When the NBA and apparel companies talk about international expansion, especially into Asian markets, China is always the country that comes up. It makes sense to focus on the world’s most populated country that also has the second most millionaires. However, other Asian markets may be more obsessed with the NBA. The NBA, Nike, Adidas and Under Armour should be targeting the Philippines for growth. It’s not just Filipino congressman and world renowned boxer Manny Pacquiao leading the charge. Social media also shows that the Philippines is already very engaged with the NBA and its stars, making it a market ripe for expansion.
With news that LeBron James is in Manila promoting the Filipino reality show “Rise,” which is sponsored by Nike, it looks like these companies are listening. With an estimated 100-plus million population, the 12th-largest country in the world should be targeted. There is an obsession with basketball, and basketball apparel, in the country that could make it a market flush with opportunity. There are benefits to moving into a basketball-obsessed market. Most of the fans don’t need to be educated on the game, and engagement could be higher than other markets that are less familiar with NBA stars. Decision-makers rarely discuss the Philippines, but it should be looked at for international tournaments and exhibitions as there would need to be little investment to draw crowds and fans.
Some major issues would need to be addressed, and the first is somewhat obvious. There isn’t a lot of buying power in the Philippines outside of a small number of people with the disposable income to afford expensive basketball shoes.
However, the obsession and demand is still there.
So the major risks include entering a market where counterfeit products are prevalent — an issue with China as well — and a population that simply can’t afford the product.
The smart move would be to make a cheaper intro product for the basketball-obsessed population. Nike could design lower-end shoes that represent stars that may not be as popular as LeBron or Kevin Durant. Segmenting the market has been done before, and it wouldn’t be that difficult to push big-name players who wear Nikes, such as Paul George. Another option is to just provide a more affordable shoe that has some name-brand recognition. Imagine Adidas pushing a version of James Harden’s new shoe in the Philippines as a way to further introduce Adidas basketball into the market.
As with any international expansion, there are risks, but with a population clamoring for more NBA, this may be the easiest place to continue the game’s desire to become a worldwide sport.
Michael Colangelo is Senior Editor of The Fields of Green and Assistant Director at the USC Sports Business Institute.