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"The Beijing Olympic Games will serve as a platform for Adidas to become the leading sports brand in China in 2008," declared Adidas China's managing director, Wolfgang Bentheimer, noting that first-quarter sales in the country soared more than 70 percent year-on-year.

And the Adidas Group overall expects China to become its number-one profit driver this year. The Olympics, for which Adidas paid an estimated $80 million to become a sponsor and for which it will bring all of its China-based staff to Beijing, are key to underscoring the company's commitment to the country.

"The campaign concept is about rallying the nation and showing how the entire Chinese nation is supporting their athletes and the Games themselves," Bentheimer continued.

"You have to see this as a huge p.r. campaign," said Erwan Rambourg, luxury and sporting goods analyst for HSBC, noting that there are very few Olympic products. "It's more of a long-term investment."

That investment includes two or more Adidas store openings a day, or around 1,000 doors this year alone, bringing the brand's worldwide store network to 5,000 stores by yearend.

The highlight is Adidas' giant Beijing flagship, which, at 34,000 square feet, dethrones the brand's 19,000-square-foot Champs-Elysées unit to become the biggest Adidas store in the world. With four floors, the flagship is like a department store in itself. The store offers the entire gamut of Adidas products, including Performance, Originals and Y-3, with the first floor and second floor devoted to men's and children's, while the third offers women's and the fourth showcases collections such as Originals.

Interactivity with consumers is a key feature. "It will take the Adidas retail experience for consumers to a new level," Bentheimer said, "and serve as a role model for our retail activities around the world."

A further 1,000 stores are planned by yearend 2010, when the Adidas Group expects its total sales in China, including Adidas, Reebok and TaylorMade-Adidas Golf, to top 1 billion euros, or $1.57 billion at current exchange.

The company's retail expansion rate isn't overly ambitious, Adidas Group chief executive officer Herbert Hainer assured analysts in March. "I always get the question, 'Don't you think there are too many stores in China?' We continue to see extremely good sell-throughs in the stores selling our products. And I just spoke to our Chinese country manager two weeks ago. He said they just can't open new stores fast enough. And please keep in mind we are talking about a market of 1.3 billion people. If 10 percent of them can afford our products — and our products are more easily accessible than luxury goods — then we are talking about 130 million consumers."

To demonstrate China's potential, Adidas organized an investor trip to Beijing and Shanghai last month, a first for the company. There, analysts received a breakdown of retail strategy. While Adidas generates 15 percent of its China sales in the three first-tier cities of Beijing, Shanghai and Guangzhou and 60 percent in first- to third-tier cities, it has begun moving into tier-six cities, which have an average population of 600,000 each, and plans to start targeting the 700 tier-seven cities with on average 400,000 inhabitants. That gives the group a reach across some 1,300 cities there, noted HSBC's Rambourg in his post-trip analysis.

Expanding and optimizing the distribution network fast enough for the Adidas brand, already present in 500 cities, is a major challenge, admitted Bentheimer.

"In order to make our brand available and accessible to the relevant brand consumer all over China, we need to continuously focus our energy on further expansions," he said.

In China, Adidas is positioned as a premium brand in the sports and sports lifestyle sectors with products there priced broadly on a par with Europe, around 20 percent higher than in the U.S.

Owning a pair of the brand's three-striped sneakers is a status symbol for many, observers said. "Adidas is a luxury brand over here, in my opinion," said Thomas Rosenke, equity analyst at Westlb AG bank. Noting that Shanghai's minimum wage is 800 yuan, or $116.74, a month, Rambourg added: "If you look at the average pair of sneakers, it's around 600, 700, up to 800 yuan. That's the equivalent of a month's salary."