Plus, China's middle class is still growing, and even from a geographical perspective, there is more 'outdoors' in China in which citizens can deploy their sporting skills, in comparison the more densely populated other Asian nations. Not only lifestyles have changed but the idea of spending money on sporting clothes is still relatively new. X-L must establish itself as the brand of choice, at this critical juncture in China's economic history. "At the moment, China's consumer economy is about the size of Italy's, but in two years' time it is going to start adding an Italy every year," observed one China analyst (Ford, 2007). Plus, the young, athletic market is expanding: "Young people are responding, and refusing to follow their parents' example of socking away 25% of their post-tax income - one of the highest savings rates in the world....These kids have had 30 years of unparalleled economic growth...They ask why they should deny themselves something that they want" (Ford, 2007)? Pulling out now when Chinese young people are just learning to become consumers would be disastrous, especially since sportswear is a luxury item, relatively speaking, and Chinese consumers are just learning to defy their parents and spend on luxury items like sporting goods. Today, "stores featuring luxury brands such as Gucci, Christian Dior and Chanel have begun to appear in more and more Chinese cities" ("Dissecting China's Middle Stratum, 2004, China Daily)

But what of expanding the company's R&D? True, some research and development is always necessary for a sportswear company to thrive. Everyone is always looking for the next water or temperature resistant fabric or nutrition bar within the industry. But the Chinese market, even its most affluent members, is not likely to be encompassed by the highest end consumers when viewed in an international context, as compared to elite hikers in the United States, Australia,...

Consumers are only beginning to explore the outdoors, and are likely still focusing on the basics, still learning to consume like capitalist sportsmen and women. Some R&D is always necessary, but this should not be the primary focus of the company, nor where it places the majority of its funds at this juncture of its history in China.
Thus advertising rather than research and development is the ideal focus for X-L. While quality control is essential, so that inferior quality goods do not damage the brand image, R&D of the most expensive and high-end technology would not benefit X-L at this present moment. Today, more and more Chinese have stable incomes and "are capable of purchasing private houses and cars, and can afford the costs of education and holidays" ("Dissecting China's Middle Stratum, 2004, China Daily). This seems relatively modest compared with the highest-end Western sportsmen and women, perhaps, but it is a seismic development in China. Advertising must target Chinese consumers in the here and now, and present an image that is attractive, affordable, non-intimidating yet still has Western cache.

An expanded advertising budget will secure the X-L brand, help distinguish X-L against inferior imitators and competitors, and create product loyalty amongst the young. Many young people will be trying different outdoor sports for the first time, and it is essential that, when they do, they do so using X-L products, and thus X-L can create customers for life in the Chinese market.

Works Cited

Dissecting China's Middle Stratum." (24 Oct 2004). China Daily. Retrieved 13 Aug 2007 at http://www.china.org.cn/english/China/110521.htm

Ford, Peter. (2 Jan 2007). "Consumer tidal wave on the way: China's middle class."

Christian Science Monitor. Retrieved 13 Aug 2007 at http://www.csmonitor.com/2007/0102/p01s02-woap.html