China's Meike to offer subsidy to sportswear distributors
Oct 11 (Reuters) - Chinese sportswear firm Meike is offering a one-off subsidy to its distributors in hopes of getting them to better market its products ranging from track shoes to T-shirts in a highly competitive sector.
China's sportswear industry has been suffering from an oversupply over the past two years and competition has been fierce among foreign firms - such as Nike Inc and Adidas AG - and domestic players like Li Ning Co Ltd .
To help fend off the competition, Meike International Holdings Ltd, based in China's southern Fujian province, is giving a one-off subsidy of 51 million yuan ($8.4 million) to 19 distributors, it said in a statement on the Hong Kong stock exchange.
Meike also hopes that the subsidy, which would partly be used to renovate approximately 450 Meike-branded stores, will help distributors clear out excess inventories and boost their promotional and marketing skills, it said.
However the expenditure will likely pressure Meike's results this year, said the company which posted a net loss of 151 million yuan in 2012.
The announcement came after Hong Kong markets closed on Friday. Meike's shares ended 2.3 percent lower, underperforming the main Hang Seng Index's 1.2 percent rise. (Reporting by Lee Chyen Yee in Singapore and Meg Shen in Hong Kong)