The deal means adidas will supply all clothes for the games' staff, volunteers and officials and will outfit the Chinese teams for the 2008 Olympics as well as the 2006 Turin Winter Games.

The cost of the sponsorship to adidas - the world's No3 sporting goods maker after Nike - was not disclosed.

China generated over 100 million euros (HK$1.01 billion) in sales for adidas in 2004 and was its fastest-growing market. ``China will certainly be the driver, by 2008, in the region,'' said Christophe Bezu, adidas' head for the Asia-Pacific region, after the signing ceremony in Beijing. ``By 2008, China could be theNo3, and with some push the No2, market in the world'' for adidas, he added.

To that end, adidas planned to expand its nationwide franchise network to about 4,000 stores by 2008, up from 1,300 at the end of last year, Bezu said.

The company hopes to earn more than two billion euros in revenue in the Asia region by 2008 and one billion euros in China alone by the end of this decade, he said.

``Even compared to other Olympics, Beijing will represent much more for us.''

Bezu said conditions meant it could quickly become adidas' most profitable market, surpassing the United States, which represented 50 percent of its global market.

Adidas outsourced more than 50 percent of its worldwide production to the mainland, Sandrine Zerbib, managing director of adidas China, said.

Adidas is a major target of counterfeiters but Bezu is confident the piracy problem will be brought under control.

``I do feel in coming years there will be a major reduction of that in China,'' he said, adding adidas would work with the Beijing Olympics organizing committee and authorities to clear the market of unauthorized merchandise.

``Athens was one of the cleanest games [in terms of counterfeit goods],'' Bezu said, ``and we think it will be an even cleaner Olympics here in China.''