Chinese Home-Made Sportswear Brands Counter Attack The 2018 Market With A Scale Of More Than 40 Billion Dollars

Bloomberg reported on the 14th that the share price of Li Ning, a Chinese sportswear brand, has strengthened continuously recently, and has risen by more than 200% this year. The popularity of Li Ning reflects the overall strength of Chinese local sports brands, and the sense of market presence of such sportswear manufacturers as Anta, 361 °, and Tebu is growing. According to the analysis of market personage, after the difficult exploration and transformation in recent years, Chinese sportswear brands are gradually walking out a relatively stable development path in the process of competing with international brand giants.

The stock price of local sports brands soared

Bloomberg said that Li Ning's share price was HK $25.850 on the 14th, up 1.17%. Li Ning's share price was only HK $6.66 at this time last year, making it the biggest stock among MSCI Asia Pacific stock indexes this year. The rise of Li Ning's share price reflects the strength of local sports brands. On the 14th, Tebu's share price rose 4.33%. Anta's share price also rose 12.5% last month.

As for the rise of share price, Li Gang, general manager of Li Ning Fashion Line, said in an interview with Global Times on the 14th that he was not surprised. With the improvement of brand strength and business performance, it is normal to be optimistic in the capital market.

Market participants said that Li Ning's stock price rise was strongly supported by its performance. Data shows that Li Ning's revenue in the first half of 2019 reached 6.255 billion yuan, up 32.7% from the same period in 2018. In fact, the performance of its main local competitors is also growing. The latest financial report shows that Anta achieved a revenue of 14.81 billion yuan in the first half of this year, up 40.3% year on year.

Wu Jincao, chief analyst of Guojin Securities (8.970, 0.00, 0.00%) textile and clothing industry, told the Global Times reporter in an interview on the 14th that the domestic listed sportswear companies represented by Li Ning seized the dividend of the rapid development of China's sports market, rapidly expanded the distribution system, and boosted sports resources, thus achieving success.

Consumers are unwilling to pay "IQ tax" again

Zhang Di, a 40 year old sports enthusiast, told the Global Times on the 14th that in the early years, he was not wearing Adidas or Nike, "because domestic clothes are too local and of poor quality". However, over the years, Zhang Di has found that the performance price ratio of domestic sportswear is getting higher and higher. No matter the style or quality, it is no worse than that of foreign first-line brands. "So now all the people are domestic".

Bloomberg said that Li Ning Company, founded by Chinese gymnastic legend Li Ning, had gone through a tortuous road. The company was listed in 2004, and its share price also reached the current level in 2007 and 2010. But later, due to blind expansion, the revenue declined, and both profits and stock prices were "halved". This was also a microcosm of the difficulties encountered by the high inventory of Chinese sports brands at that time. But later, local brands such as Li Ning gradually recovered their decline by strengthening sales transformation to meet market demand.

As for the resurgence of Chinese sports brands, the US CNBC website said that Chinese people are increasingly accepting local brands with more fashionable flu and international style. In February 2018, Li Ning series products made their debut at New York Fashion Week. On the 15th of this month, special products will also appear in London Fashion Week. This reflects that Chinese brands are moving from imitation and simple quantity expansion to innovation and quality improvement, and increasingly reflect the international color.

Wu Jincao believes that China's sportswear brands have experienced a wave of survival of the fittest. Some shanzhai brands and even well-known brands are gradually eliminated. The whole market is gradually gathering to Anta, Li Ning and other leading enterprises, making their comparative advantages more prominent. "Chinese consumers are also becoming more and more mature. After they realize that there is not much difference between Chinese and foreign brands in technology, their consumption gradually tends to be rational, and they are unwilling to pay an IQ tax to foreign brands, but prefer to choose domestic brands with higher cost performance ratio," Wu Jincao said.

Wait another 5 to 15 years?

According to the survey of market institutions, the size of China's sportswear market exceeded 40 billion dollars in 2018. In terms of brand market share, Adidas and Nike occupy the first two places, with 19.5% and 19.0% respectively. As representatives of local brands, Anta and Li Ning are in the second group, with market shares of 8% and 5%. However, market participants believe that according to the current growth momentum, Chinese local brands are launching a strong challenge to the two giants. The Chinese government is actively promoting the national fitness program, launching the Action Plan to Further Promote Sports Consumption (2019-2020) to stimulate the development of sports brands, especially local brands.

Li Gang told reporters that there is still a gap between Li Ning and international first tier brands in terms of global brand influence and the attractiveness of some products, but this gap is being rapidly narrowed. The strategic plan of "single brand, multi category" has achieved initial results. In addition to the Chinese market, Li Ning will also gradually develop the international market in the future, hoping to become a world-class comprehensive sports brand in the shortest time.

Wu Jincao believes that there is little difference in technology between Chinese and foreign sports brands, and there is no special technical threshold for foreign brands. But foreign products are better at concept building and marketing, and their cultural symbols have strong appeal and stronger market appeal. In the middle and high-end market, consumers still prefer foreign brands such as Adidas and Nike. He believes that it will take "about 5 to 15 years" to change this situation.