Runners pass Tian'anmen Square in Beijing, where the locals, always in high spirits, participate in various running and jogging activities throughout the year.(Photo/China Daily)
Global and domestic companies shrug off years of losses as city dwellers jog, run, exercise and take part in marathons
International and domestic sportswear companies have finally turned the corner after being in recession for years. Sportswear majors posted strong growth in the China market in 2015, boosted by city dwellers' pursuit of a healthy lifestyle.
According to Euromonitor International, China's sportswear industry was valued at nearly 150 billion yuan ($22.8 billion) in 2014.
Adidas Group's China unit reached its sales target of 2 billion euros ($2.19 billion) for 2015, and thus successfully completed a five-year business strategy makeover that began in 2010.
In the first nine months of 2015, its gross profit rose almost 40 percent year-on-year to 1.05 billion euros.
Colin Currie, managing director, Adidas Group, Greater China, attributed the "record achievement" to the company's ability to execute "a decisive strategy".
Rising disposable incomes, which are increasing consumer spending, helped expand the sporting goods industry in 2015, Adidas said.
This trend is particularly evident in China's smaller cities.
Adidas has expanded its retail presence to more than 8,500 stores in both big and small cities and launched retail stores in new segments for women, sportswear collections and basketball.
In the next five years, the company will continue to focus on five main drivers: football, running, women, kids and Originals. This is part of its brand strategy to strengthen key categories and lead mindshare.
Adidas said the plan will cash in on its continued growth by meeting the demands of China's burgeoning middle class "who are placing a higher emphasis on quality of life experiences and the needs of a nation with an ignited interest in sports".
Adidas's rival and global market leader Nike Inc, too, has shrugged off sluggish growth trend.
In the year to Nov 30, Nike's China unit earned $7.7 billion in revenues, up 4 percent year-on-year (up 12 percent on a currency-neutral basis).
Earlier this month, Chinese sportswear maker Li Ning Co Ltd said it expects to break even in 2015 after years of losses. This expectation itself buoyed its stock.
That would have pleased its investors, including private equity firm TPG Capital Management and Singapore's sovereign wealth fund GIC Private Ltd. Li Ning posted a loss of 781.5 million yuan in 2014.
"The board believes that the expected turnaround in operating results is principally due to an increase in both the sales revenue and gross profit of the group and a decrease in expense ratio in 2015," said Li Ning, the company's chairman, in a filing to the Hong Kong Stock Exchange.
