Experts warn that domestic brands' advantages are waning
China is becoming a "popular arena" for overseas and domestic sporting goods companies as more people play and watch games, experts told the Global Times on Thursday, but they cautioned that domestic companies need to watch costs to survive the competition.
In 2016, sales of German sportswear giant adidas rose about 28 percent year-on-year to $3.67 billion in China, according to a report that adidas sent to the Global Times Thursday.
The growth rate outstripped the company's overall 18 percent sales gain for the year, the report showed.
Ji Ning, sports marketing analyst and CEO of Beijing-based Vning Cultural Media Co, said that adidas' creative products are very popular among China's middle class, which underlines the brand's success.
Another overseas sporting goods retail giant, French-based Decathlon, said in its 2016 financial report that its Chinese customer base grew 34 percent year-on-year in 2016, and 48 new stores were opened in China during the year.
The company said it planned to expand into provincial capitals like Taiyuan, North China's Shanxi Province and Kunming, Southwest China's Yunnan Province in 2017.
The company also noted it now has 214 stores in China, more than any country except France.
Chen Shaofeng, director of the Chinese Sports Research Center of Peking University, said that the success of these foreign companies is consistent with the booming sports industry in China.
"Sales of sports-related merchandise such as sportswear and equipment have grown fast in recent years thanks to the rising living standards of Chinese people and their stronger awareness of fitness and health," Chen told the Global Times on Thursday.
He also noted that the advantages of international brands are "obvious." "It's easy for them to attract young customers in China, especially the post 1980s and 1990s cohorts, who are more likely to identify with sports fashion and have stronger familiarity with international sports brands," he said.
But domestic sporting goods brands are also rising to the competition. For example, ANTA Sports Products reported on February 22 that it achieved net profit of about 2.39 billion yuan ($346 million) in 2016, up 16.9 percent year-on-year.
Another well-known domestic sports brand Li Ning, which closed many stores around 2012 amid large losses, seems to have gotten back on track in recent years. Li Ning Co achieved revenue of 3.6 billion yuan in the first half of 2016, up 13 percent year-on-year, jiemian.com reported in August 2016.
According to Chen, domestic sports brands still face a squeeze between cost and added value, but they also have advantages over foreign brands, such as lower costs and flexible marketing.
But he also cautioned fierce competition is eroding those advantages.
"There are two points to keep in mind for domestic sports brands to break through: One is expanding production while reducing costs." For example, domestic brands can take advantage of the Internet or other platforms to cut costs. The other point is that they should make more effort when it comes to marketing and product design, generating more added value for the products, he noted.
Ji said that China's sports industry will continue to prosper in the next five years, with an average annual growth rate of 20 percent to 50 percent.
