China continues to get back to business after the Covid-19 outbreak, which peaked in that country from mid-January through early to mid-March. As a result, the leading Chinese sportswear and footwear companies are still hopeful they can come out of a terrible first half with positive numbers for the year as a whole.
Anta, the largest Chinese sportswear company in terms of share, predicts it will recover from double-digit sales declines in the first half of its fiscal year to show full-year growth, while Li-Ning, the second-largest domestic player, has said it expects its profit margins to improve by 1.4 percentage points in 2020, although it did not mention revenue forecasts. Both Anta and Li-Ning saw their revenues increase significantly in 2019.
Nike and Adidas continue to dominate the Chinese sportswear market with more than 40% of sales collectively, and other global brands such as Skechers have a strong position as well. Anta’s share of the sportswear market in China was 15% in 2019, according to Euromonitor. The researcher estimates Chinese sportswear sales at about $40 billion a year, making it the second largest market in the world after the U.S., albeit still less than half the latter’s size.
While Chinese labels remain smaller than the international brands, many of them are growing quickly and starting to give the Nikes and Adidas of the world a run for their money in China. To that end, they are increasingly using licensing and collaboration as tools to better their reputation locally and/or help them achieve their global expansion goals. A number of the leading Chinese brands have long paired with sports leagues, events, and athletes for licensing and endorsement. Today they are not only widening their presence in that space, but some are pairing with properties outside of sports, from designers and celebrities to musicians and entertainment IP.
Some of the brands that have been particularly active, especially in the footwear category, include:
- Anta. Founded in 1994, Anta’s alliances and collaborations over the last two years have included NASA; the sneaker-centric Chinese media platform Kiks (for shoes inspired by Chinese ink paintings); and Marvel, for an assortment of shoes for all ages involving properties such as Iron Man, The Avengers, and Spider-Man. In the sports realm, it has worked with athletes including the NBA’s Klay Thompson, who recently signed a 10-year extension to his endorsement deal, and boxer Manny Pacquiao. Anta also is sponsoring and creating merchandise for the Chinese Olympic Team and the Beijing 2022 Olympics. Meanwhile, the company has a number of joint ventures that give it the rights to market the Italian label Fila, Japanese brand Descente, and other global apparel businesses in China. And in 2019 it acquired Amer Sports, owner of the Wilson, Louisville Slugger, and Arc’teryx brands.
- Li-Ning. Launched by Olympic gold-medal gymnast Li-Ning in 1990, this brand has done a variety of collaborations of late, including with actor Jackie Chan, designer Stefano Pilati and his Random Identities label, New York retail boutique Atmos, and rapper Rick Ross. It has long had a relationship with NBA star Dwyane Wade and his Way of Wade brand. Both the Li-Ning and Way of Wade labels have paired with other athletes, mostly from the NBA, with an early example being Yao Ming and a recent one being D’Angelo Russell. Li-Ning is a longtime partner of the Chinese Basketball Association, among other local sports entities.
- Xtep. Xtep has been growing fast. It was in the news in 2019 for its purchase of global footwear and sportswear brand K-Swiss and its joint venture with Wolverine Worldwide to raise the profile of the Saucony and Merrell brands in China. It also released a collaboration last fall with British fashion label House of Holland, becoming the first Chinese sportswear label to have a presence at London Fashion Week. Its recent deals in the sports world have included signing NBA player Jeremy Lin as a brand ambassador last August.
- 361°. Founded in 2003, the brand released a high-profile sneaker collaboration in 2019 with the Japanese anime property Mobile Suit Gundam in honor of the latter’s 40th anniversary. The shoes were inspired by the robots on the show. In sports, one of its notable alliances was with the Rio Olympic and Paralympic Games back in 2016. It also has endorsement and apparel deals with a number of NBA athletes, as well as Chinese Basketball Association Shanghai Sharks star and former NBA athlete Jimmer Fredette, and has signed Chinese Olympic swimming gold medalist Sun Yang.
- PEAK. Peak’s collaboration activity is focused on sports. It has supplied products for the Chinese Olympic team and has the largest roster of NBA endorsers among the key Chinese sportwear players. Among the athletes on its roster are Tony Parker and Dwight Howard, both of whom have released branded merchandise lines with PEAK.
- Qiaodan. This brand is best known for its legal battles with Nike over the Jordan brand. The courts in China have allowed it to use its brand name (which, translated, is the equivalent of “Jordan”) in its home market, but not the English version of the name. The company has moved into sports sponsorship, including through a deal with tennis player Svetlana Kuznetsova.
In addition to the domestic brands’ initiatives to increase their market share at home and abroad, some of the current socio-political and pandemic-related challenges could end up helping strengthen their position domestically, compared to the global brands. The ongoing trade war between the U.S. and China could continue to spur Chinese consumers to favor local over U.S. corporations, potentially long-term. And U.S. firms moving their manufacturing to other countries, with local brands taking over the empty space in their former factories, may lead to better sales and/or profitability for domestic brands relative to the global firms.
Meanwhile, the Chinese sportswear companies’ businesses are typically more concentrated in the Chinese market, at least to date, than is true for the global operations of Nike, Adidas, and other brands with a foothold in China. That may help them bounce back from the Covid-19 crisis more quickly, as the greater part of the pandemic seems to be finished there, while the disease is peaking, or the worst is yet to come, in other parts of the world. Of course the coronavirus will not spare any sportswear company from economic hardship, no matter where the firm is based. But these Chinese-centric brands may be positioned for a somewhat quicker recovery than their international competitors can expect.