Although the Olympic spirit emphasizes the involvement of each
and every individual, the essence of competition in the sportswear
business is winner takes all. Chinese sportswear companies have a
chance to present themselves to a global audience during the 2008
Beijing Olympics. It is not only the most important campaign for
them in the first decade of this century, but a key to their
success or failure in the next few decades. Some of the smaller
brands may well disappear.
Thus, how to take the opportunity to market brands and products
has become a top priority for domestic sportswear makers.
With the rise of Chinese athletes on the international stage,
the country's sportswear business has also flourished. But
challenges remain.
If we divide the current sportswear market into three tiers,
Nike and Adidas have a tight grip on the premium segment, while
Lining is in the second tier and other local makers like Anta
occupy the majority of the low- and medium-end segments. Domestic
brands are faced with the challenge of moving up the value chain
and going global.
Lining, named after the famous Chinese gymnast, opened its first
overseas outlet in Spain in 2001. It signed the Spanish basketball
team, the world champions in 2006, and partnered with the national
basketball team of Argentina. But its overseas revenue has remained
at 700 million yuan. In the high-end market, it faces attacks from
Nike and Adidas.
Sports footwear makers in east China's Fujian Province have had a difficult time
differentiating themselves since rival Anta achieved popularity in
2000. Goals of becoming global premium brands have been thwarted by
price wars. Most of the companies are either contracted
manufacturers for international brands or they struggle with meager
sales in developing markets.
Branding dilemma
Local companies are also facing a marketing and branding dilemma
over whether to invest in TV commercials and sign up sports stars
as brand ambassadors.
In 2000, Anta spent a huge amount of money advertising on
national broadcaster CCTV, using former table tennis champion Kong
Linghui as its representative. The exposure helped the company
achieve great success in the domestic market. Other sportswear
firms followed suit, spending tens or even hundreds of millions of
yuan on TV commercials featuring sports or entertainment;
stars.
This strategy can bring short-term success, but often only the
faces of the stars stick in the minds of consumers, rather than the
brands.
Many sportswear companies focus on basketball and are unsure
about whether to position their brands as professional sportswear
or fashion.
Basketball is the No 1 sport in China. But with so many
companies signing basketball players and competing for fans, the
limited consumer pool is reduced further.
XStep signed up Hong Kong star Aaron Kwok to promote its brand,
while Derh hired Taiwanese singer Jay Chou. But both companies have
struggled with building themselves as professional sportswear or
fashion.
Chinese brands have, however, succeeded in their distribution
model, signing one agency in every province that then develops a
retail network in the region. This model has allowed the companies
to take a huge market in a short period of time. But it has also
played out in the usual way, with many sportswear retail outlets
competing along small shopping streets for a limited consumer
population.
China makes 65 percent of the world's sportswear, according to
the World Federation of Sports Goods Industry, and most of the
world's sports shoes.
But with the cost of labor increasing, it is losing its
manufacturing competitiveness, with more contracts going to other
low-cost markets like Southeast Asia and Pakistan.
China used to make most of the world's basketballs, volleyballs
and footballs, but now 60 percent of footballs are made in
Pakistan.
Chinese sports product makers are mainly small and medium-sized
companies whose manufacturing equipment, technology and management
lag behind the international level. Some make fake or low-quality
products, hurting the image of Chinese manufacturers.
Chinese manufacturers are facing unprecedented challenges,
although hosting the Olympic Games could provide a much-needed
boost.
The author is chief consultant to Landbird International PR
Agency in Beijing
(China Daily March 29, 2007)??