Productivity: The Magic Weapon To Surpass Nike

In July 2001, after the successful bid for Beijing Olympic Games, under the catalysis of the foreseeable 2008 Beijing Olympic Games, China's local sportswear brand presented a whole upsurge.

In July 2007 and October, the local sports brand Anta group in Jinjiang and China's headquarters in Beijing were listed on the Hongkong stock exchange and gained over 100 times subscriptions.

The next step is to enter PEAK, another local sports brand that is silent before the listing.

In the face of this huge overall upward traction, can China's local brands grow or even defeat Nike? Before answering this question, we may reexamine the development trend and competition pattern under the local sports brand.

In fact, if the establishment of PEAK and Lining sportswear brands in 1988 and 1989 was the starting point, in the past 20 years, the Chinese local sportswear brands have been rolling out two different ruts in the process of running forward: first, the Lining department who was born to publicize the brand (including the Li Ning Co and the Chinese General Manager Chen Yihong of 2005 group Lining's wholly owned purchase from Lining). They learn from Nike and use the way of "virtual operation" to try to regulate production through the brand's appeal, integrate channels and control the market.

The two is that Jinjiang's local sportswear brand is gradually pformed into a brand oriented brand based on wholesale and manufacturing. As for the number of brands, the local sportswear brand of Jinjiang Fujian, represented by Anta, occupies at least part of China's local sportswear brand.

In the past 15 years, there is no doubt that in the "middle name" sportswear brand, Li Ning Co has taken the lead in the world and even once covered the international brand.

This is due to the brand effect of Lining, the brand operation mode of virtual operation mode, and the inadequacy of market competition.

But in the next five years, things changed.

Nike and Adidas pay more attention to the emerging market. At the same time, the Jinjiang companies with the "rustic and rustic" bias began to rise fiercely. We compared the above two kinds of companies with representatives of Lining and Anta listed in Hongkong.

From the stock perspective, according to the existing financial data, in 2006, Li Ning Co ranked the first place in China's local sportswear with 3 billion 180 million sales, and its gross margin was basically stable at around 45%. Correspondingly, Anta's sales in 2006 were only 1 billion 200 million and gross margins were 25.1%; however, on the incremental index, the turnover of Anta increased by 151% every year from 2004 to 2006, while the sales growth rate of Lining was 34.7%; at the same time, the gross margin of Anta increased at 5.5 points per year, and the gross margin of Lining remained unchanged. From the data of this annual report, the sales volume of Lining reached 1 billion 909 million, Anta sales reached 1 billion 497 million, and the same period growth rates were 39.2%, 203.1%.

From a numerical point of view, the latter obviously shows a more rapid growth momentum.

The idea of Ding Zhizhong, chairman of Anta group, was that he became the first local sportswear brand in China in 2010. He defined "first", including "sales first, profit first, sustainable growth first".

For exceeding the most direct competitor, Anta's confidence comes from Ding Zhizhong's all thoughts on the competitiveness of enterprises. Among them, "we must have some self production capacity to quickly respond to changes in demand from the market or channel, and get some cost advantages" is a concern.

Previously, Nike's dream of "virtual operation" mode has surprised many Chinese companies, which inspired many operators. Li Ning Co managers are one of them.

The problem is, in this industry without borders, if your brand can not have the worldwide appeal, the "virtual management" mode will be applied in order to make people grow up.

"Wrist" is unlikely to have more powerful design capabilities. Secondly, price can not show advantages. Because several companies have adopted virtual operation (the world's most famous sportswear brand, the main production is outsourcing to several OEM/ODM manufacturers, to protect product quality and production capacity), no company can obtain significant cost advantage, even your production cost is higher than Nike and Adidas, because the latter's order is bigger. Furthermore, subject to the order arrangement of OEM manufacturers, if the company sells a product at the beginning of the year, if the product is sold out of stock, the company adopting the "virtual management" mode in short time will most likely be faced with the problem of not quick replenishment. In the high-end market, first of all, your brand is still competing internationally.

Similarly, the above problems will also restrict the company's downward derivation and grab the middle and low end market.

After all, there are many competitive competitors in this field.

When we worship the brand, we often forget to respect the "productivity", or even realize the huge constraint of "productivity" on the industrial chain.

Why do we say so? In fact, the most powerful company to fight Nike should be its OEM/ODM and channel operator, Yuyuan group, the world's largest sportswear OEM producer.

The company, founded in 1988 in Hongkong, was run by the Cai family in Taiwan. In the same year, it set up production bases in Zhuhai, Dongguan and Zhongshan to carry out the OEM business of sports shoes. As of September 30, 2006, the Group operates 373 footwear production lines in China, Vietnam and Indonesia, producing 196400000 pairs of shoes, and also operates sportswear production lines in the above locations and Mexico.

At the end of September 2006, Yuyuan set up a wholesale network of more than 2100 distributors in Greater China, operating more than 640 retail stores / counters in major cities in mainland China, distributing Nike, Adidas and Reebok sports shoes and casual wear shoes and clothing products.

In addition, it also holds the exclusive licensing rights of Converse, Hush puppies and Wolverine, the three largest international brands in China. It is responsible for co ordinate wholesale distribution and opening retail stores / counters for the brand.

This year, Yu Yuan's wholesale and retail business in Greater China grew by 80.4%. over the same period last year.

In the 6 years from 2001 to 2006, in 5 years, the turnover of the foundry manufacturer increased by more than that of the global brand footwear market.

What we can imagine is that if Yuyuan has a day's strike, it is likely that Nike and other brands will suffer a month's sales loss.

In other words, it became a sharp "big supporting role" for the protagonists.

So, to surpass Nike, you need to make good use of productivity.