When The Curse Comes - Sports Clothes Business: The Most Severe Time May Not Yet Come.

More and more signs show that after more than 10 years of "barbaric growth", China's local sports

Lining, Anta,

At the same time, Nike and Adidas and other international brands have gained more and more market share in China by virtue of their strong R & D capabilities and sales experience.

The national goods really can't defeat the foreign goods? Many years ago the magic spell came back to the Chinese sports again

In response to this phenomenon, PEAK President Xu Zhihua analysis: over the past 10 years, the industry has experienced more than 50% of the rapid growth, the market size has also increased from several billion yuan to hundreds of billions of yuan.

With the strengthening of the next industry concentration, the sports apparel industry will inevitably enter the adjustment period to digest the problems arising from the rapid growth in the past.

Li Ning Co President Zhang Zhiyong also said that at present, the whole industry is driven by the previous channel (horizontal growth - terminal number) to value driven (vertical growth - shop efficiency improvement).

The result of this pformation is that from the speed of market share expansion, the original double digit growth will enter the growth stage of the unit number.

De stocking

Inventory seems to be the fuse for local sports clothing manufacturers to hit the rocks.

Some analysts believe that due to the early optimistic market expectations and radical market strategy, the major domestic sports brands are now stranded in inventory, and the industry is in an overall adjustment period.

Statistics show that the inventory of Li Ning Co in the first half of the year amounted to 992 million yuan.

Affected by inventory and other factors, Li Ning Co's revenue in the first half of the year was 4 billion 289 million yuan, a decrease of 4.8% from 4 billion 505 million yuan in the same period last year, and net profit of 294 million yuan, down nearly 50% compared with the same period last year's 582 million yuan.

This is the first time that Li Ning Co has declined since its listing.

And the recent third quarter results of the major local sports brands announced that the enterprises, including Anta, PEAK, XTEP, and 31st degree, all had large inventories. Cleaning up inventory became the focus of every third quarter.

Zhang Zhiyong believes that the current domestic brands are facing increased competition, shrinking profits, slowing sales, outdated product backlog and other issues are manifested in the distribution channels.

There are factors such as labor cost and land rent increase. There are also internal chain factors such as channel distribution efficiency under the rapid growth in the past.

"Due to the rapid development of the industry over the past few years, enterprises are generally optimistic about market expectations, which is an important reason for inventory problems."

Xu Zhihua also agrees with the inventory problem.

"On the other hand, under the current domestic inflation environment, consumers have the tendency to reduce consumption of sports goods."

Fair market should not be partial, but it is precisely when the local sports brand is stalling, the profits and gains of international brands such as Nike and Adidas in China are increasing.

According to the report released by Adidas, Adidas's sales in the first three quarters of the Greater China region reached 900 million euros, up 25% from last year's 721 million euros, excluding the exchange rate factor, an increase of 28% over the same period last year, ranking the first place in Adidas's six largest global market.

It can be seen that inflation and consumption environment are not the fundamental elements that affect local sports brands.

Where is the problem?

"Inventory is owned by every company, which is not the root cause of the problem."

Roger, director of the Exhibition Department of the State Sports General Administration sports equipment and equipment center, pointed out that although the local sports brands can compete with international brands in terms of size and volume, there is still a big gap in terms of technology, products and brand culture.

"Serious homogenization of products and low brand added value are the main reasons for local brands to encounter setbacks in competition."

Most of China's sports brands were founded in the 90s of last century, and most of them were OEM (foundry production).

In the past decade or so, the brand development is basically at the initial stage, mainly relying on the low price products with better performance price ratio and participating in the competition on a large scale.

However, in the course of the rapid development of the past, local sports brand manufacturers are more keen on horse racing and mass production. Although they have invested in technology, products and brands, they are far from the same old international manufacturers.

Take the recently concluded "Beijing marathon exposition" as an example.

At the exhibition, Adidas and other international brands can only produce dozens of products on the road running shoes, and the lightest road running shoes can even achieve 200 grams.

However, there are few professional products appearing in the domestic brands.

"As far as I know, many international brands are divided into departments based on products. They are very thin and professional, and invest heavily in technology and products.

But many domestic sports brands are slightly rugged inside.

Roger said.

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Life line eroded

"After the golden period of rapid development, the slowdown in problems is normal.

In the same year, the development of international sports brands was equally twists and turns.

Roger compared the development history of other international sports brands: now, the era of scale competition of local sports brands has ended.

Li Ning Co is one of the first companies to sniff out crises and try to find breakthroughs.

"We started preparations for pformation and upgrading and brand remolding from the end of 2008."

A manager who once worked in the Li Ning Co Strategy Department said, "in addition, Lining has been investing more in product technology over the years.

Although there is still a certain gap compared with the international first-line brand, it is not impossible to surpass.

As the earliest listed company of local sports brand, Lining began to join hands with international brands in the market competition.

Experience and lessons show that it is not enough to become a cheap and popular brand. Only by building a brand that is enough to compete with Nike and Adidas can we really strengthen our position.

Unfortunately, the recent brand remolding strategy has been in a predicament.

Accompanied by Zhang Zhiyong initially selected "airborne troops" began to hang up, and Lining's sharp decline in performance.

"Our current reform process is divided into short-term and long-term plans.

The short term plan is to go inventory. It is expected that the retail end inventory level will return to normal in the second half of next year, eliminate inefficient distributors, increase the profit margin of distributors, and adjust product lines.

The medium and long term sustainable strategy is to enhance the brand, enhance the product, enhance the retailer's management ability, integrate the value chain, and achieve the vertical growth integration in the mass market.

Li Ning Co said, "but we need time."

PEAK is also trying to find ways to deal with the embarrassing situation at the moment.

Xu Zhihua said frankly, PEAK is committed to adjusting sales expectations, improving the efficiency of single stores, and hopes to achieve the recognition of consumers through the refinement and specialization of products.

"I also admit that there is still a big gap between us and international brands, but it is not difficult to achieve breakthroughs if we sink down."

"It is not necessarily a bad thing for the industry to enter a low tide.

It can make more enterprises that have developed rapidly and feel good about themselves become more aware of the cruelty of the market. It is not so simple to achieve sustainable and sound development.

Roger said, "fortunately, the local sports brand industry entrepreneurs are generally young, and full of ideals and tenacity, which is very helpful for the development of the industry."

It is worth noting that the most severe winter time may not yet come.

Because nowadays, Adidas, Nike and other international brands are sinking to the two or three tier cities, which are the main battleground of local sports brands. 70% of the local sports brand outlets are in two or three line cities.

Faced with the gradual erosion of the lifeline supporting its rapid growth, local sports brands will face more and more pressure.