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Olympic Economy Promotes Three Kinds Of Business Models Of Shoes And Clothing Consumption

2008/7/25 15:45:00 11

Competition apparel market

Driven by the "Olympic economy", Chinese local sports apparel enterprises began to attack international brands.

Three major sports costumes such as Lining sports, Anta sports and China have chosen different development strategies.

In terms of business mode, Lining sports and China adopt "light assets operation", while Anta sports is "vertical integration". In terms of product positioning, China's trend is aimed at the differentiated products of sports, fashion, sexy and taste. Lining sports is positioned in high-end professional sports market, while Anta sports is positioned in the middle and low end market. On the marketing strategy, Lining sports and Anta sports adopt the strategy of sponsoring sports events and sports stars endorsement. China's trend is the promotion of "fashion". Sales channels, Lining sports and Anta sports mainly rely on the number of expansion dealers, while China's trend is to expand sales channels with the "capital cooperation" between retail giants and major distributors.

Different modes of development produce different financial effects. At present, Anta sports income grows fastest, China has the most profitable trend, and Lining sports operation efficiency is low.

In July 2001, Beijing won the right to host the 2008 Olympic Games, which greatly enhanced the interest and concern of the people in sports and fitness.

According to statistics, the number of sports activities held in China increased from 25160 in 2001 to 44762 in 2005.

Sports industry has become a new focus of China's economic development, and sports consumption has become a new hot spot of consumption.

It can be said that the Olympic Games created gold (204, -4.59, -2.21%, bar) opportunities for China's sports apparel industry, and created a fast-growing sports consumption industry.

The popularity of sports and the trend of health and fashion have led to the demand of Chinese sportswear products.

Since 2002, the Chinese sportswear market has been growing at a rate of two digits.

According to the market survey of independent sports market promotion and consultant Zou Marketing, in 2006, the sales revenue of the domestic sportswear market was about 3 billion 800 million US dollars, and it is expected to increase by nearly two times in 2009, reaching 7 billion 200 million US dollars, and the compound annual growth rate is 23.3%. It is estimated that the growth rate in the 2009-2012 year will still be around 20%, and the market scale in 2012 will reach 12 billion US dollars.

Local sports apparel enterprises are lagging behind international brands.

From 1994 to 2003, Lining sports was the largest sporting goods company in the domestic market. But in 2003 and 2004, it was surpassed by Nike and Adidas. Nike and Adidas occupy the top two of China's sportswear market share.

According to the Market Research Report of Zou marketing, there are nearly 100 sportswear brands in China, of which 15-20% is an international brand, but accounts for about 45% of the market share. The overwhelming majority of local brands occupy only about 55% of the market share.

From the market share of brands, Nike, Adidas, Lining, Anta and Kappa are listed in the top 5.

Following Lining sports 2004 in Hongkong stock exchange, Hongxing Erke (BR9.SI) and the Singapore Stock Exchange in 2005, the other two sports apparel enterprises Anta sports and China trend in July 2007 and October have been listed on the Hongkong stock exchange, and have received more than 100 times the purchase.

Followed by XTEP sports, another local sports brand that has entered the silent period before listing.

With the help of the "Olympic economy" and the strength of the capital market, can the Chinese local sports apparel enterprises grow into an international brand like Nike?

The three major sports costumes of China, Lining sports, Anta sports and China, have chosen different development strategies.

Lining sports and China trend "light assets operation", Anta sports "vertical integration"

If China PEAK in 1988 and Lining sports in 1989 set up a sportswear brand as the starting point, in the past 20 years, China's local sports apparel enterprises have developed two different types of business models in the process of rapid progress:

The first category is represented by the Lining movement, which is a brand name, and the Chinese trend that is born out of the "Lining system". They learn from Nike and try to regulate production and integration channels through the "light assets operation (virtual operation)" way to control the market.

The second category is the local sportswear brand of Jinjiang department, represented by Anta sports. They start from wholesale and manufacture, then gradually turn to brand orientation.

They have a certain production capacity, adopt the "vertical integration" mode, respond to changes in market or channel demand with rapid response, and penetrate into the two or three tier cities with cost advantage, and gain greater market space.

For the number of brands, this type occupies at least half of China's local sportswear brand.

The "light assets operation" mode was first created by Nike in the 70s of last century.

From the 70s of last century, Nike made full production to manufacturers in Japan and Western Europe; by 80s, its production was further outsourced to South Korea, China's Taiwan, mainland China and India; and in the 90s of the last century, Nike was committed to making Southeast Asian origin.

From the constant changes in the production base, we can see that Nike's response to global production cost changes is very fast. By passing the production line to other manufacturers, Nike can focus on the design, development and marketing business, so that financial resources can be concentrated in the industry chain, which can stimulate sales and bring benefits, and thus achieve higher return on investment.

With the confirmation of Nike's success, "light asset operation" has now become a popular business mode of sports apparel industry, and all major brands have been adopted, while Lining sports and China are also strong followers.

Unlike the "light assets operation" mode, Anta sports has 5 production bases in Fujian.

In 2006, Anta sports produced about 8 million 900 thousand pairs of footwear products in Jinjiang's own production equipment, accounting for about 75.4% of the total footwear output in that year. Because most of Anta's sports products are produced by itself, they can control almost all operation stages from product design, development, manufacture to distributors, and marketing of finished products. This mode is called "vertical integration".

Unlike Lining sports and China's trend asset structure, Anta sports occupy some of the financial resources of enterprises in production equipment, and the proportion of illiquid assets is significantly higher than that of the former.

China aims at differentiated products, Anta sports positioning middle and low end market

Although China's trend follows the "light assets operation" mode, but in the market positioning of products, it has stepped out of a differentiated route which is different from Lining sports. That is, in keeping the connotations of Kappa brand sports, it integrates fashion and leisure elements, positioning the Kappa brand in "sports, fashion, sexy and taste", and avoids the "professional sports" goods market of sports giants at home and abroad.

This is also the key to China's success.

"Nike sells to people who really like sports, and Kappa sells them to people who pretend to like sports and are really trendy."

In addition, in terms of product mix, China's trend is focused on clothing products that show individuality.

Because the gross profit margin of clothing products is usually higher than that of footwear products, this provides a basis for China's trend to maintain a higher profitability.

Lining sports and Anta sports are inferior to the trend of China in the market positioning differentiation. They still follow the professional sports brand line, but there are still differences between the two.

Since the second half of 2003, Lining sports has shifted its axis of its brand promotion from the low end to the high-end professional sporting goods market, facing Nike and Adidas, which have long been entrenched in the high-end sporting goods market.

While Anta sports is located in the middle and low end market, the average selling price and gross profit margin of the products are far lower than that of Chinese sports and Lining sports, and the sales outlets are dominated by second tier and three tier cities.

In terms of product mix, Lining sports and Anta sports shoes and clothing products proportion is more balanced, but Anta sports more focus on low gross margin footwear products.

Anta sports is positioned in the low-end market. It is a wise move to avoid the positive competition between high-end brands such as Nike, Adidas and Lining. It can also play the cost advantage of "vertical integration" business mode and directly expand the two or three line city with wider market space. At the same time, because the "light assets operation" enterprises do not have the cost advantage, they can maintain the price advantage to deal with competition in this market.

Lining and Anta adopt the "Nike style" market strategy, and China moves in the "fashion" promotion route.

An important feature of the "light assets operation" mode is the importance of design development and market promotion. For example, the proportion of product development and marketing of Lining sports is significantly higher than that of Anta sports (Table 3).

However, similarly, the trend of China's "light assets operation" business mode is the lowest among the three companies, which is related to China's unique marketing strategy.

The marketing strategy of sportswear enterprises generally follows the Nike mode, mainly through sponsoring sports events, sports teams and endorsement by sports stars. Lining sports and Anta sports are all the same, and the marketing strategies of the two are very similar.

For example, Lining sports has sponsored the Olympic Games and Asian Games Chinese sports delegation since 1990, and signed the national diving team. In recent years, Lining sports has accelerated the pace of the internationalization of the brand, signed international tennis stars such as tennis player Ivan Ljubicic, NBA O'neal and other international sports stars, sponsored the Argentina National Men's basketball team, Sultan national track and field team, and the national table tennis team. In addition, Anta sports signed the NBA Rockets player Francis and straga respectively in 2007, sponsoring the Chinese men's basketball professional league and becoming its long-term strategic partner, and the two sides all attached great importance to the dissemination channels of CCTV5.

Unlike Lining sports and Anta sports, China has never done TV commercials, and has withdrawn from the sports sponsorship team. It adopts popular promotion methods of fashion brands: sponsoring hosts and stars, and promoting the fashion of pure fashion. For example, China has spent 3 million yuan on sponsoring the Chinese star soccer team.

Its brand Kappa has developed a cross industry joint marketing model.

In June 19, 2007, Kappa and PepsiCo began a cross industry strategic cooperation and launched a new series of Kappa- Pepsi "Shadow Dance" series. After that, the "Dongfeng Citroen C2 Kappa brand united city Show" large-scale roadshow took a month to tour in ten major central cities such as Beijing, Guangzhou, Dalian and Shanghai.

At the same time, the designers of both sides have begun the design work of "C2 Kappa flashy dress" of C2 owners' exclusive clothing, and launched a series of online promotion and terminal promotion of three-dimensional joint activities.

In fact, the promotion mode of China's trend is based on the positioning of its product "sports fashion", which also greatly reduces the cost of marketing. The proportion of international sports brand promotion costs in turnover is generally about 13-16%, while China's trend is only about 8%, which is conducive to improving profitability.

Lining sports expand the number of dealers, China moves to expand sales channels through capital cooperation.

The sales of sportswear enterprises mainly depend on the establishment of a broad network of franchisees.

According to the announcement, Lining sports manages 5301 stores through 244 distributors. Meanwhile, Lining sports has 375 Direct stores in Beijing, Shanghai and 13 provinces. The total number of stores is 5676, and the distribution network is the broadest among the sports apparel enterprises in China.

Anta sports manages 39 distributors and 4716 Anta franchise retail outlets through 6 regional operations centers.

Chinese move