Domestic Brand Market Is Booming, International Brands Encounter Freezing Point

According to reports, Nike's sales revenue in China's 3~5 market increased by only 6% this year. In order to reduce inventory, Nike is busy in the Chinese market. 　　 Nike shares the same feeling with Adidas. Adidas's sales fell 3% in the second quarter of this year to 3% euros, operating profit dropped 66%, only 72 million euros, and China and Japan's Asian market sales decreased by 9% over the same period last year. Nowadays, many consumers in the first tier cities choose Adidas products, mainly because of their big discount. 　　 Is China's sporting goods market in recession? It seems that this is true from the performance of transnational sports brands. However, the annual reports released by domestic brands Lining and Anta are quite different from each other. Their market growth has even exceeded expectations. It is reported that in the first half of this year, the turnover of Anta group reached 2 billion 820 million yuan, an increase of 27.7% over the same period last year, and net profit reached 608 million yuan, up 40.1% from the same period last year. 　　 Compared with Anta, Lining's performance is even better. In the first half of this year, Lining's income increased by 32.4% to 4 billion 52 million yuan, and the pre tax profit plus depreciation and amortization increased by 56.1% to 773 million yuan. In August, there were media reports that "Lining's performance is expected to exceed Adidas" (China), and Lining is likely to qualify for the second place in China. Although Lining did not comment on this, he also called himself a good momentum of development. Can this situation show that the cold resistance ability of local sports brands is stronger than that of international brands?　　國際品牌啞鈴模式：難敵本土縱向一體化

 

In view of the different performance of Chinese and foreign sporting goods enterprises, Chen Shixin, a market watchdog, said: most of the international sports brands adopt the typical dumbbell mode. Represented by Nike, it is only responsible for R & D, brand management, and other links are basically outsourcing, such as production and retail links. The local sports brands, especially the Jinjiang Department represented by Anta and XTEP, are obviously different from each other. Their mode is "vertical integration". For example, Anta, from product R & D, raw material procurement, manufacturing, distribution and logistics to marketing, promotion and retail, participates in all aspects of the industry chain, striving for every link in the industry chain, thereby improving the overall profitability of the company. 　　 Chen Shixin thinks that "vertical integration" mode can improve the gross profit of enterprises and control the cost of each link effectively. Although the operation and management level of international sports brand is generally higher than that of local enterprises, the pressure of manufacturing cost on OEM is still hard to avoid. In the period of economic depression, the vertical integrated enterprises can better control the cost and improve the competitiveness through the adjustment of the chain. 　　 Take Anta as an example. In the first half of this year, the Anta footwear production line increased from 23 at the end of 2008 to 24, and 1 shoe factories and 2 garment production bases in Changting and Xiamen were established. Anta produced about 6 million 600 thousand pairs of footwear and about 3 million 800 thousand pieces of clothing by itself within six months. At the same time, the proportion of shoes and garments produced by Anta has reached 35.5% (2008 at the end of 50%) and 14.8% (11.7% at the end of 2008). 　　 According to Anta's semi annual report, in the first half of 2008, Anta produced 6 million pairs of shoes and 2 million 300 thousand garments. Anta's self-produced footwear and clothing products were increasing, but Anta's cost not only increased but decreased. In the first half of this year, the cost of Anta's own production was 392 million 400 thousand yuan, a decrease of about 3 million yuan compared with the same period last year. 　　 Maintaining a certain proportion of self production is one reason why Anta has maintained a relatively high net profit margin in the same industry. Anta's net interest rate rose 1.9 percentage points in the first half of this year to 21.6%. In the first half of this year, Adidas group's net profit fell 95% to 13 million euros, which is one of the main reasons why it is difficult to control the price of raw materials effectively.

From the market layout of sports brands at home and abroad, most of the international brands are concentrated in the first tier cities in China. There is no doubt that this is the most powerful area of domestic consumption. But at the same time, when the economic crisis is coming, this is also the most affected place. In addition, the long time channel expansion of these brands has made the market space of these regions nearly saturated and the growth potential is limited. 　　 In contrast, the rapid development of domestic brands is mainly based on the importance of the domestic two or three line market. The number of Lining's brand retail outlets reached 6809 in the first half of this year, with a net increase of 564 in the period. Li Ning Co believes that the two or three line market is the most potential growth market in China. The number of new stores in the Lining brand period is 80% in the two or three line market. Lining has built up a wide range of distribution and retail networks in China through the penetration of strategic channels focusing on the two or three line market.

In China's sporting goods market, the speed advantage of the two or three tier cities is the most obvious. According to the relevant data, there are about 600 prefecture level cities and 2800 county-level cities in China. Suppose that the National Mall has 1500 sales outlets, and the prefecture level cities have 5~8 shops, and 1 stores in the county-level cities (conservative calculation). Then, a brand can reach 8500 outlets in the two or three tier cities nationwide. Coupled with the acceleration of China's urbanization process, this scale still has room for further growth. This shows that the retail market of Chinese sports is not yet saturated, and the expansion of retail terminals of local brands will be more rapid. At this point, the attention of international brands is obviously insufficient. 　　 The ability of local sports brands is not just about trying to open stores, but also the control of sales channels. A sports goods market watchdog revealed that Anta is increasingly investing in its distributors, forming joint ventures with them and merging with each other. 　　 There are also trends in China. As of August 24th of this year, China's move to share capital with its 6 distributors to buy a minority stake in these distributors. China's trend explains that the advantage of doing so is that after being a shareholder of a distributor, it can monitor the distributors' actions and exert influence on them, so as to optimize the operation of the distribution network, the policy and execution of the business strategy, and the financial control. At the same time, it helps the enterprises to maintain closer relationship with the main distributors and prevent them from being acquired by other retail groups. It seems that domestic brands are much more flexible than international brands in terms of attracting and strengthening control distributors.