China'S Local Sports Brands Enter "Cold Winter"

Although there are less than 100 days to go before the opening of the London Olympic Games, it is still true to the mainland.

For enterprises, the days of 2012 did not seem to be good.

"This year is a year of survival rather than development, and the situation is even more difficult than 2008."

4 at the end of the month,

China Industry Alliance Quanzhou workstation secretary, Quanzhou Zhuo Yong (Heng Li) Trading Co., Ltd., marketing manager Zhu Jinjun told reporters.

4 in late mid month, reporters in Fujian, Quanzhou, Jinjiang and other places to more than one.

The survey found that "going out of stock", "adjusting the structure" and "slowing down the pace of expansion of the retail network" are becoming an important means for them to face the grim situation.

Quanzhou and Jinjiang, as Anta, XTEP, 31st degree, Hongxing Erke, PEAK, Jordan, Meck, Kang Tai, del Hui, Xi long, Jin Lei Ke and many other sports brand enterprises, and become the largest gathering place of domestic sports brands.

"It can be said that at present, Chinese sports teams use shoes and clothing equipment, except Lining, are basically produced in Jinjiang and Quanzhou."

Anta sports brand chief responsible for Xu Yang, 19, told reporters on April, "if there is no Anta, Jinjiang, PEAK, these sports brands, do not know what China's sports equipment will look like."

Sales are everywhere.

The reporter saw in the cheddar Town, Jinjiang, where the Fujian sports brand started. Along both sides of the Chai Tai River, it was Anta shoe factory, Conway sports and so on, while the other side of the stream side industrial zone was the factory building or headquarters of Jordan sports and del Hui sports brands.

Not far away, it is "China Shoes Capital" which specializes in shoes and clothing accessories.

In April 18th, the information provided by the Jinjiang municipal government department to reporters showed that there were 3016 shoe manufacturing enterprises in Jinjiang, 1 billion pairs of shoes produced annually, and the output value exceeded 70 billion yuan.

Among them, sports and tourist shoes account for 40% of the total output of the country and 20% of the world's total output.

Roughly estimated, only sports shoes produced in Quanzhou and Jinjiang are more than 500 million pairs a year.

"Jinjiang's sports shoe factory does not start in 3 years, and it is estimated that the shoe here will not be sold."

Zhang, a shoe accessory in Jinjiang, jokes to reporters.

Walking through the streets of Quanzhou, the major sports brand stores are visible.

At the entrance of the shop, there is a discount, except for the job advertisement.

Reporters have noticed, whether Anta, XTEP, PEAK or 331 degrees, this year's new products can play 30 percent off, 20 percent off, and some last year's style, and even sold for 70 percent off.

"In Quanzhou, Jinjiang, the famous sports brand production sites, few years ago saw a large discount sale of new products.

Since last year, the sale of discount has been everywhere.

A magazine leader familiar with local sports shoes and clothing enterprises told reporters in Quanzhou.

Behind this wave of discounted sales, the hidden fact is that the major sports brands are trying to digest inventory by lowering prices.

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Inventories increase and profits decrease.

How much pressure does local sports brand enterprises have on inventory?

Reporters looked at the annual reports released by Listed Companies in March, and found that although the sales revenue of most sports brands increased synchronously, the enterprises had to face the grim situation, such as the decline in sales growth, the sharp increase in inventories and the lengthening of capital turnover.

Lining, who is in the leading position of domestic sports brand, even appeared negative growth last year.

XTEP's annual report showed that its gross revenue rose 24% to 5 billion 540 million yuan last year, but its gross profit margin increased by only 0.2 percentage points.

The balance of inventories rose from 462 million 600 thousand yuan at the end of 2010 to 671 million 500 thousand yuan (the balance of stock in 2011 was 887 million yuan), and the turnover days of inventory also rose to 63 days in 50 days of the previous year.

Lining's annual report shows that last year's income dropped 5.8%, to 8 billion 929 million yuan, gross profit reduced by about 367 million yuan, fell 8.2%, gross margin fell 0.8 percentage points, inventory from 806 million yuan in the previous year to 1 billion 133 million yuan, average stock turnover period increased from 52 days to 73 days.

Anta, 31st and so on brand stock also increased sharply compared to last year.

Downgrading performance expectations

Reporters noted that in the face of the deterioration of the international economic environment and the sharp rise in stocks, the major sports brands lowered their market expectations in 2012.

In the 2011 report, Ding Shizhong, chairman of Anta's board of directors, pointed out that "inventory problems in China's sporting goods market and the situation of large discount" continued. "In view of the uncertain market environment, Anta will take an early and active re examination of ordering strategies and shop development plans, so as to avoid excessive expansion and overstock of sales channels."

Ding Shizhong said, "looking forward to the future, the domestic retail market and consumption will continue to be affected by the slowdown in China's economic growth. High operating costs, coupled with excessive competition and excessive discount on sales channels, are all the pressure on the sporting goods brand and its retail partners.

These factors bring more challenges to China's macroeconomic environment and sporting goods market.

Prior to the information disclosed by XTEP, the sales growth target of 2012 has been lowered from 15% to the number of units.

Ding Huihuang, chairman of the board of directors, pointed out that in 2011, the sporting goods industry entered a period of consolidation after experiencing rapid development.

Industry restructuring, channel development and excess inventory have attracted much attention from the market.

The annual report shows that the wholesale discount rate has been further adjusted from 60% to 58% at the 2012 spring / summer order meeting.

"Beginning in 2011, the whole sports product market has entered a relatively severe period, and the pressure of each brand's stock is relatively large."

Zhu Chen ye, vice president of the 360 degree brand business center, also told reporters in April 19th that "the market in the next two years is likely to be more severe, and there will be a trend of slower growth."

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Active control of shop opening

Reporters learned that, as a response, the major sports brands have adjusted the strategy of opening stores, which has changed from the "horse race enclosure" in the "barbaric growth" period in the past few years to a more robust opening up strategy, and the pace of channel expansion has slowed down.

Data show that XTEP has opened 800 to 1000 stores a year and lowered it to 400 this year.

While the number of stores in PEAK in 2011 has increased by 582, PEAK has increased by 590 in the first half of last year.

This means that PEAK has begun to reduce the size of its stores in the second half of last year.

In its 2011 Annual Report, Anta lowered the original target of 8200 stores to 7800 to 8000.

Lining also said in the annual report, in 2011, "took the initiative to control the pace of shop opening."

Data show that Lining's physical store increased by 340 last year to 8225, but its dealership decreased from 65 in the first half of last year to 57.

Slowing down the expansion of physical stores is a last resort.

Analysts pointed out that the sports brand that has gone through the high-speed expansion period is restrained by the slowdown in domestic economic growth and the impact of rising raw materials and manpower costs. In fact, the profitability of the shops is being tested.

The independent comment on sports industry, Ma Gang, has previously told the media that the market structure of local brands is mostly distributed in the two or three line market. However, due to the extrusion of international brands, the two or three line market is already in a state of saturation. The focus of future channel expansion is on the four line market including some counties, but the profitability of the whole market is still unknown, and it needs to be tested by the market.

Accelerate the pace of stepping into the electricity supplier

While the expansion of physical stores is slowing down, the pace of sports brands' involvement in e-commerce is accelerating.

Zhao Zhao, XTEP PR Manager, said in a written reply to reporters in April 24th, "XTEP does have some inventory pressure at present, but the situation is expected, and it is within our tolerance."

In April 17th, Ding Shuibo, President of XTEP and vice president of Quanzhou footwear industry association, said at the 2012 e-commerce summit of China footwear industry. "For shoes and clothing enterprises, we regard e-commerce as a place to clean up inventory."

Zhu Chenye, a 360 degree, also told reporters that "strategic aspects may need to be further strengthened in the sales channel, and in the emerging strategy, such as the electricity supplier, we need to accelerate our pace."

The 31st annual report shows that e-commerce will be focused on expanding through the independent third party agents, selling shoes and clothing products on Taobao.

Lining, Anta and PEAK also mentioned in the annual report that we should continue to strengthen the construction of e-commerce channels so as to meet the current consumer demand and cope with high inventory.

Data from global shoe net show that nearly 70% shoe and clothing enterprises in Quanzhou are involved in e-commerce.

In April 17th, Lin Wen Jia, general manager of global shoe net, revealed at the shoe and clothing business summit in April 17th that the survey of global shoe net union billion power network showed that last year, Anta's electricity supplier sales volume was 160 million yuan, XTEP 120 million yuan, Hongxing Erke 100 million yuan, and XTEP was 50 million yuan.

Is electricity supplier "broken tail survival"?

However, for the local sports brand "electric shock tide", insiders do not agree.

Zhu Jinjun, the brand China industry alliance, said that the development of e-commerce will bring lethality to the brand, which may lead to a decline in brand awareness.

"The main reason is that the price of electricity selling in the domestic market is more expensive, which will lead to a change in the consumption habits of the people and pay more attention to the price rather than the brand."

Zhu Jinjun said, "for example, a sportswear sells 70 yuan online and sells for 150 yuan in a physical store. This sales strategy is very destructive to the brand, and it is a way to survive."

He said, such as Nike and Adidas and other international famous brands, the focus will not be placed on e-commerce.

"Chinese people like to follow suit, and their knowledge of their products is not clear, so under the pressure of inventory now, everyone will think of using electronic commerce to go inventory at low prices."

And analysis of the current local sports brands generally faced with the stock pressure, Zhu Jinjun said, mainly after 2008, the sports wind is overtouted in China, sports apparel enterprises are following, resulting in excess productivity; on the other hand, the homogeneity is serious.

"In Jinjiang, no one can tell which brand is the product as long as the LOGO of the sports shoes is removed."