Chinese And Foreign Sports Brands March Into Two Or Three Tier Cities To Raise Low Price Crazy Waves

According to media reports, as early as the beginning of July this year,

The news of the shoe-making of cheap shoes in the mainland has caused a great stir in the shoe market, and the share prices of several domestic sports brand enterprises listed in Hong Kong have fallen accordingly.

UBS Securities lowered the rating of mainland sporting goods shares, and lowered the ratings of XTEP, Anta and Lining from "buying" to "neutral".

And this news is no longer groundless.

The campaign of going to the countryside like Adidas and Nike has started.

In early May this year, Adidas announced its first quarter results, showing that sales in the Greater China region fell 15% year-on-year.

This means that, on the one hand, the first-line market that has been familiar with these international brands has gradually become saturated. On the other hand, they must adjust their sales channels and product mix as soon as possible, so as to get into the two or three tier cities with low consumption level, rather than the natural promotion of consumers' ability to wait and wait.

At present, big cities in China

Reaching the saturation point, the business of newly opened stores is also much worse than before. The whole retail terminal, including department stores, is infiltrating into the three or four line market.

It also set up a platform for Nike to go to the countryside.

In the light of the current situation, if Nike decides to sell products with lower price in China, the average high priced domestic brands, such as Lining, will bear the brunt, which will be most affected in the short term, because some consumers in the two or three tier cities may turn their sights on Nike.

Especially noteworthy is that over the past few years, Lining is constantly raising the price, and now its footwear products average selling price is also about 300 yuan.

A recent order will show that Lining's footwear orders in the 3 quarter of 2010 increased by 11%.

In addition, the average price of KAPPA brand shoes in China's trend is around 370 yuan.

Liang Yuchang, a researcher at UBS Securities, said, "the impact of Nike's low-priced shoes on these brands is expected to be most obvious."

He believes that the marketing budget of domestic sports brands will be an important factor in deciding whether they can survive in this wave.

Some companies with limited marketing resources are likely to be eliminated in this encounter.

Long term high-end brands bring enough product premium to Nike and Adidas, and the premium of these products can become the advantage of their price swears when their brands are gradually returning.

In 2010, Nike released the fourth quarter earnings report in 2009, showing that the pre tax profit margin of Nike in China was 40.3%, compared with the pre tax profit margin of the North American market was only 24.2%.

40.3%, the pre tax profit margin has left enough room for Nike to cut prices.

However, Nike's entry into the two or three tier market also has its own handicap.

Some domestic brand dealers said, "at present, the profit margins of agents such as Anta and Lining are generally about 5 percentage points higher than that of agent Nike.

For the majority of small and medium-sized distributors, they will prefer to profit from the same brand. "

Lining and PEAK continue to expand and develop in China. However, their ambitions are more than domestic. Lining has opened stores to Hongkong, and even overseas markets. PEAK CEO Xu Zhihua said that the company will set up product research and development centers and sales companies in Losangeles, and become the second Chinese sporting goods companies after Nike.

It is believed that there is no more pressure on the impact of Nike and other famous brands on the two or three line city.

"The price reduction has double-sided influence, although low price means more sales, but high price can also deepen consumer's impression of the brand in everyone's mind. Once the brand is established, everything can get twice the result with half the effort.

If Nike launches a low price, it will subvert the entire value chain system, which will inevitably bring about the impact of values.

For Nike's low price line, many people think that it will affect the high-end image of Nike, but many people in the industry say that the price of each brand is high and low, and 300 yuan is only a product of people's quality.

Consumers who pursue high quality can still choose high priced Nike shoes, such as NOKIA mobile phones. The price ranges from 199 to 6000. Whether consumers pay the bill depends on whether the company can meet the needs of different market segments with multiple product combinations.

In 2010, the scale of China's sports shoes market is expected to reach 69 billion yuan. By 2020, the market of the famous brand sports shoes will reach 297 billion yuan.

Facing the big cake, the storm of competition between Chinese and foreign sports brands is about to be staged.