Competition In China'S Sports Apparel Industry Is Becoming Increasingly Fierce.

Competition in China's sports apparel industry is becoming increasingly fierce.

Analysts say Nike and Nike are expanding in China, while some local companies are also unwilling to lag behind. Analysts say that Nike and Adidas are also expanding.

Over the years, Nike and Adidas have almost monopolized the sportswear market in major coastal cities such as Shanghai and Beijing, while local sports brands such as Li Ning and Anta occupy two or three tier cities.

But at present, both sides are making great efforts to enter the inland market of China.

According to Adidas, the sales stores (stores or outlets) of sports shoes are increasing at the rate of two to three per day.

And Nike is also expanding rapidly.

For both companies, China has replaced Japan as the second largest market in the world after us.

This growth also explains to some extent the cold reception of Chinese sports retailer Pou Sheng International Holdings and XTEP International (Xtep International Holdings) on the first day of listing in Hongkong last month.

The two companies are headquartered in Southern China, China, like many shoe makers in China. They also start from well-known brand foundry.

In the first few trading days, two stocks fell below the issue price and continued to fall.

The lack of enthusiasm in the market for new shares is one of the reasons for their collapse. Investors are also concerned about their business prospects in the increasingly competitive Chinese market environment.

Erwin Erwin Sanft, head of Chinese research at BNP Paribas, Paris, said the sportswear sector was overheated.

He pointed out that after the Olympic Games, the market can not continue the current sales momentum, and the market competition is also fierce.

Baosheng international is a subsidiary of Yue Yuen Industrial Holdings, which sells various brands such as Adidas and Nike, but the latter two are developing more private stores.

Wednesday, Baosheng stock closed at HK $2.12 (27.2 cents), up 0.02 Hong Kong dollars, but far below the issue price of HK $3.05.

XTEP in Fujian has its own brand and is also a distributor of Disney Sport.

Carlyle Group has a small stake in XTEP.

XTEP was listed in June 3rd at a price of HK $4.05 per share.

On Wednesday, XTEP shares rose HK $0.06 to HK $2.72.

After the Olympic Games, the sportswear market, which is increasingly competitive in China, will continue to grow, but it is expected to slow down.

ZOU Marketing, a sports brand consultancy in Shanghai, predicts that the Chinese sportswear market will grow by 20% every year from 2009 to 2012, and its value will reach $12 billion.

In 2006, the total market value of sportswear in China was $3 billion 800 million, and the average annual growth will reach 23% in the three years ending 2009.

Recently, many Chinese sportswear brands have encountered restrictions on advertising during the Olympic Games.

In June 3rd, the Beijing Olympic Organizing Committee said, "it is recommended" that Chinese media do not advertise non Olympic sponsorship related to the Olympic Games.

Adidas is the official sponsor of the Beijing Olympic Games.

This has blocked Li Ning Co's sponsorship of China National Television's sports director's clothing, which would have made the Lining brand get a lot of opportunities in the Olympic Games.

After the OCOG issued the statement, Lining's share price fell 23%, closing at HK $16.84 on Wednesday.

Zhu Jiaxuan, an analyst at South China Research, said Lining shares will rebound, because Lining still has the leading position in the market in Chinese brands, and institutional investors are willing to buy shares of market leaders.

Since April, he has been buying the Li Ning Co rating, giving a 12 month target price of HK $26.54, which is 58% higher than the closing price on Wednesday.

DBS Vickers, a securities firm, set Lining's target price at HK $28. The company said that Lining's wholesale sales and same store sales have enjoyed strong growth.

Li Ning Co Alice Hui wrote in June 30th that there will be no long-term and significant changes in the fundamentals of the Li Ning Co.

Another part of the local sportswear manufacturer, which some analysts are looking for, is China Dongxiang Group, a listed company in Hongkong. The company has the right to use Italy brand Kappa in mainland China and Macao.

As a sponsor of Juventus and other popular football teams, Kappa is regarded as a fashion frontier brand by Chinese young consumers.

Its trademark pattern is a silhouette of two men, one woman and two people sitting back-to-back.

According to ZOU Marketing, Kappa is the third most international sporting goods company in the Chinese market, second only to Nike and Adidas.

The theme of China's commodious stores is the European theme.

The Chinese trend seems to have positioned itself as a blinding foreign brand, though China's brand is still in its core, says schwart of the Bank of Paris, France.

The Bank of Paris in France did not track the trend of China, but in September last year it called it a promising consumer Brand Company.

In June of this year, UOB Kay Hian rated the initial rating of China as "buy in" and the target price was HK $5.80, on the grounds that the company had the right to use the Kappa brand and plans to open 600 to 700 stores in the next three years.

The stock closed at HK $2.99 on Wednesday, down 48% this year.

Zhu Jiaxuan, an analyst at Nanhua data research, still insists that he set a 12 month target of 5.01 Hong Kong dollars for China in April.

He said he appreciates the company's decision to re evaluate its product mix and further expand its footwear business.

The profit rate of footwear products is higher than that of clothing.

He said that China has successfully positioned itself as a fashion brand, not just a sports brand.

Many Chinese young people wear sportswear but do not exercise, so this is a good location.

China's move was launched in October last year. Its founder, Chen Yihong, was executive director of Li Ning Co before.

China's trend announced in April that its net profit in 2007 has more than doubled over the previous year, reaching 734 million yuan (US $107 million), and in 2006 it was 306 million yuan; revenue grew 99% to RMB 1 billion 710 million yuan.

The company also announced plans to acquire Phenix, a Japanese skiing brand, which owns the right to use Kappa brand in Japan.