Analysis On The Development Pattern Of Sports Goods Industry In China

As the country has launched a number of industrial support policies, the dividend policy continues to appear, for the current sports products industry is still in the stage of recovery.

According to the opinions issued by the State Council in October 2015 on accelerating the development of sports industry to promote sports consumption, it is clearly pointed out that the sports industry scale will reach 5 trillion yuan by 2025, and basically establish a sports industry system with reasonable layout, perfect functions and various categories. It will raise the awareness of sports fitness and consumption among the masses, and the number of participants in physical training will reach 500 million.

First, the market share is redistributed, and small and medium-sized brands are gradually fading out of the market.

Before 2011, the domestic sporting goods market was mainly composed of two parts: high-end and middle and low end.

High end market

,

It is characterized by high quality and high price, and the middle and low end market is mainly local.

Deep ploughing two or three line or even lower line cities is characterized by popular products and relatively low price.

After 2011, the industry adjustment period provides a rare space for the development of some international brands.

During this period, the strategic focus of Nike and Adidas was to set up factory shops to clean up stock and enter the three or four tier cities. The international brands headed by NEWBalance and Asics rose rapidly in the second tier cities, and conquered the second tier young consumers by virtue of their distinctive products and high cost performance.

In the past stage of rapid development, a large number of sports brands have appeared in China. According to statistics, the number of brands has reached more than 4000 at the peak of the industry, and the brand influence and scale are uneven.

After the 2008 capital market listing boom, the leading position of several major sports brands was gradually established, including Anta, PEAK, Lining, 31st degree, XTEP.

With the adjustment period of several years, the new round of shuffling has aggravated the differentiation of the industry pattern. At present, there are about more than 30 brands with a certain scale and influence in China, and the other small and medium-sized brands lacking brand competitiveness and terminal control ability are gradually fading out of the market, mainly relying on low prices to occupy part of the low income group market, but the share is gradually eroded by big brands, such as double star, Deng Ya Ping, gold lake, alligator and other brands.

Based on the above analysis and the market share statistics of Euromonitor, we can roughly judge:

(1) for the local leading brands such as Anta and Lining, the market share has declined in the past few years. Besides the adjustment of the enterprises themselves, the performance has declined. In addition, the development of the sub sectors such as outdoor products and the rapid rise of some high-end brands have also squeezed the share of the local sports brands.

(two) only on the mass market, the market share of Anta, Lining, PEAK, XTEP and 360 degrees has been basically stable in the past two years. Anta's share in 2014 has improved significantly. They rely on their own adjustment and pformation, and gradually enhance their brand competitiveness. While other brands (mainly in Jinjiang brand), the share decline is still obvious, and the gap between leading brands in the channel competition is bigger and bigger, and the brand strategy also focuses on the deep cultivation of some regional markets (such as Hongxing Erke).

(three) in the middle and high-end market, NEWBalance, Asics and other brands have been outstanding since 2011 and occupy a place in the domestic market. Although the American leisure sports brand Skechers has made a late effort in the Chinese market, its scale has grown rapidly in recent two years, and the sales scale has exceeded 1 billion.

(four) the market share of China's Kappa brand continues to shrink. In addition to its fashionable brand positioning, it is difficult to adapt to the popular market trend. Besides, the disadvantages of light asset operation mode also make it difficult in the trend of "retail pformation". In the adjustment of operation, the channel size has declined sharply.

It is worth mentioning that Nike and Adidas have steadily increased their market share in recent years. In 2010, the share of Adidas ranked fourth in China, which is now second only to Nike.

Channel expansion is an important engine for their growth. While local brands are adjusting, Nike and Adidas continuously develop low level urban channels and develop distribution networks outside the first and second tier cities.

Taking Adidas China as an example, in 2010, it put forward the five year long term plan for the "2015 plan". In the past few years, the channel has expanded from 550 cities to 1400, with a total number of 8000 stores, and CAGR of 2010-2014 has reached 14%, far exceeding the overall level of the industry.

Adidas's core strategy in China has three main aspects: 1) expand emerging cities, take small and medium-sized cities as growth points; 2) attack by category, and lay a market position through all kinds of combinations; 3) enhance brand experience through differentiated retail stores, including Adidas brand center, women's franchise stores and footwear franchise stores.

For Nike China, in addition to increasing the layout of low tier cities, we have also cleaned up inventories through factory stores in the past few years.

Due to the overall situation of the industry is not good, Nike China also faced greater business pressure around 2012, and the revenue was even negative growth. But as the market situation stabilized gradually and the demand for professional sports increased, the Nike China's growth in recent two years gradually recovered, and sales revenue in the 2015 fiscal year increased by 18%.

{page_break}

Two, professional foundation lay the market position, break through the bottleneck of homogenization.

For domestic consumers, sports lifestyle has changed significantly with the upgrading of consumption, and has moved towards the mature sports market. The typical feature is that the demand for professional sports is increasing gradually, and the new trend of local brands in product innovation has been triggered.

Brand homogenization is the main predicament faced by sporting goods in the past. In the past, the major brands were mainly leisure oriented, but the differentiation was not obvious. The main problem behind them was the relatively late product development and innovation capability.

Over the past few years, product R & D has become the strategic focus of local brands. By promoting the integration of brand culture and specialization, the added value of products is increased, and the proportion of R & D investment has increased significantly, reaching a high level of 2%-3%.

The competitiveness differences on professional functional products will be a sign of further differentiation of brands in the future. If brands continue to stick to traditional routes and ignore product development and innovation, they will eventually be eliminated.

In addition, while expanding R & D investment, we also need to grasp the essence of sporting goods. Leaders of enterprises are very important to understand sports.

The trend of the past two years shows that sports shoes are much better than sportswear in terms of product functional appeal. Local brands have significantly improved their R & D investment in sports shoes, which is also in line with international R & D strategies for major sports brands.

There are differences in the direction of R & D among different local brands, but the two main categories are running shoes and basketball shoes.

(1) Anta: R & D investment is the highest among local brands. In the first half of 2015, R & D investment accounted for 5.2% of the cost of sales, which is close to the top international brand level.

The company has the first sports science laboratory in Jinjiang, and has developed more than 60 state-level patented technologies through the laboratory. In the future, it will also consider setting up R & D centers in the United States, Japan and Hongkong.

In the specific direction, Anta focuses on increasing investment in running shoes. Now it has 19 top runners, including elastic glue, flexible column, easy bending and energy ring. It has launched the energy ring technology running shoes series, breathing net technology running shoes series, and new professional function running shoes Challenge100 and so on. The price range is between 350-450 yuan.

(two) PEAK: persisting in the brand specialization orientation. Currently, it has set up R & D workshops in Beijing, Guangzhou, Quanzhou and Losangeles, and professional athletes are involved in industrial R & D and testing.

Basketball shoes are the main products of the company. They have been ranked first in China's professional basketball shoes market for 7 consecutive years.

In 2015, the company launched professional basketball shoes such as Parke's three generation, lightning two generation and beast three generation. Among them, the three generation of Parke was loved by professional fans at home and abroad.

Meanwhile, in terms of running shoes, the company launched a series of "Yue run" series and "arrow rain" respectively for urban jogging and racing runners.

By increasing product research and development, the company has been growing well in recent two years, and its growth rate has been maintained in double digits.

(three) Lining: the background of the origin of the founder athlete makes the enterprise have a unique understanding of product development.

Lining's strategy is to divide professional functions and popular popular routes into two different lines, covering multiple product lines (basketball, running, training, sports life, badminton), especially basketball and badminton products. But in recent two years, they focus more on basketball and running product research and development. Running shoes technology progress is obvious. In addition to continuing to introduce "super light" series running shoes, it also introduces series of running shoes such as "cloud" and "arc".

It is worth mentioning that Lining and millet jointly launched the smart running shoes carrying the Chinese rice chip (priced at 399 and 199 respectively), in addition to collecting data in time, testing the running state of runners, and having the functions of Internet social networking (similar to the "Nike+"). The smart chip has more than one year's endurance, and the intelligent running shoes have broken 100 thousand pairs in the 1 months after the launch of the intelligent running shoes.

Smart running shoes are at the initial stage in China, mainly catering to the current rush of running and intelligent wearable, but still need to be observed in product experience and market application space.