China'S Sports Brand Anta Has Become A Long Way To Go In The Sporting Goods Industry.

From a small family workshop to an international group, Anta's multi brand implementation path deserves the deep scrutiny of Chinese brands who are attacking the front-line and high-end stations.

In 2019, Anta won a battle of the heavenly kings.

In July, the well-known institutions issued 5 short reports of muddy water, questioning Anta's accounting and corporate governance. Anta's emergency suspension will be countered and face up to muddy water. The share price fell briefly, but quickly recovered to its original level and even hit a new high.

This is the third time Anta has been challenged by short selling agencies in 13 months. Blue Orca Capital and GMT Research, known as "killer whales", have fought with Anta. Anta's stock price remained strong, and the short sellers left.

The game in capital market has proved the fineness of China's largest sporting goods group. Over the past few years, Anta has been growing rapidly: in 2012, it surpassed "big brother" Lining, maintained double-digit growth in 2014, broke through 10 billion yuan in 2015, and exceeded 200 billion Hong Kong dollars in 2019, significantly exceeding Adidas.

The fierce growth has been benefited by more and more Chinese consumers buying sports leisure and professional clothing, and more because of the company's multi brand strategic layout: the main brand positioning, cost-effective, to seize the masses of consumers; at the same time, the use of multi brand strategy, cut into the high-end, market segmentation.

Anta's multi brand road can be traced back to the 2009 acquisition of Italy's Centennial brand FILA in China. From being questioned to turning losses into profits, FILA has long been the engine of growth. Anta, who has tasted the sweetness, has been hunting "new international brands" in order to achieve globalization and brand upgrading. In March 2019, Anta led the acquisition of the European sports giant Amer Sports, the largest acquisition of sports goods in China.

On the one hand, Anta, which already has experience in overseas brand operation, shows greater confidence and ambition. After the acquisition of Amer Sports, Anta proposed the "double A plan" (Anta and Amer Sports), with the intention of reconstructing the three "one billion euro" brand. On the other hand, a number of agencies have repeatedly sold short, which also shows the market's concern: is the pace of massive acquisitions and rapid expansion too big? Can Anta replicate the success of FILA?

Since its establishment in 1991, Anta has transformed from a small family workshop in Jinjiang, Fujian to an international group. Its multi brand realization path and experience are worthy of deep scrutiny of Chinese brands who want to seize the big wave and attack the front-line and high-end stations.

01 global Hunting: multi brand matrix bureaus

In the Memoirs of the war of Su Yu, he said, "winning the war is the best way to solve ideological problems." For Anta's multi brand road, FILA is the "winning battle" of the unified thought. After building the FILA as a "model", Anta gradually revealed the giant phase -- to attack and defend, acquire strong brands and occupy the various levels of the market, forming the potential of many brands to compete with their competitors, and occupy the leading position in the category of the products.

A winning time came back to 2009. Lining was in the limelight, and sales in China exceeded Adidas, second only to Nike. In the same period, Anta was in an awkward position. It hopes to rush into the second tier cities like Lining at that time, but Anta's position in the minds of consumers is hard to change rapidly. Nike and Adidas have launched a strong penetration strategy, and have begun to sink to the counties and cities.

Too single brand structure or quickly eliminated by the market, looking for new growth point is imminent. Anta needs to face a difficult problem: how can we cut a position in the middle and high-end fields in a short time?

Anta has selected Italy's high-end brand FILA for 100 years. In 2009, Anta acquired the trademark right to use and the right to operate FILA in China from HK $650 million from BELLE international. At that time, FILA, which was in deep mire of loss, was regarded as a hot potato by BELLE. Anta bought the wind in the external doubt, and completed the acquisition in only 3 months. Zhang Tao, vice president of Anta, said: "FILA takes the high-end sports route, facing the market segments such as tennis and skiing. It has an advantage in the international brand effect and technology research and development, and the acquisition is conducive to Anta to seize the high-end sports market share."

It is necessary to keep the original consumer demand, and to catch more young consumers through fashion and high-end. These two tasks, if carried on the same brand, are like "middle aged people who are jumping around with their belts, eager to keep pace with the trend of the times". Anta has decided that it is the best way to cover high-end and high-end consumers, and Kappa is a successful demonstration. As early as 2006, China moved to buy out Kappa's brand ownership and permanent management rights in China. In the peak period of 2010, Kappa had a total revenue of 4 billion 200 million yuan. Lining also bought the exclusive franchise of 20 years in China in 2008.

The results of overseas brands' landing in China are quite different. Lining became the burden of his career, and he lost 201 million 300 thousand yuan in the three years after the acquisition. Finally, Lining lost the idea of "multi brand", contracted the strategy and focused on the brand of Lining. Anta is on the other side. As the first test field for multi brand layout, FILA's revenue growth has been as high as 80%, and has been upgraded to "second main brands". It has become Anta's confidence in implementing multi brand strategy.

FILA first battle, let Anta find a weapon to break through the ceiling. In 2014, FILA turned into a deficit. In 2015, Anta's revenue exceeded 10 billion yuan threshold, reaching the highest performance of domestic sporting goods companies. After the Spring Festival, Ding Shizhong, chairman and chief executive of Anta group's board of directors, and several entrepreneurs were skiing and chatting on the theme of "finding new excitement".

Since the beginning of 2015, Anta's selling speed has obviously accelerated. It has bought Sprandi, Descente, Desanto, Korea outdoor brand Kolon and China Hongkong brand Kingkow. This global hunting strategy is focused. A friend who had been with Ding Shizhong for many years said: "Ding Shizhong is not very interested in the operation of pure capital. I once suggested that Anta invest in upstream and downstream businesses, and he shook his head after listening.

Targeted Anta has three aspirations for the ideal takeover target: first, single focus must be an excellent brand in the sporting goods industry; second, differentiation will complement the existing brands, such as business and consumer groups; third, rely on excellent international brands to promote the internationalization process.

In March 2019, an investor consortium made up of Anta sports, Fangyuan capital, Anamered Investments and Tencent completed the acquisition of Amer Sports and its internationally renowned brands. The offer price per share is 40 euros, which is 43% less than the weighted average transaction price of the three months, and the total transaction consideration is about 37 billion 100 million yuan.

Outside questioned Anta's Amer Sports acquisition price is too high, there is "snake swallow elephant" suspicion. Ding Shizhong stressed that he looked at the differentiation advantage of market segmentation. Amer Sports was founded in 1950. It has 13 famous brands, including the world-renowned Canadian outdoor equipment brand "Arc" teryx (original bird), the French mountain outdoor cross-country brand Salomon (Salomon), the American tennis equipment brand Wilson (Wilson), and so on.

On the frontline battlefield, the advantages of Nike and Adidas are difficult to shake in the short and medium term. Anta's acquisition of Amer Sports can quickly occupy high points in the market segments and form a new confrontation pattern of differentiated competition. On the one hand, it has further cut into the professional and niche market, and has gained the performance. On the other hand, it has promoted globalization and reduced its dependence on the Chinese market, and has become a global sports brand group with global influence. In addition, Amer Sports is mostly winter sports brand and is expected to enhance Anta's liquidity in the 2022 Beijing Olympic Winter Games.

A well-known parent fund founder partner said privately: "top quality brands have always been scarce, especially on such a long and steep slope." From the perspective of brand upgrading, incremental market, riding on the Winter Olympic Games and diversifying and smoothing risks, Anta's acquisition of Amer Sports has a smooth logic.

At this point, Anta's "double A plan" has initially taken shape. The uncertainty lies in whether we can find a string to connect these scattered pearls so that they can interact with each other and integrate into one another.

　 02 systematic success: digestion after mergers and acquisitions

Jack Prouty, partner of Step-Change Management, an American management consulting firm, summed up a "77 law", that is, 70% of mergers and acquisitions failed to increase shareholder value, of which 70% was related to integration after mergers and acquisitions. Multi brand strategy has greatly enhanced Anta's ceiling, but this is not a simple "1+1" math problem. If digestion is bad, it will become a drag.

There are many cases of failure. Kappa, who once had no two of its popularity, overlooked fashion and expertise, ignored the core consumer demand, and said goodbye to its peak since 2011; the One Way performance at 361 degrees was not so warm; the four expanding birds of the world, tasting the bitter fruits of unfocused attention, set foot on the road to save themselves from selling assets. With the success of FILA, Anta has almost become the only listed sporting goods company with multi brand operation capability in China. After the acquisition of Amer Sports, more domestic and foreign brands need to be integrated. Multiple collisions and chemical reactions increase management complexity, requiring Anta to have "systematic success" capability.

John Bepo, an example of CEO, a big brand and multi brand leader, gave an example. When he first started work, as long as he put an advertisement in "I love Lucy" program, overnight, all 1/4 families in America could see it. Now, even the most popular TV programs can't do this, and the cost of advertising is becoming more and more expensive. In the digital age, consumers' right to speak, competition globalization and media diversification led to the leading position of big brands, and the golden age of building new brands has passed.

Take Procter & Gamble as an example. In 2002, the first domestic brand named run Yan shampoo, which was prepared for 3 years, was quietly delisted. In 2005, the first domestic bathing brand that had spent hundreds of millions of yuan on the Chinese market for 3 years was also unable to escape the fate of delisting. After that, Procter & Gamble suspended the development of new brands, introduced overseas brands and acquired strong brands: developing large brands, acquiring mature brands, abandoning chicken ribs, and standing at a macro level to divide the market structure.

In 2019, after purchasing Amer Sports, Anta became a Procter and gamble learner and formally put forward the strategy of "big brand". In December, Anta first proposed the "double A plan" (Anta and Amer Sports) on the investor's opening day. In the next 5 years, the restructuring of Go to market will be launched worldwide, and from the brand portfolio to focus on single brand, we plan to build Amer Sports's eBird, Salomon and Wilson into three "one billion euro" brands. Data show that many brands of Amer Sports are in the leading position in the market segments, including cross country running, alpine skiing, tennis, baseball and other fields ranked first in the global market.

Li Liang, President of Clif positioning college, pointed out that to build a big brand, we should pay special attention to two main points: separation and distance. He believes that the most important force of multi brand strategy is the differentiation between brands, so that their brands are sufficiently independent and expert brand status in specific areas, so that the target customers are diversified, and business development is no longer dependent on single movement or single group.

The success of FILA has saved Anta's ability to build big brands. In order to make FILA fully independent, Anta has dug up the French high-end leisure brand LACOSTE, China's chief executive officer, Yao Wei hung, to set up a brand new team to carry out the localization process of high-end foreign brands from product, channel and marketing level. In 2011, FILA made a strategic change in the Chinese market with a keynote significance. The brand positioning returned to fashion and deliberately avoided the confrontation with Nike and Adidas in the professional sports battlefield.

In terms of product design, the style complies with the characteristics of Asian people, and many classic styles of the brand in 1970s are re interpreted. Innovation is also one of the most important indicators in the product segment. "I require less than half of every season's innovative fabrics, and the proportion of imported materials is no less than 40%," Yao Weixiong said.

As for the most popular marketing, FILA takes the marketing layout based on entertainment and fashion stars. Hsu Chi and Gao Yuanyuan have attracted many young consumers for FILA.

Whether it is brand gene, product positioning or marketing mode, Anta intends to set up a firewall between FILA and its main brand. In the end, FILA has become a trump card for Anta in the Chinese market with Nike and Adidas. In the first half of 2019, the FILA brand achieved a revenue of 6 billion 538 million yuan, accounting for 44.1% of the total revenue of the group, and the contribution of the two main brands basically reached the same level.

In addition to the "big brands", Anta also put forward a "big channel" strategy, transforming from wholesale to retail, creating a brand DTC (direct to consumer) mode, and vigorously developing direct channels. Specifically, in the past 5 years, Amer Sports has expanded more than 360 existing self operated channels to more than 1000, and the proportion of DTC business income has increased from 11% in 2018 to 30%.

The game between distribution and direct selling is fundamentally the distribution of profits between manufacturers and distributors. It is a kind of control and counter control. This game is a skill that Anta is familiar with. Although the distribution system is adopted in the sales link, most of the stores are invested and distributed by dealers everywhere, but Anta has maintained a strong control over the channel. This is precisely one of the most important operational experiences of Anta in the past 10 years.

Since 2011, every retail outlet of Anta has been forced to access the company's ERP system. The purpose is to enable headquarters to monitor and analyze the sales data of each retail terminal and each single item in real time, so as to realize the information and resource sharing of the entire group, so as to guide production and balance inventory, and optimize the store network in time, and abandon the poor performance stores.

Distributors are obviously not so easy to comply with the requirement that the brand parties fully open their business data. But after less than 3 years after the Beijing Olympics, the sports consumption industry was in an extremely painful bubble period. Adidas and Nike also failed to escape. The overoptimism of the Chinese market was triggered by an industrial inventory crisis in 2011. At that time, the extremely bad market environment forced distributors to accept cooperation with Anta to tide over difficulties.

The process of stock taking has also led to the reflection of Anta. Early business logic can only be said to be a simple wholesale mode. When the dealer gets the goods and pays the money, Anta will ignore it. The real "retail oriented strategy" should realize the strong control and standardized management of distribution channels. The adjustment of the channel management mode, which aims at resolving the crisis, marks the transformation of the wholesale mode to the retail mode.

It is precisely because of the adjustment of resolute attitude, in 2012 the industry's most difficult year, Anta still get 1 billion 300 million yuan net profit, "accident" completed the anti Lining. In the same period, Lining, because of the large number of loose management models, was forced to shoulder a net loss of nearly 2 billion yuan and was badly hurt.

What is worth noting is that unlike Anta brand, which relies on channel distributors, FILA's channel reform takes another route, which takes three years to recover 80% stores from dealers, instead of direct marketing mode, from flat to retail end. This strategy of insisting on opening large stores in the second tier major cities in China has achieved remarkable results. In the Chinese market, direct camp is the iron rule of high-end image in brand maintenance, which helps companies to control the terminal, control experience and respond quickly to consumption trends.

Different paths verify Anta's control over channel transformation. This close relationship with dealers has even become a short argument for muddy water. Ding Shizhong, a former employee and garment analyst Ma Gang, asked this question: "why should I doubt the cheating of 100 points students?" in his memory, in 2013 and 2014, Ding Shizhong visited a large number of dealers at a high frequency.

Anta, the big platform, is trying to rebuild several FILA, and systematic management and resource synergy become the key support. Zheng Jie, President of Anta brand, believes that one of the biggest changes in Anta in the past more than 10 years is upgrading from a relatively impromptu management mode to a systematic management mode. From the original only to win a business, punctuate to do a thing, up to now has a planned and systematic from top to bottom.

In April 2019, during the same period of announcing the acquisition of Amer Sports, Anta completed the structural adjustment. According to the different attributes of its brand, it divided into three major brand groups, namely professional sports, fashion sports and outdoor sports.

Similar to the platform structure advocated by Internet companies, Anta set up three platforms, namely, retail, supply chain and sharing support at the group level. The front end is directly independent of consumers' brand groups, and each brand group has its own design, brand and marketing functions. The ability to share procurement, logistics, finance, retail and e-commerce will enhance the efficiency and scale advantage.

For Anta, the restructuring is a big operation. After buying Amer Sports, Anta has more than 20 brands. Among them, Amer Sports's brands are well functioning, have hematopoietic function and sustainable development capabilities, have built an experienced and independent and stable management team. After the completion of the acquisition, Amer's original CEO and main management leaders continue to lead the company, and all brand executives and core personnel will remain in office. The incentive for management will focus on long-term value creation to solve the problem of decentralization of shares and the weakness of large shareholders.

At the same time, Anta will focus its efforts on the adjustment and reform of China's business. Based on its experience in the operation of high-end brands in the domestic market, it will help Amer Sports's rapid growth and growth of its core brands in the Chinese market from product, supply chain, retail and other dimensions.

Take the supply chain as an example, the 60% output value of Amer Sports in 2018 came from Asia (22% from China), and 62 of the 133 suppliers in the world. Anta's domestic supply chain system, which has been grinding for many years, will contribute to the development and sales of Amer's products in China and form a better synergy effect. The acquisition of Amer Sports brings Anta global brand operation and channel management experience, and accumulates valuable experience in the global operation of the main brand. In addition, Amer Sports's brand design and R & D capabilities are outstanding, and it has good cooperation with top suppliers in the world. Anta can polish and improve product design and R & D capabilities to further enhance the quality of the main brand. The size of the synergy generated by both sides will become the key to the success of the acquisition.

03 the end of Anta: the end of the beginning

13 years ago, when Anta listed on the Hongkong stock exchange, Ding Shizhong offered to take a photo with the company managers. After taking a group photo, he said with a strong Minnan accent: "everything is just beginning." Today, Anta has a market value of more than HK $200 billion, more than Lining, XTEP, PEAK, and 361 degree four.

On the bookcase of Ding Shizhong's office, the shoe dog of Nike founder Phil Nate is next to the art of war. The road ahead of Anta is clear: keeping the position of the leader of the domestic sports brand, grabbing the first domestic market in more market segments, crossing the Nike, ADI, and the two international brands at home, and even trying to pry the giant garden of the United States and the European core market.

From the financial data, in 2015, Nike and Adidas's revenues were nearly 18 times and 11 times that of Anta. In 2018, the two data reduced to 10.5 times and 6.9 times. Although the number has narrowed, the gap is still obvious. On the brand value, the list of "2019 of the world's most valuable TOP50 apparel brands" released by Brand Finance, the British brand assessment agency, ranked first in Nike's list, with a brand value of $32 billion 421 million, while Anta ranked twenty-first, but its brand value was only $3 billion 870 million. As the leader of the local sporting goods industry, Anta has a long way to go.

To some extent, the brand power of Anta's main brand is also weaker than that of Lining. In recent years, Lining has attacked the design with the help of the tidal wave of the east wind, and has won a wave of young fans in the New York international fashion week, the way of Wade and so on. The main brand of Anta has only promoted the "brand remolding" in the second half of 2018. It wants to be closer to the young people in the second tier cities, but it has not achieved any results yet.

While reinventing strategy and system, Anta is positioning its core competitiveness in product R & D and innovation. The 2018 annual report shows that Anta's R & D cost has decreased by 0.5 percentage points to 5.2%, but its absolute value has increased by 25%. Second Lining accounted for 1.9% of research and development. Judging from the amount of R & D capital invested, Anta is far ahead of its domestic counterparts. But compared with international giants, Anta's R & D investment still has a gap. Nike's R & D investment accounts for about 10% of revenue.

The acquisition of Amer Sports offers Anta a chance to overtake corners. Take the ancestors as an example, due to its almost crazy pursuit of new technology and technology, in just a decade or more, it has become a recognized and even global leading outdoor brand in North America. Its stores and luxury stores are also lined up, known as "Hermes" for outdoor products.

In November of 2019, a price limit of 12000 yuan for the eiderdown feather suit was the most expensive single item in Li Jiaqi's live room, and it was sold out in 20 seconds. The quest for a product with a spirit of scientific research and the pursuit of excellence is the core of the same spirit. In the video released from the shell, the experimenter wore a series of ruthless trials: paper cutter, shower, blower, hanging machine, and even a refrigerator car with a temperature below 20 degrees Celsius.

In addition, China's sports industry is far from the outbreak period. The average consumption per capita of sportswear is only 28.75 US dollars per year, compared with the per capita consumption of sportswear. Japan is US $110.57 / year, and the United States is US $357.48 / year. Anta's "double A plan" is in a long incremental process.

The Anta race faces not only the dividend policy, the upgrading of consumption, but also the fastest growing and largest sports product market in the world. The key to the problem still lies in the development path of individual enterprises in the case of equal opportunities. For Anta, the operation and running of the global business will be a difficult task to overcome in the future.