The Rise Of National Trend: The Surging Of Domestic Sports Brands

"We don't know enough about consumers, so we leave room for Chinese competitors who do better..." Adidas CEO Roth recently concluded that Adidas has made mistakes in China.

On the other hand, the sales volume of domestic brands of li'an'ning is increasing, while the sales of domestic brands are increasing.

With the end of the semi annual report of major sports brands in 2022, Nike and Adi, which originally occupied half of the domestic sports shoes and clothing market, have fallen into the altar, showing different degrees of negative growth. On the contrary, domestic sports brands are in a good situation.

Behind this, what is the reason for the alternation of strength and weakness of domestic and foreign sports brands in China? Nike and Adidas are really declining. Are these domestic sports brands really rising?

Nike ADI

　　 In the competition for Chinese sports brands, the "iron throne" has finally changed.

Adidas recently released the second quarter of 2022 and the first half of the year's report, the company's first half growth of 5% to 10.89 billion euro, the net profit attributable to shareholders of listed companies increased by 19% to 776 million euro.

Although there was a strong growth trend in the western market, such as the sales in EMEA, North America and Latin America increased by 9%, 29% and 45% respectively year-on-year, the sales of Adidas Greater China region decreased by 28% year-on-year, showing a "big decline", which affected the overall performance.

This is not the first time adidas has been "frustrated" in Greater China.

According to the data, from the second quarter to the fourth quarter of fiscal year 2021, the sales volume of Adidas Greater China region was 1.003 billion euro, 1.155 billion euro and 1.037 billion euro respectively, with a year-on-year decrease of 15.9%, 14.6% and 24.3%.

As early as last year, Adidas was aware of the performance problems in Greater China. Previously, Adidas signed CBA star Hu Mingxuan with a large sum of money, and took the initiative to reduce the price to clean up excess inventory. However, this did not reverse the situation. By the end of the second quarter of 2022, Adidas's inventory backlog increased from 4.85 billion in 19 years to 5.5 billion euro. According to a survey of more than 120000 people, more than 80% of netizens said they would no longer buy Adidas products, and only 4% of Internet users still regularly buy Adidas products.

Another sports shoes and clothing giant Nike's situation is not very optimistic. In the fourth quarter ending May 31, 2022, total revenue fell 1% to $11.7 billion and net profit fell 3.7% to $1.396 billion, according to the financial report.

Among them, Nike's sales performance in Greater China was under significant pressure, and the revenue in Greater China region fell 20% year-on-year to $1.56 billion in the fourth quarter. In the last quarter, Nike's sales revenue in Greater China also fell 5.2% to $2.16 billion.

The sales of Nike in tmall's flagship stores in April this year also fell 59% year-on-year, cutting back on the same period last year, and the inventory squeeze also reached $8 billion in the fourth quarter.

In the announcement, Nike and Adidas attributed the weak performance to the epidemic situation and supply of new crown pneumonia. In fact, since the Xinjiang cotton incident last year, the two giants have not recovered their vitality in China. On the contrary, domestic brands such as Anta and Li Ning have made slow progress.

Anta financial report shows that in the first half of 2022, Anta Group achieved revenue of 25.965 billion, a year-on-year growth of 13.8%, exceeding market expectations.

In 2021, Anta's total revenue reached 49.32 billion yuan, which exceeded the revenue of Adidas Greater China of 4.597 billion euro, and was very close to the revenue of Nike Greater China of 8.29 billion US dollars. In the first half of 2021, Adidas reported the same revenue in China.

Compared with Anta, the growth of Li Ning is more rapid. According to its financial data, as of June 30, 2022, the company's revenue reached 12.409 billion yuan, an increase of 21.7% over the same period in 2021. In addition, special step and 361 ° achieved revenue of 5.684 billion yuan and 3.654 billion yuan respectively in the first half of 2022, with a year-on-year increase of 37.5% and 17.6%.

Not only in terms of performance, but also in terms of market share, Euromonitor information consulting data shows that in 2021, the market share of Nike and Adidas in China fell to 40% (Nike 25.2%, Adidas 14.8%), breaking the pattern of 43% maintained from 2018 to 2020. Anta Group rose to 16.2%, surpassing Adidas to second place. Li Ning's market share also rose to 8.2%.

However, according to the data of the National Bureau of statistics, from January to June 2022, the retail sales of clothing, footwear, knitwear and textiles of units above the national quota reached 628.2 billion yuan.

However, in the face of China's trillion level market, international brands have never let up. What is the reason that makes the competitive situation of domestic and foreign sports brands alternate?

2. Nike ADI in trouble at home and abroad

"Compared with the past, today's Chinese consumers like to have a kind of 'China feeling'", Adidas CEO Robert rothed openly said that Adidas did not find this "China feeling".

Although Roth believes that the main reason for adidas' sharp drop in income in Greater China is the new crown epidemic, he also has to admit that some of the factors come from civil "resistance". Before that, several public events in China made domestic brands get strong exposure and get the dividend of "patriotism", which also affected the incremental development of Nike and ADI in China to a certain extent.

　　 The external reason is that the international brands are resisted by the domestic people, and the domestic brands follow the trend and are sought after.

In the Xinjiang cotton incident, compared with the reputation of Nike and ADI in China, domestic sports brands quickly played the emotional value of patriotism.

Anta quickly issued a statement to withdraw from BCI, saying that "Anta has been purchasing and using cotton produced in China's cotton producing areas, including Xinjiang cotton, and will continue to purchase and use Chinese cotton in the future," it said.

When the "Xinjiang cotton" incident continued to ferment, some netizens found that domestic brand Li Ning had always written "using Xinjiang high quality long staple cotton" on the label, and praised Li Ning one after another.

After that, in the heavy rain in Henan, hongxingerke's official microblog issued a statement to donate 50 million yuan of materials to the rainstorm stricken areas in Henan Province. The next night, some netizens commented that "you are going to close down and still donate so much". This aroused the resonance of the whole network, and promoted the topic of "hongxingerke's good heart" to the top of the microblog hot search list, and the topic heat reached the first peak.

Subsequently, a large number of netizens rushed into the live broadcasting rooms of various platforms to participate in the "wild consumption" craze. What the netizens paid for was actually hongxingerke's family feelings, brand values, and the public's value recognition.

According to the data, after the Xinjiang cotton incident was exposed, Nike and ADI and other foreign sports brands fell one after another.

Adidas Greater China has continued to decline since the second quarter of last year, with the most serious decline of 34.8% in the second quarter of this year. In fiscal year 2022, Nike's revenue continued to decline at the highest level of 20% in the second quarter, while the latter continued to decline by 1%.

Odd and even school drawing

The rise of domestic brands is behind the decline in revenue of the two major brands in China.

Specifically, Anta Group's overall revenue will reach 49.3 billion yuan in 2021, with a year-on-year increase of 39%. Anta's revenue will surpass that of Nike in Greater China; Li Ning had the fastest growth rate, with annual revenue of 22.6 billion yuan, up 56% year on year; Tebu's revenue was 10 billion yuan, up 23% year on year.

Parity map, converted into RMB according to the exchange rate on September 13

The internal reasons for the exchange of strength and weakness of sports brands at home and abroad are mainly the solidification of international brand marketing methods and the lack of innovation following the times.

Although domestic brands have won the first battle in the field of marketing through the use of public events, after all, people's emotional factors are short-term, and the more important reason lies in the products.

Cheng Weixiong, an independent analyst in the shoe and clothing industry, believes that the core point of adidas' encounter with Waterloo is that it is still dominated by the commonly used elements such as European and American fashion culture, so as to design products, adopt universal version, and the practice of "one routine going around the world" is out of order. In China, this is clearly not accepted by consumers.

In this regard, A Post-00 student told us, "I used to follow the trend with a group of students. I often saved money to buy some Nike ADI's co branded products. But I slowly found that some shoes were not light weight, and even felt very prickly on the feet. After a day's walking, I felt that the shoes of domestic brands had developed well in recent years, comfortable and affordable It is also very friendly, so it is reasonable to choose to support domestic products. ".

At the end of last century, both Adidas and Nike entered China, bringing not only global sports resources and halo, but also exploring sports fashion and other fields. Air Jordan, yeezy and other subdivided fashion brands are popular in the Chinese market. In 2016, the adidas NMD series was officially released. On its first day of sale, it sold more than 400000 pairs worldwide and triggered a price increase. Many Chinese consumers are very proud to have such a pair of shoes.

However, with the change of the trend and wind direction, the halo of fashion has faded, and people have found that there are many problems in the shape design of these shoes.

According to the online evaluation, these shoes of Nike or ADI have the following characteristics: easy to open glue, hard leather, easy to grind feet. The design of international brand shoes is based on the slender Western foot shape, while Asians generally have wider forefoot. If this type of shoes is placed in the functional areas such as basketball shoes and football shoes, it will affect people's daily wear from a small point of view, and in a large sense, it will affect the competition performance of athletes, and will certainly affect consumers' choice of products over time.

In addition, they are doing better in international marketing.

Under the influence of unstable factors such as epidemic situation, economic environment and war, sports brands at home and abroad have gradually shifted their business focus to DTC (direct to consumer) mode, which has the advantage of saving the costs of dealers, stores and maintenance, but the private operation and publicity and marketing of brands are particularly important.

According to the financial report data of various companies, in recent years, everyone has increased R & D investment in DTC business. However, in terms of revenue volume and market value, domestic sports brands undoubtedly leverage a bigger cake with a smaller cost in the Chinese market.

We have observed that Anta has started to set up group buying groups and good goods sharing groups by taking a walk around before and after the epidemic, turning consumers from scattered individuals into communities operating in private areas. At the same time, private marketing and distribution will be carried out on a large scale at each node of new product release.

In this matter, Li Ning is also imitating. Although the effect is not as good as Anta, it also allows the DTC mode to be integrated and expanded online and offline.

　　 Nike and Adidas are not too late to take action on DTC. However, due to their strong belief in the brand effect in the international market, they have not spent much effort on the private operation of the domestic consumer market. Moreover, the high brand attribute and high price make their DTC have nothing to show.

A sportswear practitioner pointed out that Nike and Adi are basically out of control in the Chinese market in recent years, and they have not really studied the market thoroughly. Previously scarce products, such as "coconut shoes", can be seen everywhere. This shows that international brands do not control their own marketing and channels well.

Looking back on the donation events of Anta and Li Ning in supporting Xinjiang cotton and hongxingerke after the rain disaster in Henan Province, it can be seen that in the process of continuous evolution of public events, with the help of online social media platform represented by microblog and e-commerce platform represented by Taobao and shuoyin, domestic sports brands have more opportunities to display, directly reach young consumers and usher in a new development peak.

Take Hongxing Erke's contribution and single topic broadcast 240 million times. Wu Rongzhao, President of Hongxing Erke, has received 6.833 million video reviews on relevant responses. The "wild consumption" craze in Hongxing Erke's live broadcasting room has created a continuous heat, from topic discussion, short video to live broadcast, These are the vivid footnotes of the Internet boosting domestic sports brand "out of the circle".

In terms of appearance design, Nike and Adidas still play to create a sense of fashion and luxury. For example, at the end of 2019, Nike and Adidas went hand in hand to carry out a wave of influential joint brand attempts. First, Adidas announced the joint brand with Prada, and then Nike's Jordan brand launched shoes co branded with Dior. These two "strong alliance" have caused extensive discussion and attention on social media.

"How many more people will buy Dior this year" is an issue that began to be discussed before the global outbreak. According to the "fashion headlines", some people in the industry believe that after the rapid rise in recent years, the novelty of luxury brands has gradually declined, or has begun to touch the ceiling.

In the field of sports brand, Adidas and Nike's leading positions are constantly impacted by other sports brands, and their products are also criticized as not innovative, especially adidas has been short of popular models in recent two years.

In contrast, China has chosen the route of national tide elements. For example, at the Paris Fashion Week show at the beginning of this year, Li Ning launched the "Li Ning x Jackie Chan co branded Kungfu series", which caused quite a stir. Both Olympic champion Li Ning and Kung Fu Jackie Chan are the most representative icon in the world. This cooperation can be said to be mutual endorsement.

This is not the only joint brand launched by Li Ning brand so far this year. After the joint name of the cultural and creative works of the Forbidden City last year, Li Ning co signed with the Dunhuang museum this year and launched a series of products. Each style has an exclusive name, "qianxingce", "qinbiantai", etc., which reminds people of the silk road.

From the above two products, we can see the change of domestic brand co branding strategy. From product combination to "cultural integration", Li Ning is constantly shaping its own brand image through co branding, giving a new definition to "Guochao". Young consumers often want to express an attitude that Li Ning is trying to make more Chinese.

With the global economic downturn and the widening economic gap, Nike ADI's choice of track is only a second choice for consumers with economic strength. However, the public will prefer to buy domestic products with lower cost performance, and those with Chinese characteristics will be more likely to buy in the domestic market.

From the perspective of product characteristics, domestic sports brands actually stand out from the subdivision track. For example, special step starts from running, Anta breaks through from temperature, and Li Ning breaks through the circle from the perspective of fashion. But international brands still seem to stay in the traditional sports scene, such as basketball, football and so on.

This paper combs the events in recent years from the perspective of post event review. The political platform of international brands provides opportunities for domestic sports brands to take advantage of public events and awaken Chinese people's feelings of domestic products. Combined with a series of national fashion elements created by domestic sports brands in recent years, it provides Chinese people with a sense of national belonging.

The combination of these factors is the kind of "Chinese feeling" that Adidas President Robert Rothschild mentioned he wanted to find.

　　 "International brands can no longer only consider catering to the needs of global users, but also understand the needs of Chinese users and the changes in the business model of the Chinese market.", Cheng Weixiong said, "only by producing products suitable for the Chinese market, implementing measures to truly meet the needs of Chinese consumers, and concentrating on the study of China's market, can we grasp the window period of China's sportswear market growth, otherwise, the loyalty of consumers may gradually weaken."

3. It's not so easy for domestic products to "turn the mountain"

Although the international sports brands in the domestic market are slightly tired, Nike and Adi, as the big brother in the sports brand market, their strength in all aspects can not be underestimated.

Take the pride of international brands in the case of *. According to the data from the website of the World Intellectual Property Organization (the company searches with Nike Inc, Nike innovation CV and Nike International Ltd as applicants), in the past 10 years from 2013 to 2022, a total of 14459 invention applications were made by Nike Company, including 3778 inventions with footwear as the key word; There are 2534 applications from Adidas worldwide, including 212 inventions with footwear as the key word.

In terms of footwear technology, Nike and Adidas have their own advantages. For different sports, different sports occasions and different users, Nike has developed different outsoles. Among them, air cushion is the model of insole technology, which has been improved and innovated again and again.

The core technology of adidas shoes is the technology of outsole and midsole. The technology of outsoles includes torsion system and adiware, which optimize the control, balance and wear resistance of the outsoles respectively; The technology of the insole includes adiprene and adiprene +, A3 and A3 structure, which make technical innovation on the elastic shock absorption and lightweight, cushioning + guidance and promotion of the insole.

　　 On the contrary, the performance of domestic sports brands is a little pale.

According to data from the world intellectual property organization website, The number of Tebu, Anta and Li Ning in the past decade was 267, 388 and 616 respectively.

According to the first half of 2022, the R & D investment of Tebu, Anta and Li Ning accounted for 1.9%, 2.3% and 4.2% of revenue respectively (Li Ning's R & D expenses were incorporated into the total administrative expenses), while in the financial statements of Nike and Adidas in 2021, the R & D expenses of Nike ADI accounted for less than 1% of revenue. Although domestic brands are not inferior to Nike ADI in terms of R & D costs, they have not made great efforts in the protection of * *.

In fact, domestic sports brands in recent years also have some surprising technological innovation. Compared with traditional EVA, the material is lighter and lighter than EVA in 2019. The combination of embedded full-length heterogeneous carbon board and light elastic technology can greatly improve the energy rebound, and the GCU of the outer sole enhances the anti sliding and wear resistance.

Earlier, Li Ning also developed the revolutionary shuangdu running shoes, aiming to solve the problems of shock absorption and transition between heel and midfoot landing (invention: 201310269846.0).

Another example is Anta's newly launched "flash energy technology" in the insole cushioning technology. Inspired by the "wormhole", Anta a-flash foam can rebound like a spring through numerous high-strength compressed particles when it touches the ground, providing fast energy feedback.

However, the technical barriers accumulated by international brands over the years can not be broken by domestic brands in one day. Domestic products still need to work harder on the number of applications and the speed of innovation. Nike and Adidas are two sporting goods companies with a long history, both of which are constantly catching up with their rivals. In the future, the battle field of domestic and foreign sports brands should be in the competition of * *, who can stand the first opportunity, who can laugh the last.

4 at the end

From the market trend and future space, China's sports shoes and clothing market is still a "blue ocean". Although the sales situation in Greater China has been poor in the past two years, it is obvious that Nike and Adidas will not give up. They have been in action.

Recently, Nike announced that the transformation of its own digital platform will be launched in July, including Nike app, official website and wechat app, NTC wechat app for course training, and snkrs app, a shoe purchasing platform.

Behind a series of operations is the speculation on the psychology of Chinese consumers. Men Lijun, vice president of Nike Greater China and general manager of market development, said that it was the consumption trend of Chinese consumers keen on digitalization and pursuing physical and mental health, which inspired Nike's innovation inspiration.

While Adidas is committed to digital transformation and strengthening marketing, it also announced the change of head of China business. Adrian Siu took over Jason Thomas as managing director of Greater China from April 1. Previously, under the leadership of Xiao Jiale, Adidas recorded considerable growth in China's property rights and profits.

Although domestic sports brands have been able to compete with these international brands in the Chinese market, there is still a big gap in revenue volume and market scale, and shoes and clothing design is still unable to get rid of the background color of imitation.

Anta Li Ning special step in the "Chinese battlefield" has not yet been successful, Nike ADI has been actively responding to the current downturn. In the broader global market competition, domestic sports brands need to reflect the technical strength matched with the cultural details, so that the world can feel the real "Chinese quality".