The Strategist

Sports frenzy spurs demand in the Chinese sporting-goods industry

03/27/2017 - 14:31

Operators of fitness centers, manufacturers of sports and non-sports goods are actively exploiting a surge of love for sport and a healthy lifestyle in China. Sales of sporting goods rose by 11% last year to $ 27 billion, and are expected to rise even more as the country’s authorities adopted a five-year health promotion campaign a few months ago.

The Chinese literally fell in love with sports and an active lifestyle. Moreover, growth of income of Chinese families allows them to spend more on the new hobby. The trend is also strengthening thanks to a special five-year health promotion programme adopted last year by the Chinese authorities. In particular, the authorities promised to increase number of football fields to 70,000 (now 50,000).

All this, as a consequence, has brought unprecedented flourish to the Chinese market of sports goods and services. According to IBIS World Research’s report, the fitness industry has grown by 11.6% over the past five years, and by the end of 2016 sports facilities have earned about $ 5.8 billion. Sports goods and sports nutrition showed no less impressive indicators of sales growth over the past year (11%, to $ 27 billion, according to Euromonitor). For example, Adidas, according to its own reports, increased its revenue in 2016 by 28%, and there’s no comparable region by this indicator. Nike said that its revenue in China showed a "double-digit" growth rate in the last quarter. At the same time, China is the second largest market for both brands, and they themselves account for a third of all sales of sportswear and footwear in the country.

In turn, experts told about an interesting phenomenon. Expensive sportswear, especially shoes, what is called the style athleisure, become the only thing that certainly brings profit. As an example, the researchers quoted statement by Belle International Holdings, the second-largest Chinese footwear manufacturer in term of sales. According to the company, while conventional footwear showed a 9% -fall in profits, profit from sale of running shoes grew by 16%. "Athleisure is the only thing that is moving the market forward," says Belle’s President Sheng Baijiao. According to him, previously the Chinese chose business style for work, but now their preferences changed in favor to sports clothing. This is the fashion.

Given rapid growth of popularity of sports and fitness in China, the world's largest sports brands in the coming years are going to focus their efforts on conquering the Chinese market. So, for example, Adidas plans to open another 3 thousand stores in the country by 2020, bringing their total to 12 thousand. However, they will have to withstand serious competition with local producers.

Sales of local manufacturers are also growing, but there is a big difference between them and the leading duo: Chinese consumers perceive Nike and Adidas as fashion brands. Wast majority of people prefers functionality and cheapness of the goods. The third largest sportswear manufacturer, Anta, reported a 17% increase in net profit for the year, to a record $ 347 million. 


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