【Market】Research on 2013 Chinese Sporting Goods Market

　　According to Research on the Trends and Supply-Demand Pattern of 2013-2017 Chinese Sporting Goods Market recently released by ZERO POWER INTELLIGENCE CO., LTD, top six Chinese sports brands including Li-Ning, Anta, Peak, etc. have 3.721 billion RMB Yuan inventories while their orders decrease 15%-30% in domestic sports apparel market. High cost, low terminal market demands, and price war have made them get in trouble.

　　Turning to Youth Market

　　With hundreds of thousands of children as potential consumers, Chinese youth market is one of the most important target markets to be further explored.

　　In 2012, 361 Degrees increased 433 children’s apparel stores to 1590 stores, and its children’s apparel sales were doubled to 370 million RMB Yuan, 7.5% of its all turnover. It is estimated that Xtep will increase 100-200 children’s apparel stores in Chinese second and third-tier cities in 2013. Adidas also targets youth market and has established 500 children’s apparel stores in China. Li-Ning focuses on college students market.

　　According to Chinese Educational Departments’ 2011 Statistical Bulletin released by the Ministry of Education, there are over 200 million students in China, including college students, senior high school students, junior high school students and preliminary school students. This is a big market.

　　According to Chinese government’s Twelfth Five-Year Plan, the government will carry out Youth Exercise Promotion Program and make all social forces pay attention to youth exercises. In 2013, according to the Students’ Sports Events Plan released by the Ministry of Education, there will be 70 events for college students and high school students, 43 for college students and 27 for high school students, throughout the whole year. It is the right time that sports brands should explore the students market.

　　There exist many problems in Chinese students’ sport market, such as simple organization structure, low financial budget, less training, less professional organization, less market promotion, less media exposure, etc. However, youth is the major sports participants.

　　The stronger youth is, the stronger nation is. More government’s measures and policies and more professional brands’ support are needed to pay attention to youth health and let them take part in sports. For example, in 2012-2013 Chinese High School Basketball League, Li-Ning provides participants with professional outfits as league partner.

　　New Target - Outdoor Market

　　Besides women apparel market and children’s apparel market, outdoor market is also a new target.

　　Take Toread as an example, as Chinese outdoor market leader, its revenue increases 46.68% to over 1.1 billion RMB Yuan in 2012 and its net profit increases 58.91% to 170 million RMB Yuan. Its orders’ value also increases 40.21% in 2013 products ordering meeting. Take Columbia also as an example, it has established over 600 stores in China by the end of 2012. Next, it will enter Chinese second and third-tier cities. Its revenue reached 1.694 billion dollars in 2011.

　　In the last 10 years, Chinese outdoor market annually increases over 40% and its value is over 10 billion RMB Yuan. At present, nine brands with over 100 million RMB Yuan sales per year in Chinese outdoor market get 55.81% market share. The average price of outdoor apparel and shoes is obviously higher than that of sports apparel and shoes. Among top six brands with the high average price in sports apparel market, there are four professional outdoor brands, 70% higher than that of sports apparel.

　　Continuing to Close Stores

　　Just like last year, sports brands will continue to close stores, in order to improve channels and reduce inventories. Besides Li-Ning, Anta and Peak, Xtep also announces to close stores. Mr. He Ruibo, CFO of Xtep, says, “Xtep closed 80-100 stores last year. It plans to further close 100-200 stores this year, mainly in Hunan Province and Anhui Province. In the first half of 2013, orders decrease 15%-20% and in the second half of 2013 orders will continue to decrease. We will reduce inventories by discount and close stores.”

　　Last year Chinese sports brands totally closed at least 3,000 stores.

　　Carefully Raising Capital and Keeping down the Cost

　　Because of the low expectation for the sporting goods industry in the next 2-3 years, increasing salaries and the lack of human resources, enterprises should carefully launch new programs and raise capital. To keep down the cost, some enterprises move their factories to neighboring countries. For example, Hong Kong Yongjia Group is planning to move its factories from Chinese mainland to Vietnam and Cambodia. By 2014, the percentage of domestic factories will have dropped from 85% to 50%. It has invested about 70-80 million RMB Yuan on building factories in Vietnam. Its cost will decrease in the future.

　　Little Brands Become Competitive

　　Retailers get fewer profits by managing famous brands, so they begin to favor little brands which have good styles and good qualities.

　　Unlike in previous years, now many retailers weaken the concept of brands and introduce new products to customers instead of actively promoting famous brands. Famous brands used to bring more profits, but with the development of online shopping, customers can shop around and this make profits fewer. Therefore, retailers begin to favor little brands which have good styles and good qualities.

　　According to analysts of ZERO POWER INTELLIGENCE CO., LTD, famous brands face increasing pressure. Blind expansion causes high inventories and then those brands have to close stores. The industry reshuffle is inevitable. We will see which brands can survive.

　　By Chen Lin