Anta: PRC Largest Sport Maker Will Beat Nike!

26/11/2018

Is Anta setting or following the fitness trend? Fujian based sportswear brand is running to reach the International podium. Nike and Adidas still lead sales in China, but Anta will outstrip Western giants soon

 

In a brand-new fitness trend, more and more people in the PRC want to keep fit. As a response, major companies started to approach the sports sector catching a glimpse of opportunity in this growing field.

This new interest in the sports industry does not come from anywhere. Recently Beijing started a big plan of investments in order to strengthen the economic reforms as well as productive sectors in many fields, including sports, so that sportswear industry is now on a secular uptrend in China, supported by macroeconomic factors and the government incentives.

 

anta - xiamen as hi-tech hub - cifnews

© 123rf. Xiamen, capital of the Fujian province, is one of China’s booming second-tier cities that have emerged as hi-tech hub.

 

“China has set itself the goal of becoming a sports powerhouse and the sportswear industry is entering a golden era of rapid growth with unprecedented infrastructure development,” Anta’s Chairman Ding Shizhong said in a statement.

 

Anta is the strongest sportswear domestic player in China. Founded in Fujian province, it grew its market share displaying superior execution capabilities.

 

Established in 1991, Anta Sports Products Limited was founded in Xiamen by Ding Shizhong. Although it is mostly unknown in Europe, on their home market in China, it is the number three sportswear firm behind Nike and Adidas.

The brand – whose name means “safe step” in Chinese – started as a company engaged in the design, manufacturing, and marketing of sportswear in order to provide the mass market in China with professional sporting products including footwear, apparel, and accessories.

 

anta - NBA Klay Thompson - cifnews

© Anta. Anta renewed the deal with NBA star Klay Thompson with an $ 80 million contract.

 

However, it recently turned into a multi-brand omnichannel company and included other brands such as Anta Kids. The sportswear firm recently started a partnership with the Japanese Descente, bought FILA business rights and it also collaborates as basketball NBA main sponsor.

While Anta primarily targets the mass market, its acquisitions will allow it to diversify its portfolio and to aim at different market segments enhancing its competitiveness to achieve sustainable development in the long run.

 

Like many local manufacturers, the company’s stronghold is not China’s first-tier cities. While Nike and Adidas have a competitive advantage in the metropolis like Beijing or Shanghai, Anta focus on tier-two and tier-three cities.

 

Despite one may think, these are not small markets. More than 150 million Chinese teenagers and young adults live in secondary cities, which often have populations of more than 5 million. Moreover, China’s local manufacturers have stronger distribution networks here, as well as lower prices and a better understanding of the Dragon’s complex retail market.

In 2007, Anta gained a cornerstone investment by Leslie Alexander, owner of the US basketball team Houston Rockets, and suddenly entered the Hong Kong Stock Exchange list. Its revenue now reached more than $ 1.5 billion with 54.3% gross profit margin compared to 50.6% from a year earlier.

However, the brand found the opportunity to expand its business into footwear during the 2008 Beijing Olympics and it later became the official apparel sponsor for the Chinese national team at the Rio Olympics. President Xi Jinping also contributed to the company’s success when he was photographed wearing one of the jackets while visiting the site of the 2022 Beijing Winter Games.

 

Nowadays, the Chinese company has more than 9,600 retail stores in China including hundreds of FILA stores acquired in 2010.

 

Last August, the Chinese biggest sportswear retailer reported that the online and offline business expanded further thanks to the growth of sports sector in China where the company benefited from the growing demand for high-end products within a favorable domestic policies environment.

Ding Shizhong said the company has set two development goals to be realized by 2020: selling 100 million pairs of shoes and 130 million items of clothing, and expanding the number of stores it operates to 11,000.

The firm’s CEO also highlighted the significant contribution from e-commerce channels, including record-setting sales numbers during last Single Day event, one of the country’s biggest online shopping festivals, which helped the firm to grow its market worldwide.

 

Anta Sports’ market capitalization recently exceeded $ 12 billion, nearly six times its initial market value while its net profit rose 34% from a year earlier to $ 281.90 million in the first half of 2018.

 

In 2017, the Xiamen company collaborated with the Economist Corporate Network in a research report on the growing sports industry in China. The report revealed that one-third of the PRC population practices sports at least once a week showing the emerging success of the fitness sector.

The research also says that fitness shoes and sportswear will increase by 54% reaching $ 36 million by 2020. While the fitness industry in China generates 10.3% of annual growth, the reasons that led Chinese people to gain a wider health consciousness are various.

Better living standards together with a higher disposable income have risen leading people to engage in new activities. The concept of “Healthy mind in a healthy body” is another reason for Chinese people to start exercising while chasing new beauty standards as well as a way to escape an intense work environment.

 

anta - fila signed Wang Yuan - cifnews

© Anta. Last June, FILA signed the Chinese teen Idol Wang Yuan as brand ambassador.

 

On the other hand, while the population was moving from rural areas to big economic hubs, the emerging of a wider middle-class society let private consumption to grow. Cities such as Beijing, Chongqing, Shanghai, and Tianjin thus turned into new favorite fitness cities. As a result, according to Dianping.com – a leading Chinese online city-guide – now Beijing hosts more than 1,500 fitness clubs compared to just 20 professional fitness studios in 2013.

In fact, although half of Beijing population is involved in physical activities at least once a week, in poorer rural provinces such as Ningxia, Xingjiang, and Qinghai, only 25% of people actually practice sports regularly.

“Chinese people are not only putting more attention on health but they are also more willing to pay for better consumption experiences,” said Tang Lin, founder of iFitness Space.

 

Sports industry contribution to China’s GDP is expected to grow from 1,9% in 2015 to over 3% by 2025.

 

Regardless of whether they are foreign or local sports brands, as Chinese sportsmen pay more and more attention to sports equipment, the demand is increasingly detailed so that the pursuit of “function”, “differentiation” and “high-end” by sporting brands has become a general trend.

Thanks to the increase of per capita GDP of China, that now exceeds $ 8,500, and thanks to the demand for more sports consumption, the sports industry is facing a rapid growth while China could become the biggest fitness market in the world within the next 20 years.

The Chinese government also bets on the sports industry. A recent guideline released by the State Council provides new business models of sports consumption in order to respond to the increasing demand and to promote further development of industries related to health and leisure.

 

Anta - 2022 Beijing Winter Olympics ad - cifnews

© Anta. One of Anta’s official advertisements for Beijing 2022 Winter Olympics.

 

As the Middle Kingdom’s society changes into a wealthier society more concerned about health and living standards, Anta is one of the sportswear company that will not only benefit from this new healthier trend but it will also lead it with its own initiatives and products.

In fact, Anta already sells elsewhere in Asia, such as Singapore, the Philippines and Malaysia, and in Eastern Europe and about 10% of the brand’s sales are outside China. The company’s strategy is to grow first in Asian countries, which have a similar culture, and they do not have existing tier-two brands to compete with before investing in overseas selling and enter the competition with major international players.

Nevertheless, lately, the Chinese firm seems to be very interested in purchasing the Finnish competitor Amer Sports. Therefore, Anta Sports Products has made a bid to buy the Amer’s Wilson tennis racquets used by Serena Williams. This potential acquisition could lead the sportswear company to become the worldwide number three, stepping up the same podium of Nike and Adidas.

Anta has thus become the symbol of how the Dragon is able to excel in many business challenges, including sports.

 

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