Text | City Boundary, author | Qi Minqian, Editor 丨Liu Xiaoying
In the summer of 1980, on the train from Beijing to Shanghai, because of the sweltering weather, two large white men took off their pants, wearing only T-shirts and underwear, and walked around the car, attracting the attention of the passengers in the same car.
They are Nike employees who want to follow the boss Phil Knight to Shanghai to negotiate cooperation with the Chinese track and field team. "1 billion people, 2 billion feet" is Phil Knight's original imagination of the Chinese sneaker market.
During that trip to China, Nike finalized two things, one was to sponsor the Chinese track and field team, and the other was to sign production contracts with five Chinese factories.
Almost at the same time that Nike entered the Chinese market, Fujian Jinjiang gave birth to the first batch of shoe-making enterprises with "family co-production" and "handicraft workshop" as the main form, and Ding Hemu was a member of this entrepreneurial wave. Under the leadership of his son Ding Shizhong, an Anta he founded gradually became stronger.
In the mainland sportswear industry from scratch, from small to large in the process, Nike has eaten up the market dividend, once occupied the first throne of mainland sportswear for many years.
In recent years, the rise of the national tide, Anta, Li Ning and other "followers" who had been left behind by Nike were fully pursued. Today, in the mainland sportswear industry, ANTA is regarded as Nike's strongest competitor.
01 Catcher counterattack
At the 1984 Los Angeles Olympics, when the Chinese track and field team entered the arena wearing Nike's warm-up suits and sneakers, Phil Knight was very excited. At that time, Adidas and Puma, founded by two German brothers, were Nike's fierce rivals.
On the one hand, Phil Knight hopes to use the influence of the Olympic Games to open up the Chinese market; on the other hand, he also hopes to find a lower cost production site. The mainland market perfectly meets his needs.
(Nike founder Phil Knight)
When Phil Knight first started his business, he was an agent of the Japanese brand Onizuka Tiger in the United States, and later, he founded his own brand Nike, adopting a production outsourcing model.
Earliest, Nike's producers were mainly in Japan. As production costs in Japan have risen, Taiwan has gradually become the location of Nike's largest producer.
In the 1980s and 1990s, many foreign brands, including Nike, set their sights on China's southeast coastal region, where production costs were lower. Jinjiang City, Fujian Province, is in this process, relying on the unique advantages of overseas Chinese, developed a large number of family workshop shoe-making enterprises. Among them, most of them have no brand, and the quality of the product is difficult to guarantee.
In 1987, Ding Shizhong, who graduated from junior high school, decided to go out into the outside world. He came to Beijing with 10,000 yuan sponsored by his father and 600 pairs of his own "quality" brand shoes.
When selling shoes in Beijing, Ding Shizhong found that shoes of similar quality were several times more expensive than their own. This inspired Ding Shizhong's determination to build his own brand, and in 1991, he returned to Jinjiang with the 200,000 yuan earned from selling shoes, and after consulting with his family, he established ANTA.
When Anta was first established, it was not prominent among the shoe-making enterprises in Jinjiang, and the most "famous" brand in the domestic sportswear industry at that time was Li Ning.
In 1988, Li Ning, the "prince of gymnastics" who had high hopes, lost the Seoul Olympic Games and chose to retire when he was lonely. Li Jingwei immediately invited Li Ning to join Jianlibao and helped him establish Li Ning Clothing Company.
In 1990, before ANTA was established, Li Ning Garment Company became the sponsor of the Asian Games, winning the Asian Games torch relay organizer with more than two million.
Compared with Nike and Li Ning, ANTA is undoubtedly a "catcher" who started later. But Ding Shizhong has a lot of business talent, under his management, from 1991 to more than 30 years, ANTA first stood out among the Jinjiang enterprises in the same period, and then surpassed Li Ning. Nowadays, in the domestic market, ANTA can even compete with Nike.
(Ding Shizhong, Chairman of the Board of Directors of ANTA Group)
Beyond the hometown brand, Anta relies on the emphasis on branding and marketing.
When ANTA was first established, most of the Jinjiang shoe companies were mainly OEM for "foreign brands", and few had their own brands. Ding Shizhong resolutely persuaded his father and brother to produce their own brand products, supplemented by OEM.
When the financial crisis broke out in 1997, Jinjiang's OEM-based shoe companies fell by more than half, while ANTA survived by relying on its own brand.
Two years later, Ding Shizhong spent 800,000 yuan to sign Kong Linghui. In fact, for sports brands, signing athletes is a routine operation, and Nike can surpass Adidas, which is inseparable from its signing of Jordan. But at that time, Anta's annual profit was only 4 million yuan, and after signing Kong Linghui, Ding Shizhong spent another 3 million yuan to advertise on CCTV.
Under the strong marketing, the ANTA brand became a hit, and its annual revenue increased from 20 million yuan to 200 million yuan. Other Jinjiang enterprises have also followed suit and have started advertising on CCTV.
02 Large-scale mergers and acquisitions, funds under pressure
In 2001, Beijing successfully bid for the Olympic Games, and suddenly gave a dose of "cardiotonic injection" to mainland sportswear. For the next decade, sportswear brands could almost make money by opening stores.
At that time, although ANTA had stood out in the sportswear industry in Jinjiang, the boss of the domestic sportswear industry was Li Ning. In the first decade of this century, Li Ning, Nike and Adidas sat firmly in the top three of the mainland sportswear. Until 2012, Li Ning was overtaken by ANTA for the first time, and the industry pattern that had been maintained for ten years was completely broken.
The opportunity for ANTA to surpass Li Ning was the outbreak of the industry's inventory crisis in 2012. Stimulated by the 2008 Beijing Olympic Games, domestic sportswear brands have benefited, and ANTA, Xtep, 361 Degrees and Peak were all listed between 2007 and 2009.
After the listing, with the blessing of capital, these brands began to expand wildly. According to Guosheng Securities estimates, there were more than 15 brands with more than 3,000 stores at that time.
Li Quan, from the town, remembers that around 2008, every street in their county town was full of stores of these brands. "Next to 361 degrees is Xtep, and ANTA and Jordan also have stores on that street."
After the Olympics, consumer demand for sportswear has decreased. Euromonitor data shows that in 2008, the growth rate of the mainland sports shoes and apparel market reached 32%, and by 2009, this data plummeted to 11%, and in 2012 and 2013, there was even negative growth.
On the one hand, the brand is expanding wildly, on the other hand, the development of the industry has peaked, and the supply of sportswear is far greater than the demand. In addition, at that time, the major brands were mainly based on the wholesale model, and the brand reacted slowly to the situation of the retail terminal, and the product homogenization was serious. The industry's worst inventory crisis finally broke out in 2012.
According to media reports at the time, in order to destock, the newly listed products of these brands began to be discounted.
As early as 2010, Ding Shizhong pointed out the problem of the "big wholesale" model and began to transform. He led all executives to travel to 500 cities across the country in one year to carry out retail promotion and terminal problem research.
The measures taken by ANTA include the abolition of the regional system in the wholesale era, the direct docking of the company's management personnel with dealers, the launch of real-time ERP systems in retail stores, etc., while strengthening the management of dealers and retail stores.
After the inventory crisis, ANTA completely surpassed Li Ning.
After that crisis, brands such as Delhui, Xidelong, and Guijin Bird, who grew up with them, gradually withdrew from the stage due to tight funds.
In addition to the transformation to retail, ANTA can become a leader in the domestic sportswear industry, inseparable from the contribution of Philae.
At the end of 2008, the number of ANTA stores has approached 6,000. In addition to operating the main brand ANTA, in 2009, ANTA spent 330 million yuan to acquire Phillips' business in China from Belle, using a multi-brand strategy to find new growth points.
Phillips is an Italian brand founded in 1911, mainly in sports fashion, marketed all over the world. What spurred ANTA's acquisition of Phillip was Kappa's success in the Chinese market.
Kappa is also an Italian brand, focusing on sports fashion routes. From 2006 to 2009, the Chinese trend of operating the Kappa brand in China soared from 860 million yuan to 3.97 billion yuan.
Before an ANTA acquisition, Feile was still in a state of loss in China. After being acquired by ANTA, Feile did usher in a performance explosion, and now it is the most important source of profit and growth for ANTA. In the first half of 2021, The operating profit of Feile was about 3.14 billion yuan, accounting for more than half of ANTA's total operating profit.
From 2015 to 2020, the compound revenue growth rate of ANTA and Li Ning will be 26% and 15%, respectively. According to SPDB International data, in recent years, the compound growth rate of Phillip's revenue has reached 56%.
In the view of Guo Bin, chief analyst of the textile and apparel industry at Pacific Securities, there are two reasons for the success of Feile in the Chinese market. First, an ANTA management team has strong ability, and after the acquisition of Feile, the adjustment of brand tonality and channels has been successful; second, the sports fashion to which Feile belongs has been on the industry outlet.
Perhaps with the successful operation of Philae, ANTA has acquired more than a dozen international sportswear brands. Among them, the most eye-catching acquisition is the establishment of a consortium in 2019 by ANTA and Fangyuan Capital to spend 36 billion yuan to acquire Amalfon Sports. This is the largest acquisition in the history of the mainland apparel and sporting goods industry.
(From ANTA official website)
Through the acquisition, ANTA has completed a multi-brand layout with different fields and different price positioning. In this regard, Ding Shizhong was quite proud. In 2017, at the celebration of the tenth anniversary of Antao City, he once said: "Now the only way to really cover a variety of brands, multiple channels, in the apparel industry only Anta, we can go from the high-end Shin Kong Tiandi to cities above the county level." ”
However, the financial pressure of mergers and acquisitions cannot be underestimated. In 2019, anta's total liabilities exploded from 7.85 billion yuan to 20.16 billion yuan, and the asset-liability ratio soared from 32% in the previous year to 49%.
Moreover, Anta has just invested heavily in the acquisition of Amalfin, which has encountered the epidemic in 2020, and in the short term, Amalfin may bring pressure to Anta.
03 The final destination is a price increase
When ANTA became stronger through acquisitions, Li Ning chose a different path - to strengthen the main brand.
In addition to improving the professionalism of products, In 2018, Li Ning launched the "China Li Ning" series for the first time at The Fashion Week, which not only highlights fashion but also emphasizes patriotism. Moreover, Li Ning will also launch joint products with trend designers and the Forbidden City. Through limited sales, limited store sales and other forms, to enhance the brand tone.
(Li Ning)
This series of reforms has stepped on the trend of the rise of the national tide in recent years, not only achieving product price increases, but also achieving growth in product sales and company performance.
In fact, in the sportswear industry, many companies in the mainland are originally from foundries, from upstream raw materials, equipment procurement, to production, management and other aspects have matured, with a strong supply chain system.
For a long time, Nike and Adidas have long occupied the top two in the continental sportswear industry. Compared with domestic brands, their advantages are in product strength and brand power. Now, that advantage is slowly waning.
In the 30 years of development from the beginning of the 1990s to the present, domestic sportswear brands have been able to compete with Brands such as Nike and Adidas in terms of product function and design.
Economic development has made mainland consumers more culturally confident, especially With Gen Z (a generation born between 1995 and 2009). Therefore, consumers are now more receptive to domestic brands. "Baidu 2021 Guochao Pride Search Big Data" shows that from 2016 to 2021, the search popularity of Chinese brands increased from 45% to 75%.
In this context, in July 2021, ANTA released the five-year strategic goal of the ANTA main brand. In the next five years, the core strategy of ANTA's main brand is "professional-oriented, brand upwards." ”
This means that, in addition to Phillips, ANTA now has to upgrade its main brand. Analyst Guo Bin told the market that the upgrading of the main brand is a process that ANTA must do. Because, on the whole, ANTA's strong market was mainly concentrated in the second and third tiers and below in the past, and the future brand development will inevitably lead to direct competition with Li Ning and Nike in the first and second tiers.
In order to cooperate with the brand upgrade, the ANTA brand began to adjust its channels. DTC (DirectLy Facing Consumers) is a common measure being taken in the industry, which is simply to increase the proportion of directly operated stores offline and attach importance to the construction of online channels.
Previously, the ANTA brand adopted a wholesale distribution model, and the stores were mainly in the hands of distributors. In 2020, ANTA spent 2 billion yuan to acquire 11 dealers, involving 3,500 stores in Nanjing, Shanghai and other places. After that, 60% of these stores are directly operated by ANTA and 40% are operated by franchisees.
In the process of channel reform, ANTA is also facing many challenges and pressures. For example, the problem of price differences between channels is worth paying attention to. We found that the price of the same sweatshirt in an ANTA offline store was 60 yuan higher than its official flagship store.
"There is so much difference between online and offline prices, and it will certainly not be sold offline." The clerk said.
Expanding the proportion of directly operated stores will increase promotion and distribution expenses in the short term, which will affect profitability. Therefore, although ANTA's gross profit margin has been improving in recent years, its net profit margin has declined.
Of course, one of the most direct manifestations of brand upgrading is price increase.
As the only official sports clothing partner for the 2022 Beijing Winter Olympics, in 2020, ANTA obtained the franchise to combine the national flag with the logo of the Winter Olympic Organizing Committee. The national flag model launched as a result has become the best choice for it to enter the mid-to-high-end market.
In an ANTA offline store, a national flag sweatshirt is priced at nearly 600 yuan. According to an official flagship store of ANTA, the price of a set of Winter Olympic ski clothes is 8999 yuan, and the price of the national flag down jacket is 2699 yuan.
In the past two years, including ANTA and Li Ning, when domestic brands rose by the national tide, price increases have always been a "sensitive topic" that they cannot get around.
Guo Bin believes that in the long run, after the domestic brand product strength is improved, the price grade will sooner or later benchmark international brands, that is to say, those domestic brands that are positioned as high-end will have a higher and higher premium.
In the view of garment analyst Ma Gang, consumers' complaints about Li Ning and Anta's price increases are also normal. Domestic products can not always take the low-price route, the high-end market to foreign brands.
In the past 30 years, domestic sportswear brands have been in a big wave, and there are few brands left to survive through the industry wind and rain to today. It turns out that these domestic brands have been "suppressed" by Nike and Adidas for a long time.
Nowadays, the rise of the national tide, Li Ning, Anta have upgraded the price increase, the second half of the war has just begun.
Resources:
Shoe Dog, Phil Knight
"Ten Years on the Market, ANTA Evolution"
"Ten Years of Ups and Downs of Chinese Sports Brands: Only Three Can Compete with Nike and Adi"
"Ding Hemu: Integrity and gratitude are the intrinsic genes of enterprise development"