Text | Sunday Industry Analysis, author | Zero dew
The Beijing Winter Olympics schedule is coming to an end, but the heat of topics related to the Winter Olympics is no less than that of the exciting events.
Before the Winter Olympic down jacket out of the circle, after the Olympic Village food on the hot search. It can be seen that in addition to the ice and snow competition, countries also have a confrontation in various fields such as clothing, infrastructure, and transportation.
Xu Mengtao, a freestyle ski women's aerial skiller, just won her first Olympic gold medal in her 31-year life just a few days ago. The veteran, who has experienced 16 years of Olympic cycle, once revealed in an interview that there were no domestic skis in the early stage of training, and imported skis were extremely expensive, and coaches could only pick up snowboards eliminated by athletes from other countries in the training ground.
This is a period of bitter tears shared by domestic brands and athletes.
Once domestic brands not only have gaps in the field of high-end sports equipment, but also difficult to appear in heavyweight international events. At the 2008 Summer Olympics in Beijing, the Chinese sports delegation wore clothing provided by Adidas. In addition, there were 22 national teams at the time whose match costumes were sponsored by NIKE.
Fourteen years later, Chinese athletes can not only wear a full set of domestic equipment to the podium, but also the Beijing Winter Olympics have won unanimous praise in terms of technology, aesthetics, venues and other aspects.
Together with Chinese athletes on the world stage, it is Chinese companies.
In the men's 1000m final of short track speed skating, the five players on the field were all dressed in sportswear from Chinese sports brands. Under the sports field, new technologies such as cooking robots, hydrogen energy vehicles, and dry blood point monitoring stimulants are also constantly refreshing the perception of athletes from all over the world.
Each Olympic Games is an all-round test of China's scientific and technological strength and enterprise capabilities.
Chinese sports brands have gradually transformed from local third-tier to international first-class markets, and various technologies have gradually transformed from relying on imports to independent research and development.
Under the double blessing of the Beijing Winter Olympic Games and the national tide design, China's sports brands are increasingly loved by a new generation of consumers, and those "domestic technologies" are constantly resonating with young people at home and abroad. On how to keep up with the needs of young people, how to seize the opportunity and maintain the growth momentum when the wind comes, this article tries to use the circle strategy of domestic sports brands such as Li Ning and Anta to explore the Chinese brands that break away from the "earthy" image on the sports field and make every effort to "break the circle".
01 Chinese Sports Brand "Let Change Happen"
According to the 2021 C-BPI brand ranking (brand power index ranking), ANTA, Li Ning and Xtep occupy 3 of the top 5 seats. Anta's 2021 interim report shows that in the first half of the year, the group achieved operating income of 22.8 billion yuan, an increase of 55.5% year-on-year; net profit reached 3.84 billion yuan, a year-on-year surge of 131.6%. Xinhua speculated that "in terms of domestic market share, ANTA will replace Adidas as indisputably second and infinitely approach NIKE."
On e-commerce platforms with more purchasing power for young people, local brands are growing rapidly. For example, in last year's Tmall 618 promotion, anything an average increased by 94.9%. Li Ning grew by 37.3% and Xtep by 31.6%. In contrast, Nike and Adidas fell by 26.8% and 33.4% respectively.
Behind the rapid growth of local brands is the overall good trend of Chinese sports brands.
On the one hand, the policy is favorable, the state has issued relevant policies to promote national fitness and sports consumption, on the other hand, the sports apparel industry has great potential. The report shows that in 2022, the scale of China's sportswear market has exceeded 300 billion yuan, with the increase of national income and the deepening of the concept of national healthy life, the mainland sportswear industry will have huge room for growth.
At the same time, as the Winter Olympics entered a white-hot, the rhythm of traffic explosion was also brought up. Licensed goods around the Winter Olympics and the same equipment for the Winter Olympics have been sold out. In this consumer boom brought about by the celebrity effect and the national ice and snow sports, local brands have obtained tickets to top marketing resources.
As the official partner (the highest level sponsor) of the Beijing 2022 Winter Olympics, ANTA, the "top class" in the first echelon, provided the Chinese delegation with a full range of competition equipment, from the competition uniform to the medal-receiving uniform. At the same time, together with an ANTA Group's brand Phillips and Desante, it sponsored the Netherlands, Japan and Canada, which have strong strength in ice and snow projects. These two brands, ranked in the top two in the Beijing Winter Olympics sports brand value list, currently have more than 35 medals. Peak in the second echelon sponsored delegation costumes from 7 countries.
Compared with the full blossoming of Chinese brands, sports equipment giant NIKE was not used by any delegation when entering the opening ceremony, and rarely appeared on the field. Compared with the venues that were almost monopolized by Adidas and NIKE at the 2008 Beijing Olympics, Chinese brands have undoubtedly "let change happen" in the past 14 years.
Top exposure resources, national self-confidence enhancement, and consumer recycling trends have brought "heat value" to the brand. Unlike previous years, which only increased brand awareness, this year these brands have a benefit bonus. During the Winter Olympics, ANTA Group's shares rose 10.64% in six trading days, with a market value of HK$348.5 billion as of press time. Li Ning's stock, which has appeared a lot in the Winter Olympics, also rose 9.75%.
02 China's "Intelligent Manufacturing" with Difficult Breakthroughs
Today, local sports brands have not only top marketing resources, but also have the hard-core technology to match.
In a short track speed skating event where the difference between victory and defeat is only one thousandth of a second, you can see the competition of technology behind each athlete.
Known as "shark skin on ice", the speed skating suit is a showcase of the top technology of every sports brand, which needs to be lightweight, cut-proof, fit tightly, and reduce wind resistance. Being able to stand on the Olympic field also proves the brand's scientific and technological research and development strength. I have to say that in the field of "haute couture", both ANTA and Li Ning have reached the world-class level.
Looking back at the development history of Chinese sports brands, it has gone through half a century from "Made in China" to "Made in China". Originating from the manufacture of shoes and apparel in the 1980s, the earliest business methods were oem (OEM) and foundry (ODM). Later, these foundry companies embarked on different development paths, such as ANTA, Xtep, 361 degrees, Peak, Guijin Bird, etc. began to try to operate their own brands.
For a long time, domestic brands have positioned the main consumer group as office workers, college students and sports enthusiasts living in third- and fourth-tier cities with a monthly income of about 5,000 yuan. In the early stage of brand development, on the one hand, it floated in the negative public opinion of "earthy taste" and "poor quality", and on the other hand, it fought in the self-reserved land.
In the "post-Olympic era" after 2008, the industry is seriously involved, and many brands want to go out of small cities and hope to open up the international market, but they have more than enough and lack of strength. The overextending and blind opening of stores by China's head sports companies eventually led to an imbalance between supply and demand, and the entire industry entered a period of stagnation.
People's inherent impressions of brands, especially clothing brands, are very difficult to change. Fortunately, "fashion is a reincarnation", in 2018, with the rise of the national tide and national cultural self-confidence, local brands ushered in the opportunity to "break the circle". Nowadays, local elements and retro national fashion have become the representative of fashion. The local brands that have refined their internal skills have become the fashion spokespersons of "beautiful and talented".
At present, the local brands in the first echelon have invested heavily in research and development costs. Anta has invested more than 3 billion yuan in research and development in the past 5 years, accounting for 3% of total turnover. In the same period, although Li Ning was in a trough period, he still invested more than 1 billion yuan in research and development. On the contrary, the noble bird that has always been Buddhist is on the verge of closure when the opportunity comes.
Of course, the rise of local brands can not relax. Chinese sports brands are facing the situation of "two-sided attack" on the Winter Olympics, on the one hand, Nike, the veteran power of Adidas, and on the other hand, a group of sports brand rising stars represented by Lululemon and UnderArmour.
Canadian national team athletes appear in the opening ceremony dressed in Lululemon Image source: Lululemon official
Unlike traditional old players, these new stars have their own way of playing. Lululemon, which we have previously written and analyzed, has achieved breakthrough growth with a direct-to-consumer DTC business model and precise user positioning. At present, Lululemon has a market capitalization of $25 billion, ranking third in the world after NIKE and Adidas. However, if there is any commonality between new brands, then it should be to pay attention to community operations, as well as to integrate current trends and specialize in single category scenarios.
With the improvement of consumer aesthetics and consumption, it is no longer possible to rely only on the strategy of low-price sales, and good products must not only have both function and fashion, but also have the specific embodiment of identity status and lifestyle.
In other words, in addition to the practical function, sports brands also need to have social and aesthetic added value at present. Wang Wenhua, executive director of CIC Insight Consulting, said in an interview that the main development directions of China's garment industry in the future are differentiation, personalization, physical experience and life.
ANTA is similar to Unilever in the sports world, with brands that are independent of each other and interdependent on the inside. In addition to FILA (China) and Descente, which appeared on the Olympic field, there are 24 fashion sports brands such as Archaeopteryx, known as the "Hermès" of the sports equipment industry.
In 2020, FILA achieved revenue of 17.45 billion yuan and gross profit margin of 69.3%, while the gross profit margin of ANTA's main brand was only 44.7%. Driven by FILA, ANTA's overall gross margin rose to 58.2% in 2020.
According to the "2020 China Consumer Brand Development Report" released by Ali Research Institute, Li Ning, ANTA, Xtep, 361 Degrees, Peak, Jordan, Hongxing Erke, and Huili have become the leading brands of China's sports national tide. But in addition to these powerful players who have been floating in the "town" for many years, under the leadership of the head, the startups in many segments have also shown new vitality. For example, sports brands such as MAIA ACTIVE, Focus, and Lolita will focus on Asian women's sportswear, cut to the aesthetic needs of women, and create a brand growth curve.
03 "Industrial Romance" at the Winter Olympics
In the Winter Olympic Games, Chinese athletes and Chinese brands are "hard to face" with players from all over the world. Back on the field, Various Chinese companies showed "industrial romance" for players from all over the world on "food, clothing, housing and transportation".
According to Sino-Singapore Sports, Germany's Der Spiegel Weekly praised The Shougang Jump as "Industrial Disney". Shougang was relocated for the 2008 Olympic Games in Beijing and is now back in life at the Beijing 2022 Winter Olympics. When the rusty giant steel appears in the same frame as the extreme rotation of the athlete when he or she flies onto the platform, it creates a cyberpunk-like visual effect.
Beijing Shougang Big Jump
The design of the Shougang Ski Jump is a perfect combination of "wasteland aesthetics" and "extreme sports", and will also become the world's first permanently preserved and used ski jumping venue.
In terms of the "soft decoration" of the Winter Olympic Village, it is built by various robots. CCTV News and Baidu Intelligent Cloud jointly created the first AI sign language anchor to help watch and interpret ice and snow events through "3D+AI" technology; intelligent service robot company Orion Star provided apartment check-in, mobile sales, a la carte food delivery, tour translation and other services during the Winter Olympics. There is also the intelligent unmanned delivery vehicle of JD Logistics, which is also playing a role.
NBC reported that the restaurant scene at the Beijing Winter Olympics was "like a science fiction movie." Whether it's spicy hot, kung pao chicken or hamburgers, pasta, and cocktails, they can all be made by a "machine chef".
Beijing Winter Olympics Main Media Center "Smart Restaurant" Source: China-Singapore Pictures
The "together to the future" Winter Olympics also confirmed the development of the mainland robot industry, and the operating income of the robot industry exceeded 100 billion yuan in 2020. The way of robots is tantamount to the daily use of ordinary people, and we have previously written an article analyzing that China's industrial robots have entered a new situation of "from defense to attack". And these Winter Olympic robots will also detonate new outlets in the era of Industry 4.0, and the local robot industry will have more opportunities.
At the same time, on the Olympic field, we can also see that the technology displayed by China's leading enterprises such as BOE, Baidu, JD.com, and Ali is moving in the direction of the world's top.
Under the leadership of these head companies, whether it is second-tier brands such as Huili and Xtep, or start-up technology companies, they are achieving differentiated market positioning in a good market background as quickly as possible. As analyzed by Tsingshan Capital, in addition to the details, it is more important to find a subdivision category with high-speed growth and the prospect of popularization to the general public.
Of course, compared with the huge business empires such as Adidas and NIKE in terms of sports brands, we still have a big gap, and technology fields such as chips are also constrained. But just like the sport itself, from "ice and snow sports do not enter Shanhaiguan" to the realization of the vision of "300 million people participating in ice and snow sports" today, from no Asian athletes standing on the 100-meter Olympic arena to Su Bingtian breaking through the limit, it is only a few years.
The charm of sports lies in the rapidly changing arena and unpredictable uncertainty, and it is precisely because of the fierce competition that domestic brands are given the opportunity to catch up.
In China, the introduction of various policies and the rapid increase in the population base of various sports such as running, fitness, cycling, swimming, ice and snow sports will serve as the underlying driving force to provide long-term momentum for local sports brand competition. It is expected that local sports brands will create the next golden age of Chinese sports on the world stage.
The essence of sport is the constant climbing and self-transcendence of athletes and human beings, and in another arena, there is a group of visionary and dedicated people who are changing the world.