Appropriate products, effective marketing tools, a strong network of channels. Conquering China's Taki market (referring to the consumer groups that are mainly concentrated in second-tier markets), these three elements are undoubtedly the most effective.
Studies show that there are currently about 1,200 county-level tertiary cities, 34,400 townships and 614,000 administrative villages in China. However, the consumption of consumer goods, durable consumer goods, medical and health products Of total consumption and potential demand, China's Taki market will likely reach trillion of scale.
In this economic crisis, the value of the Tajik market by multinational and local enterprises is clearer than ever before. But who is the winner? Local enterprises are unprecedented momentum, a strong siege, figures show everything.
The effect of the industrial chain shows the local sports brand challenges foreign brands
Recalling the performance of the past year, Nike President Mark Parker (Mark Parker) specifically referred to the first time in 1984, Nike shoes selling in the Chinese market scene, when Beijing Friendship Shopping Center in a 50-square-foot shop, Nike 200 pairs of shoes sold for 11 days.
Snail-like sales were already a thing of the past, and Nike is now well known among Chinese consumers under 500 million.
But let Nike frustration is that although the prospects for China's sporting goods market, people have unlimited reverie, Nike March to May this year, sales in the Chinese market increased by only 6%, in order to reduce inventory, Nike is busy discount in the Chinese market .
Adidas with Adidas. Adidas sales in the second quarter of this year fell 3% to 2.46 billion euros; operating profit fell 66% to 72 million euros, mainly in China and Japan, the Asian market sales fell 9%. Discount Adidas shoes, is becoming a number of first-tier cities consumers choice.
China sporting goods market in recession yet? This seems to be the case from the performance of multinational sports brands, but the half-year performance of Li Ning and Anta which have been announced one after another is very different. In sharp contrast, the management model of transnational sports brands is facing more or less challenges.
Among them, the most test multinational sports brand and Chinese sports brand, that is, the structure of the industrial chain as well as other than the first-line market expansion.
Dumbbell mode or take-all industrial chain?
Anta (02020.HK) semi-annual report shows that Anta Group turnover in the first half of this year reached 2.82 billion yuan, up 27.7%, net profit reached 608 million yuan, an increase of 40.1%.
Compared with Anta, Li Ning (02331.HK) performance worse than. In the first half of this year, Li Ning's revenue increased 32.4% to 4.052 billion yuan, profit before interest and tax plus depreciation and amortization increased 56.1% to 773 million yuan.
Chen Shixin, a market watcher, said: "The international sports brands mostly adopt the typical dumbbell mode, which is represented by Nike. They are only responsible for R & D and design, brand management, and basically outsourcing other aspects such as Production, retail, etc. Local sports brands, especially the Jinjiang department represented by Anta, Xtep and so on, are obviously different from each other in the way of "vertical integration." For example, Anta, from product development and design, raw material procurement , Manufacturing, distribution and logistics, marketing and promotion, retailing, etc. By participating in all aspects of the industry chain throughout the entire journey, we can gain profits at every stage of the industry chain and improve the profitability of the company. "
Chen Shixin believes that the "vertical integration" model can raise the level of corporate gross profit while effectively controlling the costs of all aspects. Although the operation and management of international sports brands are generally higher than the local enterprises, however, the manufacturing cost pressure on foundry is still hard to avoid. In times of economic depression, vertically integrated enterprises can better control their costs and enhance their competitiveness through adjustment in the chain.
Take Anta for example. In the first half of this year, the production line of ANTA footwear increased from 23 at the end of 2008 to 24 as at 30 June 2009, together with 1 sole factory and 2 apparel production bases in Changting and Xiamen respectively In the first half of the year, Anta produced about 6.6 million pairs of footwear and about 3.8 million garments. Meanwhile, the share of self-produced shoes and apparel products sold by Anta was 35.5% (50.0% at the end of 2008) and 14.8% (11.7% at the end of 2008) respectively.
According to the ANTA previously announced semi-annual report, in the first half of 2008, Anta produced 6 million pairs of footwear and 2.3 million garments. It can be seen that Anta's production of footwear and apparel products are increasing, but Anta is This cost not only did not increase, but decreased. In the first half of this year, the cost of self-production by ANTA was 392.4 million yuan, compared with 395.2 million yuan in the same period of last year, a decrease of about 3 million yuan.
Maintaining a certain percentage of self-production is one of the reasons for Anta's net profit margin in the same industry. Anta's net profit margin increased by 1.9 percentage points in the first half of this year to 21.6%. In the first half of this year, the net profit of Adidas Group Down 95% from a year earlier to 13 million euros. It is difficult to effectively control the rise in raw material prices is one of the culprits.
Transnational sports brand, into a first-tier cities, defeated first-tier cities?
Quanzhou, Fujian Province, can only count as a third-tier city in China when compared to the mega-cities such as Shanghai. However, its per capita GDP has exceeded 5,000 U.S. dollars, which is only half that of Shanghai's per capita GDP of 10,000 U.S. dollars. The difference is not large. In the bustling streets of Quanzhou, Anta, Hongxing Erke store flashed from time to time, in this gathering of Chinese sports brands, but rare Nike and Adidas shadow. Domestic sports brands in the domestic second and third tier cities soaring time, first-tier cities multinational sports brand sway in the wind and rain.
Li Ning brand retail stores in the first half of this year reached 6809 in the country, a net increase of 564 during the period, Li Ning Company that the second and third tier markets for China's most growth potential market, Li Ning brand new stores during the period more than 80% concentrated in two, Third-line market. Li Ning is through the second and third tier markets focused on strategic channel penetration in the country to establish a wide range of large-scale distribution and retail network, sales outlets throughout all provinces and municipalities.
In China sporting goods market, only the second and third tier cities to the fastest speed shop.
Chen Shixin said that in mainland China (mainly in markets other than first-tier cities), sales channels of local sports brands are significantly faster than international sports brands. According to the relevant data, there are about 600 district-level cities in China and 2,800 county-level cities. Suppose the country opened 1500 sales outlets, each district-level cities to open shops to 5 to 8 dollars, each county-level city opened only one store, then the country's second and third tier cities outlets can reach 8500 such a scale . "Coupled with the acceleration of urbanization in China, there is room for further growth in this scale."
Data show that by the end of 2008, Anta total number of stores reached 5667, May 2009, Anta 6000 stores opened in Guangzhou. In the second half of this year, Anta will add 500 to 600 new stores. Li Ning, as of 2008, in mainland China has 6,917 stores, a net increase of 1,000 stores a year, and Li Ning is expected in 2010 the store will further increase to 7,700. In addition, Li Ning is said to have opened up to 100 stores in Southeast Asia in 2009. 361 degrees Jinjiang Department, especially the same step, Xtep also announced that it will speed up the expansion, of which 361 degrees announced plans in June next year, the sales network from 5925 to over 6900.
In view of the great potential of the Chinese market, the international sports brands are strongly intent on expansion but their speed and intensity are significantly weaker than that of local sports brands. Data show that as of the end of 2007, Adidas stores in China is about 1000, while in 2008 only increased by more than 300, or about 1332.
Local sports brand business skills is not just hard to shop, local businesses on the sales channel control is also gradually increased. A sporting goods market observer revealed that Anta is increasingly investing in its distributors, setting up joint ventures with distributors and integrating with distributors, you and I have you.
This is also done by China Mobile (03818.HK). As of August 24 this year, China Dongxiang and its six distributors for equity cooperation, the acquisition of 30% of these distributors minority interests, China Mobile to explain the benefits of doing so: First, to become a shareholder of the distributor Which can monitor the major distributors' every action and influence on them, so as to optimize the operation and business strategy of the distribution network and the implementation and financial monitoring. Second, the retail industry is a high-value industry in the industrial chain of the sportswear business. Investing in retail business will benefit sporting goods enterprises. Third, by investing in major distributors, it will help distributors to increase their cash resources and further develop their distribution network and business. Fourth, China's sportswear retailing industry has been operating in recent years As a result, large retail groups have acquired smaller retail groups in order to grow their market share and bargaining power while sports brand owners, through their shareholding distributors, can maintain a closer relationship with major distributors while also protecting them from Other retail group acquisitions. Local brands are much more brave at drawing in and strengthening their control over distributors.