Sneaker makers off to running start in China

Market consulting firm iResearch estimates that there are around 100 million elite runners and another 300 million amateur runners in China, making the country the world's second largest running market after the United States.

But the largest share of the Chinese sneaker market is still dominated by Nike, taking up more than one fourth of the total, according to Qianzhan Industrial Research Institute. Adidas took up second place with 17 percent, followed by domestic sportswear giant Anta. Other big names coming into the top 10 are Li-Ning, Xtep, Guirenniao, Toread, Kappa and 361 Sport.

The competition is already intense. According to Xiao Kaixi,consumption analyst from Nomura China, market consolidation will continue in the country and leading sports brands will gradually seize more market share given higher thresholds regarding technologies and marketing campaigns in the sports sector.

Efforts made by Chinese domestic brands in terms of product innovation and marketing should not be overlooked as they aspire to catch up with international leaders, said Xiao.

One example is Anta's specially designed shoe for 5 to 10 km training that it rolled out in early August. Tagged "Olympic champion shoes", the newly launched product has integrated running data from more than 100 Chinese Olympic champions and samples from another 7,700 runners. This is part of the long-term program that Anta kicked off in late 2020, which aims to introduce more running shoes especially designed for Chinese consumers.

Anta's efforts have paid off. Fiscal results for the first half, showed that sales revenue from shoes contributed over 11.1 billion yuan ($1.6 billion) of income, comprising 42.8 percent of the company's total turnover. More important, income from shoes reported the most robust 25.8 percent year-on-year growth in the first six months of the year, apparently little affected by the epidemic.

"Apart from the sales increase in the short run, we have seen changes in Chinese consumer preferences,upgrading in distribution channels and reallocation of marketing resources. All these will help to elevate market share taken by domestic brands," Xiao of Nomura said.

But no company should be discouraged as the potential of the Chinese market is tremendous. The State Council, the country's Cabinet, released in August 2021 a national fitness plan for the 2021-25 period, which states that the market value of the Chinese sports industry will top 5 trillion yuan when the five-year plan wraps up.The sports industry will grow into a new pillar of China's economy by that time, said the plan.

Looking more closely, the Chinese sports apparel and footwear market was valued at around 372 billion yuan in 2021, and the number is expected to amount to 599 billion yuan in 2025, according to market consultancy MKT Index.

The increasing number of younger sports enthusiasts will translate into sustained purchasing power for sports brands in general.According to the 2022 sports development white paper for the Chinese younger generation released by iResearch in August, up to 60 percent of consumers born after 2000 have increased their expenditure for sportswear and activities over the past five years.

Xiao said that the growth of the sportswear sector will remain resilient in China this year despite the negative impact from resurgent COVID-19 cases in the country.Functional sportswear, especially footwear, will report the fastest growth in China this year, he said.

"With Chinese people's rising awareness of health and greater importance attached to exercise,the sportswear industry in China is of long-term investment value,especially empowered by supportive government policies," he said.