'Footwear capital' adapts to changes

Footwear enterprises in Jinjiang, a city in Fujian province which is famed as the country's "footwear capital", are tackling growing competition in the industry, rising inventories and market saturation.

Jinjiang, which makes 20 percent of the sports shoes sold globally and supplies 40 percent of the domestic market, is home to some of the country's top manufacturers, such as Anta Sports Products Ltd, 361 Degrees International Ltd and Peak Sport Products Co Ltd.

Recent financial figures reveal companies under pressure.

Anta recorded 1.36 billion yuan ($220.1 million) in net profit in 2012, a fall of 21.5 percent year-on-year, its first profit decline in five years. 361 Degrees also saw its net profits decline, by 37.6 percent to 715 million yuan in 2012.

In Anta's latest annual report, Chairman and CEO Ding Shizhong highlighted how some footwear enterprises have resorted to offering large discounts to clear their stocks, further intensifying competition in the market.

Zhang Tao, the company's vice-president, has suggested consolidation in the domestic industry is a sensible option to help footwear makers remain competitive.

Anta recently spent 254 million yuan acquiring Quanzhou Huanqiu Athletic Shoes & Garments, Quanfeng Shoe Material Co Ltd and Quanzhou Dongda Light Industry Co Ltd.

While Quanzhou Huanqiu specializes in footwear and apparel, the other two focus solely on shoe production.

"The move is meant to help the company replenish and improve its product quality," Zhang said.

Peak's vice-president Xu Zhida agrees that acquisition is one way of optimizing the supply chain. Peak selected three companies from a dozen suppliers - to form a partnership with them, to improve supply chain efficiency, Xu said.

Jinjiang's shoemakers have also started moving into new sectors, to diversify their product lines.

Anta became the Chinese mainland's first company to make inroads into the children's footwear sector in 2008, and has recently expanded its Kids Sportswear series by offering products targeted at 3-7 year olds.

Last year, Anta added another 59 Kids series stores, giving it a network of 691 stores nationwide.

361 Degrees also invested in extensive research and development of the children's footwear sector, while adding 433 child sportswear stores, bringing its total to 1,590 nationwide.

Statistics show that a baby boom has been taking place since 2005 and will last for 10 to 15 years.

Zhang Bin, a textile industry analyst with Sinolink Securities, said the Chinese children's clothing sector is likely to experience robust growth in the next decade.

Local governments and industry associations have also been giving full support to the industry's optimization.

The Fujian provincial government, China Council for the Promotion of International Trade, China National Light Industry Council and China Leather Industry Association have hosted the Jinjiang Footwear International Exposition for the past 14 years, in a move to unify local shoemakers, material suppliers and buyers at home and abroad.

This year's expo started on Thursday and will run until Sunday, and hosts 1,700 exhibition stands, the most in its history. At the opening ceremony, Chen Rongfa, the Party chief of Jinjiang, said the expo has put the spotlight on innovation and design.