CHINA DAILY HONG KONG EDITION Friday, September 28, 2018 HK | BUSINESS 11 Sporting chance to revive ‘golden years’

China’s athleisure boom may have given sports apparel makers a new lease of life after a spell in the wilderness. China Dongxiang executive Zhang Zhiyong says staying unique is key to the industry’s upturn. He talks to Sun Feier.

ith some of the backtrack triggered by the 2008 most “glamor- global fi nancial tsunami. ous” Chinese From 2006 to 2008, China sports apparel Dongxiang saw a whop- makersW stealing the thun- ping 96.7-percent top-line der among H-shares on the growth and an equally stun- Hong Kong bourse in the fi rst ning 111.3-percent jump in half this year, China Dongx- net income on a yearly basis, Zhang Zhiyong, chief executive o cer of sports iang Group — another of the propelling the group’s annual apparel maker China nation’s stars in the industry net profi t to above 1.4 billion Dongxiang, says consumption — is staking its claim to be a yuan over the next two years upgrade and changing part of a success story, upbeat and hurtling the company to lifestyles play a big role in the about rebooting their past sportswear “superstar” status. reconstruction of the Chinese glory. The chain effect prodded sportswear business. China’s athleisure boom has mainland-based athletic goods become somewhat synonymous producers onto the world cap- the company’s future growth foreign competitors. few years back, when he tried with its economic miracle, cata- ital market in the pursuit of recourses. “There’s no need China Dongxiang has played to read fi nancial statements in pulting household names like going public before and after for us to maintain low-income its part too in promoting Chi- the pharmaceutical industry, Anta Sports and Li-Ning to the 2008 Beijing Summer stores that can only rake in nese teenage football culture, every single nerve in his body the world sports arena — with Olympics, with Li-Ning — the The key to the recovery of Chinese monthly revenues of less than which has far lagged behind was reluctant to work, he says the former sponsoring China’s eponymous group founded by 60,000 yuan,” stresses Zhang. that of Western countries. The in jest. delegation and the latter Can- China’s former Olympic gold sports brands is whether they can It might sound obvious to Kappa brand has contributed Having been with the sport- ada’s ice-skating team to the medalist — Anta, China Dongx- revamp the distribution chan- to sponsoring the “Chinese ing sector for well over 20 years, Pyeongchang Winter Olympics iang, Xiamen-based Xtep Inter- stand out with their uniqueness from nels, inventory situation and Football Boy” video tourna- Zhang bears plenty of testimo- in South Korea earlier this year. national Holdings sequentially an emotional perspective.” marketing strategy, and Kappa ment and has received two bil- ny to the ups and downs in the Does it mark the “return of launching IPOs in the Hong has to stick to its uniqueness. lion clicks from viewers since country’s sporting goods busi- spring” for Chinese sportswear Kong stock market. Zhang Zhiyong, chief executive o cer of China Dongxiang “Having a chain of Omini last year’s debut. ness. makers after years in the dol- However, pressure against logos, patterned on the ‘back- Unlike being just a tradition- In his life, one person stands drums? overstock eventually mount- to-back couple’ and very much al sportswear company, invest- out — Chen Yihong, currently “The key to the recovery of ed, with destocking or inven- liked by consumers, is our ing has long been seen as a vital chairman and the biggest Chinese sports brands is wheth- tory depletion becoming the DNA,” Zhang says. strategy by China Dongxiang’s shareholder of China Dongx- er they can stand out with their mainstream for both interna- From teaming up with Japa- directors. Based on the slogan iang, whom Zhang succeeded uniqueness from an emotional tional brands like Nike and nese designer Kazuki Kuraishi “Being profi t-oriented, working as chief executive o cer. perspective,” believes Zhang Adidas and domestic Chinese to launching a co-branded new with high-caliber partners and Have known each other as Zhiyong, chief executive o cer sports apparel producers. product series, and conduct- being focused on competitive colleagues at Li-Ning, where of Beijing-based, Hong Kong- “Five years ago, Nike and Adi- ing cross-sector collaboration projects”, it has teamed up with Chen was its first CEO, both listed China Dongxiang, which das’ combined market share in with celebrities in the enter- many private enterprises, such were of the opinion that the is well known for its Kappa China was just 10 billion yuan tainment, music and art com- as the Alibaba Group-backed Kappa brand was undervalued products on the Chinese main- but, today, it has surpassed 30 munities to lift brand exposure, Yunfeng Fund and storied with lots of room for develop- land, Macao and Japan. billion yuan. But, for the domes- Kappa is bent on being a trend- US venture capital investor ment. China Dongxiang owns all the rights to, and is well known for The company brought tic companies, they’re merely setter again, as it did when it Sequoia Capital. As of late June “Our common cause to work Kappa products on the Chinese mainland, Macao and Japan. Kappa’s “back-to-back couple” inching towards 10 billion fi rst landed in China. this year, the company had held for the future of the sporting PHOTOS PROVIDED TO CHINA DAILY Omini logo to the mainland yuan,” Zhang recounts to China Positioning itself as a fashion Alibaba shares valued at 1.98 goods business has brought us market 12 years ago, long after Daily with a gulp of dismay. en 10 years” in 2018. Zhang is Products worth approximately sportswear brand, and not like billion yuan. together,” says Zhang. it had become an icon in the Nonetheless, the year-to-date upbeat the industry has the 140 million yuan were involved, any other brand, the company Before joining China Dongx- casual sportswear business performance of the Chinese potential to roll on in the long resulting in a one-off decline has sought to focus on diver- Liquidity priority iang, Zhang was president of across Europe from the 1960s sportswear sector, especially in term. “Consumption upgrade, in the sportswear producer’s sified market segments like “Liquidity is our priority LeSports — the sports arm of to the 70s. Hong Kong’s secondary market, along with changing lifestyles, gross profi t margin by some 2.3 sporting accessories and wom- amid the market uncertain- China’s troubled Chinese video Zhang recalls the “golden has exuded a glimmer of hope. does play a big role in creating percentage points. en’s goods driven by their lust ties, as well as beefi ng up our streaming group LeEco — for era”, not only for China Dongx- Xtep International, which went the strong impetus needed for Further afield, according for gymnastics and yoga, says protective capability,” Zhang less than a year. iang with its famous Kappa public in Hong Kong in mid- the reconstruction of the Chi- to Zhang, they will inactivate Zhang. explains. The company’s fi nan- He prides himself in having label, but also the entire Chi- 2008, saw its share price hav- nese sportswear business”. non-performing stores and “But, for both general and cial investment segment cur- what he calls a “well-thought nese sportswear industry dur- ing jumped 62.7 percent as of revamp big, efficient outlets specifi c Chinese sports compa- rently boasts total assets of plan” and a clear future direc- ing the fi rst decade of the cen- Sept 2 this year from early 2018, Destocking measures and some self-operated ones nies, the major problem is how HK$11.3 billion. tion for the group. “The most tury, underpinned by the popu- hitting a year-to-date high of As part of the group’s strat- in key cities, including Beijing, to gain and keep customers’ Although not a diehard uncomfortable thing for a lation’s accelerating incomes, HK$5.90 in June, while Li-Ning egy to rebuild the Kappa brand, Hangzhou and Shenyang. As e ective commitment from an sports fan himself in his child- leader is that you haven’t got as well as the sports sector’s shares surged 28.17 percent to Zhang has taken charge of of the end of June, 48 stores emotional viewpoint”. hood, systematic learning any plan in case you know the industrial clusters. HK$8.28 apiece during the overseeing destocking mea- were shuttered compared Zhang thinks Li Ning has about sports seemed to be the problem and the solution. So, Data showed that the indus- same period — a seven-year sures over the past few years. with the end of last year on done well as it had obtained catalyst for Zhang to make his the only thing I need to do is to try saw an average annual high. In the first half of this year, the mainland and in Macao, a great base of people’s shor- journey into the business. let time do it”. growth of more than 20 per- This fresh impetus has China Dongxiang had got rid according to its interim result. ing up, featuring “Chinese Li “Thanks to sports, it binds my cent during those glorious years prompted investors to yearn for of some “defective goods” left Reforming distribution Ning” and classical elements, career with my interest,” he says. Contact the writer at despite a subsequent slight a possible replay of the “gold- over from 2015 and earlier. channels is also seen as one of which distinguishes itself from Recalling his experience a [email protected]

The Governing Principles of CAPITAL IDEAS: PETER LIANG Ancient China Editor’s note: This is an extract from The Governing Principles of HK to feel the pinch as infl ation, higher interest rates bite Ancient China, based on 360 passages excerpted from the original compilation titled Qunshu Zhiyao, or The Compilation of Books and Writings on Important Governing Principles. Commissioned by gainst the back- escalating property prices Emperor Tang Taizong of the Tang Dynasty in the seventh century, drop of rising oil has been a combination of the book contains advice, methods and historical notes on the prices, low yields abnormally low interest successes and failures of the imperial governments of China. and average work- rates and easy bank credit, Today it continues to be relevant as a source of inspiration for self- improvement, family management and interpersonal relations. ers’A wages, should investors factors rooted in the expan- be worried about infl ation sionary monetary policies 231. 昏禮者，將合二姓之好，上以事宗廟，而下以 and its impact on global adopted by the major econo- markets? mies to stimulate growth in 繼後世也。故君子重之。男女有別，而後夫婦 So far, there’s little sign the years since the outbreak 有義；夫婦有義，而後父子有親；父子有親， suggesting that investors of the global fi nancial crisis 而後君臣有正。故曰：婚禮者，禮之本也。 are paying much attention in 2008. （卷七 禮記） to infl ation while their focus Things have taken a falls mainly on the escalating sharp turn in more recent The propriety of marriage unites two families with trade war between the United years. Strong economic di erent surnames, to commemorate the ancestors States and the Chinese main- growth in the US, together with respects and o erings, and produce o spring land. with a robust job market, to carry on the family name and the teachings of the Indeed, the increases in has prompted the Federal forefathers. Therefore, a superior person would value prices of utilities and trans- Reserve to tighten liquid- marriage as an important event. With a man and portation have been almost ity and raise interest rates, Hong Kong developers are cutting their property prices, spooked by the prospect of rising interest a woman playing di erent roles comes a righteous entirely overshadowed by resulting in the appreciation rates. PROVIDED TO CHINA DAILY commitment between a husband and a wife. With a soaring property prices of the US dollar against most righteous commitment between a husband and a wife which seem to have defi ed major world currencies. in raising the cost of money. despite its externally oriented tal, mostly from the mainland. comes a fi lial closeness between parents and children. all economic fundamentals. Meanwhile, infl ation has After all, fi ghting infl ation has economy and the fact that the This could change. The With parents and children displaying a fi lial closeness The property bubble, even as exceeded the targeted 2 remained the primary func- exchange rate of its currency pressure on raising the comes a rightful relationship Propriety and Music grotesque and enduring as percent in many developed tion of central banks. is linked to the US dollar. benchmark best lending rate between a superior and his subordinates. Hence, the the one in Hong Kong, doesn’t economies. Further increases Hong Kong has remained That’s because the local mon- is building fast, signaling propriety of marriage is the foundation of all propri- have a life of its own. in prices could force central relatively una ected by all ey market is grossly distorted the beginning of the interest eties. Scroll 7: Li Ji The driving force behind banks to be more aggressive the latest developments by the infl ow of overseas capi- rate up cycle.