Winter 2019 GOING GLOBAL Could Anta “Just Do It” and become the world’s next Nike?

By Mark Andrews

Image by Raciel Avila

CKGSB Knowledge 2019 / 51 Company

China’s national nta, the leading Chinese sportswear are in a fairly positive position, but are brand, is determined to make itself their products any different to Adidas and sportswear Aas well-known and trendy around the Nike?” world as Adidas and Nike. With it being champion, Anta, named an official sponsor of the 2022 On your marks Beijing Winter Olympics and President Anta is a relatively young player in the has set its sights Xi Jinping having been seen wearing the global sportswear scene. It was established brand, it might be a race it stands a chance by company chairman Ding Shizhong in on becoming the of eventually winning. Fujian Province in the south of China in In the Anta store on Shanghai’s 1991. The last few years have seen rapid country’s new renowned Nanjing East Road, sales growth with headline figures for revenues personnel proudly stress Anta’s position as and profits consistently increasing. market leader. the number one Chinese sportswear brand This is off the back of a rapid expansion and pitch their bestselling footwear, a in the sportswear market in China, which Will it be able to lightweight and low-price sneaker for RMB is expected to achieve annual growth 369 ($52). rates of around 10% both in 2019 and knock out the Anta has a 15% share of China’s 2020, according to Statista, a business- sportswear market, but it is still behind the intelligence portal. Anta in 2018 reported likes of Nike and top global brands: Adidas has 20% and revenues of RMB 24.1 billion, up 44.4% Nike 23%. “During the past November 11 over 2017 . Adidas to reach shopping carnival [similar to Black Friday In 2009, Anta bought the rights to in the United States], Anta achieved RMB the FILA trademark for mainland China, its goal? 1.83 billion ($261 million) in sales, with Hong Kong and Macao. The acquisition is 63% growth year-on-year,” says Karen a crucial part of the surge in its mainland Dai, group project director at ISPO, a China business, with an increase in society that organizes a leading sports fair revenues of 79.9% versus just 18.3% for in Munich each year. “Anta listed number Anta-branded products. FILA-branded three in the sports category and their kids’ goods now account for more than half of line listed number four in that segment.” the company’s gross profit. Anta’s game plan is to use the 2022 “To some extent, it [FILA] is still seen Winter Olympics to vault over Adidas and as a cheaper alternative to Adidas and Nike, Nike to become number one in sportswear but Anta has been working hard to create in China, a market which is currently worth more of an image of a first-choice brand $43 billion annually, but the company still and has been fairly aggressive with its faces a problem with market differentiation. marketing,” says Ben Cavender, principal at “Domestically their brand has been well- China Market Research Group. “It has also received over the last decade or so,” says used brands like FILA to try and move up- Mark Thomas, managing director at sports market and into street wear.” Financially, marketing company S2M Group. “They the latter strategy seems to be successful.

Anta has understood how nationalism can benefit them

Mark Thomas Managing Director S2M Group

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Anta is the leading Chinese player, but is still RACING FORWARD venture with Itochu for the Descente far behind international brands brand, and in 2019 it gained a family of Nike brands from its Amer purchase. 2013 “The multi-brand strategy also brings Adidas a growing reputation to Anta,” says Dai. 2014 Anta “FILA keeps its 80% year-on-year growth rate, and other brands like Descente and 2015 Li-Ning Kolon are all running successfully in 2016 China.” The multi-brand strategy has helped 2017 grow Anta’s bottom line, even though it also risks overshadowing the Anta brand 2018 itself in the market. Until the Amer Group purchase, Anta was largely dependent 0 5 10 15 20 25% Euromonitor International, Bloomberg on the home market, but with several international brands now under the FILA is not the only foreign company “Li-Ning is an interesting case because group’s control, it can make bigger forays Anta is using to fuel growth. In 2019, Anta going back five years, Li-Ning over- into overseas markets. The multi-brand purchased the Finnish company Amer expanded its retail footprint in China strategy has also allowed the company to Sports for $5.2 billion, bringing into the and tried too hard to copy Nike,” says target different market segments. “Anta is fold brands such as Arc’teryx and Wilson. Cavender. “The Li-Ning of 2019 is in building up their brand matrix, from entry- Another key part of the company’s a much stronger place. It has embraced level sports goods to premium outdoor strategy has been building sales through being a Chinese brand with unique Chinese and ski brands as well as sports equipment brand attachment via sponsorships that design characteristics and has been setting from the Amer Group,” says Dai. extend beyond local Chinese teams and the internet on fire with its street wear.” The China-US trade war, and in sport stars to include names such as He notes how Li-Ning had to scale particular a Chinese backlash against Filipino boxer Manny Pacquiao and Klay back and re-evaluate before achieving a the NBA in late 2019 related to a Thompson of the NBA. resurgence. Thanks to those efforts, the politically charged tweet, have helped company is now booming with profits in strengthen Chinese sportswear brands and The race is on the first half of 2019 nearly tripling. Its manufacturers in their home market. This But the first obstacle to Anta’s global rise has been reflected in Li-Ning’s share has come at a time of growing national ambitions may not be Adidas and Nike price, which has risen around 170% since pride and a greater willingness amongst but other Chinese brands, in particular Li- June 2018, compared to just over 50% for consumers to support local brands. Ning, named after the athlete who became Anta. “Both Anta and Li-Ning have been a gymnast star at the 1984 Summer Michael Norris, strategy and research beneficiaries of the Guochao (national Olympics in Los Angeles. manager at AgencyChina, a market tide) trend,” says Norris. “Chinese “First of all, Li Ning himself is a intelligence firm, says that although Anta consumers have responded positively to celebrity, a well-known sportsman who is currently more financially successful, domestic sportswear brands aggressively has won several Olympic medals,” says it is Li-Ning that seems to epitomize the adopting streetwear influences, while Haru, an online fashion commentator concept of “Cool China.” “By contrast, playing up local themes like folklore who blogs under the name Haruru. “This Anta’s products look and feel more references or printing “中国” (China) in is something Anta could never compete functional,” says Norris. Cavender adds, large characters.” He believes that Anta’s with.” “Anta is seen as a strong option. Still not association with the 2022 Beijing Winter He goes on to note that Li-Ning scored the first choice for many, but it is definitely Olympics will, in the short term, help the a big hit with its range unveiled at the 2018 now viewed as a quality alternative to company to further capitalize on this trend. New York Fashion Week and has garnered foreign brands.” “Anta has understood how nationalism considerable street-cred for its cool can benefit them,” says Thomas from S2M. clothing designs with a modern Chinese Relay race “They’ve positioned themselves strongly feel. Anta today could be seen as being Most sportswear companies rely on their toward domestic athletes, national teams where Li-Ning was around the time of the own brand, but Anta stands out for its and now as an Olympic sponsor. They’re 2008 Beijing Olympics, of which Li-Ning multi-brand approach. Along with the focusing on where there is relevance to was a sponsor, although Li-Ning’s efforts acquisition and licensing agreements their marketing in China because most of to capitalize on that event backfired. already mentioned Anta also has a joint their market is currently domestic.”

CKGSB Knowledge 2019 / 53 Company

company is likely to benefit in the run-up to the next Winter Olympics, but it needs to be careful not to repeat the mistakes of Li-Ning and make sure it masters the mainland China market first. “Companies like Nike are effectively marketing organizations that happen to sell shoes, so it is very difficult for an outsider to break into that top position in the market,” says Cavender, noting that it may take some time for Anta to be in a position to compete globally. Through acquisitions, the company has made far greater inroads into the overseas sportswear markets than its Anta’s flagship store in Shenzhen Chinese competitors without having to bear the associated marketing costs of He notes that purchases by Chinese to have done it organically is Huawei while trying to take the Anta brand itself global. consumers of sportswear are largely not most others, including Bytedance, Geely Tempering the future success of this about using the clothing for sport but are and Lenovo, have done it via acquisitions. approach is also the increasingly stringent more aspirational. Shifts in Chinese society In many ways, Anta’s approach is like that Chinese government controls on overseas toward more active and leisure-focused of automaker Geely, which buys existing acquisitions above $50 million. However, lifestyles have helped build the market for brands and operates them as separate Anta’s Amer Group purchase was subject this type of clothing. entities. to these controls and was approved, While Anta’s official sales growth “Outside the core brand, Anta’s and so these restrictions may not be figures have been phenomenal, some overseas acquisitions may prove more unsurmountable. market observers, including several short- successful in winning over European and There is now already some knowledge seller research firms, have identified North American consumers than a fully- of the Anta brand overseas thanks potential problems in its reported financials. fledged market entry,” says Norris. to sponsorship of athletes like Klay “The numbers behind Anta’s growth story Achieving success internationally as Thompson, but many of these deals, such as have been questioned,” says Norris. “Blue well as domestically also has to do with with his associated KT shoe line, have been Orca, GMT Research and Muddy Waters corporate management. According to about riding the popularity of the NBA have each published research interrogating Thomas, part of the reason Li-Ning failed with Chinese fans. The recent NBA tweet Anta’s financial statements.” in its first attempt to go global was that it issue shows that such associations can be It is to some extent unclear how the tried to do too much too quickly without the problematic for a Chinese sports brand, two brands, Anta and FILA, balance the product lines and quality to support it. Anta, both at home and abroad. two company’s accounts. FILA is certainly he believes, is in a far better position now Anta has a plan and they have the much more visible in the market, especially than Li-Ning then. determination but getting into the lead in first-tier cities. “I think the answer is “What (Anta founder) Ding Shizhong position is not going to be easy for two main one of scale,” says Thomas. “FILA is a understood is that you may have a good idea reasons—the general global perception genuine global brand, whereas Anta is still or concept but you need the right people of Chinese products as being low-quality pretty much restricted to Chinese domestic in your business to run it,” says Thomas. goods and the deep consumer loyalties markets. Most of their [Anta’s] global “And he has employed a lot of very good, attached to Adidas and Nike. growth will come from acquisition rather competent seasoned professionals in this If Anta’s ambitions of becoming a than the organic growth of the Anta brand market.” One notable early appointment global household name are to be realized, it itself.” was James Zheng, who formerly ran is going to be a long road. “They’re not Reebok’s China operations, as president in ready for it yet, maybe in five to 10 years’ Running the world 2008. time,” says Thomas. “First, they don’t have Anta is aiming to be not just a competitor to the revenue to get one of the marquee Adidas and Nike at home but also around The finishing post athletes. Adidas and Nike have so much the world, but few Chinese companies have Although Anta seems to have positioned more to spend, and secondly they don’t so far managed to make the jump to become itself well, there are still many hurdles have the distribution channels to benefit globally competitive. One of the only ones ahead to achieve global success. The from it.”

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