The call of "domestic products should strengthen themselves" is not only the urgent need to adapt to the current market reshuffle and the adjustment of the industrial chain, and to urge foreign brands to respect the Chinese market, but also the ardent expectation of the public for domestic brands to seize the rare opportunity and realize corner overtaking.

At present, China's sportswear industry is in the blue ocean stage, if domestic brands can seize the opportunity, there is indeed a lot to do.

Sports apparel gold track

Compared with other clothing sub-industries, Guojin Securities said that sportswear has created a golden track with the characteristics of high growth, high profitability and high concentration.

High growth:According to policy guidelines and per capita consumption of sportswear, Guojin Securities estimates that the retail market of China's sportswear industry is expected to exceed 600 billion yuan in 2025, a growth of nearly 100% compared with 2020, showing good growth. there is a huge market space in the future.

Highly profitable:With the rapid expansion of the market scale, the average profit level of listed companies in the sportswear industry (ANTA Sports Products, Li Ning Co. Ltd., Xtep, 361 °) is much better than that of the clothing and home textile industry.

High concentration:The sportswear market is highly concentrated, which contributes to the birth of big brands.

In terms of the market share of the leading companies in the sportswear industry, by 2020, international brands such as Nike (25.6%), Adidas (17.4%) and Skechers (5.6%) have occupied the middle and high end of the market. Domestic enterprises ANTA Sports Products (15.4%), Li Ning Co. Ltd. (6.7%), Xtep (4.7%), and 361 °(2.6%) ploughed the mass market and penetrated into the mid-market with flagship products.

Domestic leader benefits

For the current prospects of the domestic sportswear industry, Guojin Securities said that sportswear enterprises still have deterministic growth in the medium and long term.

In the new industry pattern, domestic brand sportswear enterprises that are good at grasping the national trend and making significant progress in product strength are expected to become the biggest winners, such as Anta and Li Ning Co. Ltd..

Guojin Securities believes that compared with domestic brands and international brands, although international brands are still dominant from the perspective of overall market share, the current pattern still gives a positive signal.

In 2020, the total market share of international brands in TOP10 enterprises reached 48.6%, which was higher than the level of 22.1% of domestic brands.

It is not far for domestic brands to overtake around the corner:

The overall market share of TOP10 enterprises comes from the clearing of small and medium-sized enterprises, and the overall market share of domestic brands is still gradually increasing, increasing 5.1PCT from 2016 to 2020.

From the perspective of specific companies, ANTA Sports Products, Li Ning Co. Ltd., Xtep, 361 °market share ranked 3rd, 4th, 6th and 7th, and the overall ranking was at the top. ANTA Sports Products's market share has risen to 15.4% in 2020, second only to Nike and Adidas.

Three barriers to industry competition

Where is the strength of the leader to benefit?

Guojin Securities reviewed the changes in the concentration of China's sportswear industry and found that the overall trend was rising, forming three major industry barriers: business efficiency, product technology and brand marketing.

In the view of Guojin Securities, to enhance the market share based on the competitive advantage formed by these three barriers has become the only way for sports clothing enterprises to transform and upgrade.

• Product science and technology: the rise of domestic science and technology, excellent products push prices up

In terms of product technology, the strategic transformation of domestic brands has accelerated the upgrading of science and technology, and the gap in product technology between domestic brands and international brands has been narrowed through the continuous introduction of new materials, new processes and international brands.

In 2020, the R & D expenditure of ANTA Sports Products and Li Ning Co. Ltd. reached 790 million yuan and 360 million yuan respectively, and the CAGR4 was 26.5% and 28.6%, respectively. As the largest production base of sports shoes and clothing in the world, China has a solid foundation in the integrity of industrial chain, production efficiency and technical reserve, which provides soil for domestic brand product innovation.

• Marketing: grasp the popularity of the national tide and adhere to the localization strategy

In terms of marketing, with the improvement of China's national strength and national pride, local brands represented by Li Ning Co. Ltd. have created a "national trend" with Chinese characteristics since 2018, gaining popularity among young consumers.

In this regard, Guojin Securities analysis said that behind the rise of the "national tide" is a deeper understanding of the psychology of Chinese consumers by domestic brands. When the personalized demand, purchasing power and national identity of the main young consumer groups are enhanced, the national tide products with "Chinese elements + young trend elements + matching product characteristics" as the core formula can effectively open up the market drainage trend.

As the core of the national tide products, China's unique profound Chinese culture and contemporary local popular culture are still rich mines with great room for exploration, and continue to upgrade through product marketing and design. Domestic brand recognition represented by ANTA Sports Products and Li Ning Co. Ltd. will continue to improve.

• Efficiency: the epidemic brings operational pressure and accelerates the transformation of domestic brands DTC.

In terms of efficiency, the outbreak of the epidemic in early 2020 put pressure on offline stores, forcing dealers to actively embrace digital operations, providing a good opportunity for the transformation of sportswear brands DTC (face-to-face consumers, Direct to customer). Local sportswear leaders such as ANTA Sports Products and Li Ning Co. Ltd. have taken the lead in starting a comprehensive transformation.

For example, Anta rapidly integrates resources to full retail and live streaming, and plans to improve omni-channel operational efficiency by streamlining intermediate dealers in the channel, increasing the proportion of direct business, opening large stores / flagship stores, and digital transformation. DTC business accounts for 70% of revenue by 2025.

Similarly, Li Ning Co. Ltd. has also worked deeply with Aliyun to carry out digital transformation, accounting for an increasing proportion of online sales channels closer to consumers, such as e-commerce, Mini Program and live streaming, with online sales accounting for 27% in the first half of 2020.