China's Sporting Goods Industry Is Expected To Grow Rapidly In The Next Five Years.

China is expected

The industry will grow rapidly in the next five years, but the main driving force for growth will come from overseas sporting goods giants in the market. The emerging enterprises in this field will face huge competition.

According to reports, the GeneralAdministrationofSports' sfive-yearplan (2016-2020) released in early May, by 2020, China's sporting goods market will grow from 100 billion yuan in 2015 to 300 billion yuan.

However, due to the lack of brand awareness and product characteristics, smaller local brands will further shrink their market share.

It is estimated that by relying on strong brand awareness and diversified product lines, the major international sports brands will expand the market to China's two or three tier cities and gain more market share.

For example, in the past five years, the German sports brand Adidas (

More than half of the newly opened stores are located in two or three tier cities.

It is estimated that if the development continues to be healthy, the sales of the two or three tier cities will account for more than 50% of the total sales of China's sporting goods market in the future.

There are many Chinese brands competing in these markets, and the main competitive means are price wars.

With the increase of income and the pursuit of healthy life, consumers in the two or three tier cities may pay more attention to the characteristics of brands and products, which is very unfavorable to local brands.

International sports brands already have a large market share in the first tier cities, and the Chinese market has become an important driving force for their growth.

In the first quarter of 2016, Adidas's net sales in Greater China increased by 28% over the same period last year, higher than the overall 18% growth rate of the group in 2015.

Gross profit margin increased by 1.3 percentage points to 57%.

Adidas's old rival, the US sports giant Nike, is also very similar. In the 3 months ended February 2016, sales in Greater China increased by 27% compared with the same period last year, and EBIT (pre tax profit) increased 43% compared to the same period last year.

Because of this, these international sports brands will invest more capital expenditure in the Chinese market in 2016.

Global capital expenditure is estimated to be 750 million euros in Adidas2016.

In the first quarter of 2016, China has surpassed North America to become the second largest market for Adidas. Fitch expects that a large part of the 750 million euros will be used in China.

For China's local sports brands, competition from international brands has slowed their sales growth from the top two digits at the end of 2015 to the low two figure at the beginning of 2016.

In the next five years, the profit margins of local brands will decline due to increasingly fierce competition, limited pricing flexibility and rising labor costs.

Most local brands will reduce capital expenditure in 2016.

Brands like new brands entering the Chinese market and local brands attempting to build high-end brands will have to adjust their market structure.

Anta has established a joint venture with Japanese brands Descente and Itochu to provide consumers with all kinds of high-end professional sporting goods, while 360 degrees have cooperated with Finland outdoor sports brand OneWay, hoping to diversify the product mix and gain a larger market share in the high-end winter sports products industry.