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China’s Sportswear Giant Anta Gets Presidential Plug

In this month's China Edit, how homegrown Anta is chasing Nike and Adidas, why retailers from Zara to 10 Corso Como are closing stores, and more.
Illustration of Xi Jinping
By
  • Edwin Jiang

BEIJING, China — As Beijing becomes the only city in history to host both the summer and winter Olympic games, Chinese President Xi Jinping took to Zhangjiakou in the nearby Hebei province — one of the co-host cities of the games — to encourage government officials and promote the international sporting event. Though this visit may appear to be standard procedure for any head of state, it tangentially sparked another somewhat surprising headline. While walking through the snow, Xi was seen on the state-sponsored CCTV (Central China Television) wearing a black down jacket made by Fujian-based Anta, a domestic sportswear company. Anta's stock prices rose 3 percent on the Hong Kong stock market immediately after the television program aired, according to Tex Asia.

The event may speak more about the vagaries of the market than Anta’s potential for growth. Nevertheless, almost a decade after the 2008 Summer Olympics, Anta finds itself in an enviable position in the market, especially at home. Anta cited a 16.9 percent growth in net profit reaching 2.39 billion yuan ($347 million) in 2016, buoyed mostly by domestic sales. Additionally, Anta reported 2016 revenues to be up 20 percent year-on-year to 13.3 billion yuan ($1.94 billion).

Though the 2022 Winter Olympics will likely not generate as much hype as the previous Summer Games, as the demand for luxury brands cools in China, the country’s sportswear market is expected to surpass its luxury goods market by 2020, according to a report by Euromonitor. In the years leading up to the Winter Olympics, the sportswear market is expected to post double-digit year-on-year growth, expanding to over $280 billion yuan ($43 billion).

While the brand’s logo remains relatively unfamiliar to those outside of China, Anta’s strides in the Chinese market has allowed the company to respond to the post-Olympic slump following the previous games. Shuttering low-performance stores, while adding new profit generators by acquiring Fila’s loss-making Chinese business from Belle International, and introducing Descente — a Japanese skiwear brand — to the Chinese mainstream through a joint venture, Anta now controls over 10 percent of the sportswear market at home. It is increasingly aiming for the higher-end, putting it in direct competition with the likes of Nike and Adidas.

What’s more, though the home market has always been a priority for Anta, the brand is increasingly shifting its gaze overseas. Having secured shoe deals for highly coveted NBA players like all-star Klay Thompson of the Golden State Warriors, Anta has managed to establish a direct-to-consumer e-commerce business in the United States, as well as a wholesale partnership with American retailer Shoe Palace to distribute the brand’s equipment throughout the West Coast.

In Other News...

Alibaba looks in all directions overseas. This month, Alibaba established its Australia and New Zealand headquarters, intending to build the infrastructure necessary for local brands in the Australasian region to expand globally. In India, Alibaba is leading a $200 million round of funding for Paytm, an Indian payment and commerce company — the investment, made in partnership with private equity firm SAIF Partners, raises the value of Paytm to $1.1 billion. Meanwhile, in Russia, where Alibaba already announced plans to develop logistic services late last year, GQ China reports that Alibaba's AliExpress is now the country's most popular e-commerce platform, with nearly 23 million Russian users.

Anzheng, clothing for the 'mature', launches IPO. Founded in 2008, Anzheng Fashion Group has become a domestic leader in China's apparel market in just under a decade. Through its various lines, Anzheng targets professionals aged 28-45, as well as elderly shoppers aged over 80. On February 14th, the company's opening day of trading on the Shanghai Stock Exchange, listings soared 44 percent, and it reached a market value of 68 billion yuan ($10 billion). Anzheng's equity structure is concentrated in the Zheng family holding, with the largest shareholder Zheng Anheng possessing nearly 50 percent.

Store closures throughout the country. Daphne International Holdings, one of China's largest shoe manufacturers, announced that it had shuttered 999 stores in 2016, with net loss increasing by approximately more than 50 percent according to Reuters. Meanwhile, 10 Corso Como has also chosen to close its doors after three years of doing business in the capital, reportedly suffering "serious loss." Similarly, Zara has chosen to shutter one of its largest flagship stores in Chengdu earlier this month, highlighting the saturated state of fast fashion in the country.

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