Anta Is Topping The International And Domestic Sports Shoes And Clothing Market

Recently, media reported that Anta is considering to promote the listing of Amer Sports (hereinafter referred to as "Amafin"), which is expected to raise more than $1 billion. Subsequently, Anta Group responded that it would not comment on market rumors and speculation.

Maybe most readers don't know much about Amafin, but they will often brush news about Archaeopteryx recently. As one of the most popular outdoor brands among the 109 million middle class in China, Archaeopteryx, together with Ralph Lauren and Lululemon, is called the Three Treasures of the Middle Class. Some netizens even teased Beijing SKP that "five people are birds within ten steps".

Archaeopteryx is one of the brands owned by Amafin. This company, located in Finland and founded in 1950, was acquired by an investor consortium consisting of Anta United Fangyuan Capital, Tencent, etc. in 2019. From the acquisition amount of 4.6 billion euros, Anta, which held 57.95% shares at that time, needed to spend more than 20 billion yuan of cash to promote the acquisition.

Of course, this is not the first time Anta has acquired overseas brands. In the past ten years, Anta has made rapid progress in overseas mergers and acquisitions. Since its acquisition of FILA in 2009, it has successively acquired high-end ski brand Descente in Japan, outdoor sports brand KOLONSPORT in South Korea and other brands.

As usual, the acquisition of overseas brands is more to prepare for going abroad in the future. After all, whether it is the accumulation of brand popularity or the establishment of overseas channels, it takes time, far less simple than acquisition.

However, Anta has its own methodology for the acquisition.

Acquired, but not completely

On December 18, 2021, when Anta was founded 30 years ago, it released a new 10-year strategy, namely "single focus, multi brand, globalization", in which "globalization" replaced the "omni channel" position.

Maybe you want to ask, didn't you say that Anta acquired Fila as early as 2009, why did it propose globalization in 2021? The fact is that before the acquisition of Amafin, whether it was Feile, or Di Sant, or Kelong, Anta was more appropriate to them as an "independent Chinese agent".

Taking Fila as an example, Anta Group purchased the franchise and trademark use rights of FILA in China from Belle International for 600 million Hong Kong dollars, responsible for promoting and distributing FILA products in mainland China, * * * and Macao. That is to say, Anta has the right to research, produce and sell these brands in the domestic market, but it has nothing to do with their overseas markets (until 2017, Anta started to promote the acquisition of the trademark management right of Fila in Singapore).

Not for overseas, but for domestic market. Anta, which has grown from a manufacturer to a leader in sports footwear and clothing in China, knows the importance of the brand.

China's sports brand originated from the sports brand of the same name founded by famous gymnast Li Ning, but Li Ning has the blessing of the founder's Olympic champion aura, which is a talent that other enterprises cannot envy. An important reason why Anta can rise is that it is bound to the Olympic IP.

In 1999, when the operating profit was only a few million yuan, Anta invested 3.8 million yuan to sign the advertisements of Kong Linghui and CCTV Sports Channel. A year later, Kong Linghui fought Waldner in Sydney for five games and reached his professional grand slam. With him to complete the leap in life, there is Anta, whose turnover has doubled ten times.

Since then, Anta has continued to deepen its binding with the Olympic IP and sponsored the Chinese Olympic Committee for eight consecutive times. In 2020, Ding Shizhong, Chairman of Anta's Board of Directors, said in an interview: "If we could not cooperate with the Chinese Olympic Committee a year ago, our current valuation would never be the third in the world".

This is the value of overseas brand acquisition. Whether it is Fiele, Di Sant or Kelong, they are all well-known brands that have accumulated for a long time and are naturally more easily sought after. It is also because of this acquisition strategy that the Feile brand stands out as the second curve supporting Anta's growth.

In 2020, affected by the epidemic, Anta's main brand revenue decreased by 9.7% year-on-year to 15.749 billion yuan, while FILA still maintained an 18.1% growth, achieving revenue of 17.45 billion yuan. In 2021, FILA will account for 44.2% of the group's revenue, second only to 48.7% of Anta's brand.

Some practitioners in the sports industry concluded that "the advantage of Anta Group is always two against one."

The purpose of Anta's overseas acquisition is to build a multi brand advantage by acquiring the Chinese management rights of overseas brands and relying on its own brand advantages.

Methodology of outdoor market segment

"With the brand operation ability of today's Chinese companies, the possibility of making an Archaeopteryx or Wilson within 30 years is almost zero, while through acquisition and taking the Chinese market as the potential growth space, it is possible to complete a rebirth." Ding Shizhong said in an interview with the media after completing the acquisition of Amafin Sports.

In the past few decades, the consumption demand of Chinese people has also made great progress with the economy. For example, skiing, which is emerging due to the Winter Olympics, and various outdoor sports that are increasingly popular among the middle class.

To some extent, the sports shoes and clothing industry can also follow the time machine theory of Softbank Sun Zhengyi, and the segmented sports market emerging in developed countries in the past also has growth potential in China.

Although there are many failed cases of overseas acquisitions of domestic sports brands, such as Li Ning's purchase of the operation right of the Kappa trademark from Italy, and then Kappa lost its popularity, Ding Shizhong has enough confidence to say this.

Phillip is the best example.

In 2009, Phillip was still a brand with a loss of more than HK $39 million a year (2009 data). In 2021, the annual revenue of Phillip will exceed 20 billion yuan, and the revenue of a single brand can rank among the top five in China. The reason why Anta can bring its magic back to life depends on accurate market positioning and channel reform.

At that time, Anta found after market research that the domestic sports fashion track was still in a blank at that time, so in 2011, Anta established the strategic positioning of FILA sports fashion, emphasizing its own scarcity through IP co branding, limited sales and other ways; Highlight its own characteristics through the classic red and blue design; Through the international fashion week shows and celebrity endorsements, the product's sense of sophistication was enhanced.

In terms of channels, Anta has radically improved the channel model of Feile, which used to be dominated by distribution. It has adopted a full direct retail model, focusing on prime locations in first tier and second tier cities. The advantage of this is that it not only changes the problem of chaotic terminal image in the past, but also facilitates better monitoring of market consumption trends.

This methodology is also used by Anta in the actual operation of DESCENTE. In 2020, although the revenue of other Anta brands accounted for only 6.6%, the growth rate has reached 35.4%. Among them, DESCENTE's revenue growth rate was 60%, its operating profit margin increased to more than 20%, and KOLONSPORT's revenue increased by 20%, which also turned losses into profits for the first time.

According to Anta's retail performance in the third quarter, the retail sales of all other brands of Anta recorded a positive growth of 40-45% year on year in the third quarter of 2022.

By virtue of market segmentation and channel reform, Anta successfully completed the internal internationalization of multi brand building.

Buy in and go out

In 2020, Ding Shizhong was asked about internationalization in an interview with China Business Daily, He replied: "At the current stage of development, Anta's brand influence and marketing resources are still more targeted at China. We believe that our roots are in China. If we want to make international achievements, we must guard the main battlefield in China."

This may also indicate that the globalization strategy was proposed only in 2021 for the sake of Anta's continuous overseas acquisitions.

But this time is different from the past. According to Anta's 2022 midterm report, in the first half of the year, Anta's revenue increased by 13.8% year-on-year to 25.965 billion yuan, while Nike's revenue in China in the same period was 23.681 billion yuan (3.721 billion dollars).

Anta has topped the domestic sports shoes and clothing market.

What needs to be vigilant is that the second curve that has long supported the group's revenue in the past is slowing down. According to Anta's report, the brand's revenue in the first half of the year was 10.8 billion yuan, down 0.5% year on year. Some people in the industry believe that at present, the layout of Fiele brand is relatively comprehensive, and the previous high-speed growth is difficult to sustain, which means Fiele has entered the bottleneck period of development.

This involves two questions. First, can the brand advantage built by market segmentation be sustainable? Second, is there enough space in the domestic market?

What needs to be acknowledged is that there is a trend in the market segment, or a trend in the market segment. In recent years, with the rise of the national trend, the space of Feile in the sports and fashion track has become smaller and smaller. At the same time, due to the positioning of middle and high-end, Feile is doomed not to rely on sinking to gain new growth.

Despite being driven by the Winter Olympics, Archaeopteryx has become a middle class hit, "one bird is hard to find" for a time. However, there are also media reports that many mainland users have chosen Macao as their purchasing agent, because Macao has not only a complete range of styles, but also more promotional activities.

It is hard to say whether this wave will come and go as quickly as Canada's geese. After all, compared with the outdoor population participation rate of 53% in the United States, the number in China is only 9%, and the market is limited. Moreover, at the moment, the revenue of all other brands of Anta accounts for only 7%, less than 10% of the total revenue.

In other words, Anta, which has established itself in the domestic market, needs the brand to go out rather than buy in. According to the global sports and fitness apparel market trend and analysis report released by Research And Markets website, the global sports apparel market will reach 193.9 billion dollars by 2026, of which the Chinese sports and fitness apparel market will reach 27 billion dollars.

A good case is Nike. According to the financial report of the first quarter of fiscal year 2023 released by Nike at the end of September, although the revenue of Greater China has declined by 16% year on year, the overall revenue still increased by 4% year on year, reaching 12.687 billion dollars.

For Anta, the brand of market segmentation and multi brand strategy can certainly continue to play, but in the long run, it is a better choice to do a good job in the main brand and go overseas.

Write at the end

The acquisition of Amafin Sports is regarded by Ding Shizhong as "the most important decision made since the start of business". It is also after this acquisition that Anta's development strategy has changed from "single focus, multi brand and omni channel" to "single focus, multi brand and globalization".

In the past three years, Yamafen Sports has been in a state of loss, but the loss has been narrowing. According to the financial report, between 2019 and 2021, Anta's losses fell from 633 million yuan to 81 million yuan. At the same time, it is estimated that more than 100 million yuan of profits will be realized from Amafin this year.

Earlier, Anta Group also announced that it plans to cultivate Archaeopteryx, Salomon and Wilson into three single brands with a revenue of 1 billion euros, and Amafin's turnover in the Chinese market will also exceed 1 billion euros.

Many industry views believe that this is Anta's strategy to replicate market segments. But at the moment, the news of listing surprised the industry. On the one hand, this is not a good time to go public, and the global footwear and clothing market is still in the stage of slow recovery; On the other hand, Anta Group is trying to promote the expansion of brands including Archaeopteryx in the Chinese market. At this time, listing means that the operation of Amafin Sports will be more transparent, which is not conducive to strategic coordination with Anta Group.

Therefore, after the news of the listing came out, some people believed that this was a precursor to the fact that Anta could not find a new FILA with its own methodology. There is no golden strategy for enterprise development. In the past, relying on overseas acquisitions, Anta successfully found the second engine of growth, and switched to the high growth mode driven by twin turbines. But as the path of the past narrows, change may be more important.