Sports Brand Observation: Ask Anta Again

Strong international brands such as NIKE, ADIDAS, PUMA, REEBOK, CONVERSE, KAPPA and domestic leader Lining are calling for high winds in the high-end market. Many local sports brands such as XTEP, double star, PEAK, Jordan, del Hui, 361 degrees, and Philharmonic are also unwilling to become the three tier brands.

In July 10, 2007, Anta was listed on the stock exchange of Hongkong, and was 183 times oversubscribed, raising about HK $3 billion 168 million.

Not long after, Lai Shixian, chief executive of Anta sports, said in an exclusive interview with a local circulation Metropolis Daily in Fujian that "last year, Anta realized net profit of about 147 million yuan. This year, net profit is expected to increase to 380 million yuan, and in 2008 it will exceed 600 million yuan."

This is not an easy task.

What can we do to support Anta's share price?

From Kong Linghui to CBA, from pure shoes product development to series of sporting goods, sports marketing, and sponsorship of professional sports teams, Anta has been leading all the time. They have supported Anta's continuous growth and Anta's glory today.

But that's all in the past. If Anta never forget these "leading" and indulged in these leading reports and memories, they will lose their way. What is more important and meaningful to Anta is how to lead next.

In fact, Anta's difficulty in becoming a continuous blue chip stock is quite large.

The main support for stock price and earnings is Anta's continuous profitability.

Now the competition in the sporting goods industry (sports goods market) is in the white hot state. Many resources are gathered in this industry, so we can only get the average profit. This is the basic principle of economics.

Of course, Anta, the leader of the industry, can get a much higher profit than its industry by its leading edge.

The requirement for Anta is to continue to lead the sporting goods market in China.

Anta's prospectus shows that only HK $250 million of HK $3 billion 100 million is used to expand the scale of production. Most of the remaining funds will be used for brand promotion and expansion of marketing networks.

The operation of the brand and the solid channel are the two best tools to make Anta brilliant today. Anta is still too obsessed with the past successful experience.

For brand promotion, Anta brand is definitely a strong brand in today's world. Of course, the brand needs to be maintained and appropriately promoted to maintain brand's freshness and loyalty, which does not require huge capital investment.

From 2001 to 2004, Anta has basically formed a monopoly network covering the whole country (county) and above the city level, reaching the monopoly coverage of the largest coverage in the industry. In 2007, Anta has 37 dealers and more than 4000 stores, and Anta will also spend a huge sum of money on expanding its marketing network.

This has to make people doubt Anta's strategy of using funds.

It is undeniable that Anta has bought back many marketing networks to enhance its sales channels, and further improve and enrich its sales network.

The author's doubt is whether Anta has put considerable capital into the marketing network of the first tier cities.

In fact, by the end of 2005, Anta has already controlled 40% of its terminals. Is Anta necessary to further increase its share of control?

In 2001, Li Ning Co hired an external consulting firm to investigate and conclude that the target consumers of Li Ning Co management are 14-28 years old, student centered, large and medium-sized cities, enjoying sports, advocating fashion trends and internationalized trends. The core consumers of genuine Lining sports products are between 18 and 45 years old, living in two tier cities, middle income, and not "heavy consumers of sporting goods".

Lining CEO Zhang Zhiyong, who was born in the financial sector, found that Lining was always unable to sell in the first tier cities, but the second tier cities that were not very sensitive to brands had always been selling well.

Is it possible to identify the location of Anta in mid-range cities, and whether the capital investment in cities such as Shanghai, Guangzhou and Beijing can be effective?

For the development of Anta brand, entering these cities is a matter to be completed sooner or later. Is it possible to invest large sums of money in the wrong time?

If Anta uses huge amounts of money raised to invest in two or three line cities or even county level, well developed town level sales network, and continuously expand sales outlets according to the actual sales situation, and eliminate inefficient outlets, continue to optimize, consolidate and consolidate the terminals of non tier cities, and believe that it is meaningful for Anta's sustained profitability.

So, where is Anta's large sum of money raised?

Merger.

If Acer did not buy TI's PC business, Lenovo did not acquire IBM's PC business, the two computer manufacturers from China could not be in the fourth place and third place in today's computer industry.

For manufacturing, too much support is needed.

Anta has already grasped itself by using external capital through capital market, at least "expanding marketing network" reflects this goal.

However, Anta still hopes for its natural growth. For the sporting goods industry in the "scrimmage" period, Anta should consider the rapid acquisition and expansion of production capacity and the elimination of competitors.

For Anta, who wants to compete with Lining, even Nike and Adi, he needs this "scale" too much, and in a short time, there is plenty of money on hand.

The fund raised by Anta has HK $250 million for investment and expansion of production capacity. For a world-class production base in Jinjiang, Anta's choice seems unwise.

It is not difficult to cooperate and merge with local enterprises in Jinjiang by holding strong brands, huge funds and promising prospects.

In this way, we can properly eliminate unnecessary competition, do not invest repeatedly in fixed assets, enhance our strength and expand our scale.

But what about Anta?

In those days, Kong Linghui's "accident" made Anta grow between "hazy". However, Anta did not want to expand the international market under the "hazy" state.

Although this reflects Anta's rationality on the one hand, it also shows that Anta is too conservative for international market development.

A reporter in the interview with Anta, Anta President Ding Zhizhong's point of view touched him very much.

Ding stressed that the main reason why Anta did not enter the international market on a large scale is not to ignore the international market, nor to want to enter the international market, but to form an international marketing mode that can be replicated.

Can we replicate the international marketing mode?

However, the author believes that Anta is more important to make use of the huge amount of funds to consolidate and deepen the domestic market. At the same time, part of it is used for deep internationalization of internationalization (in fact, Anta has begun to try in Asia). With its price advantage and stable product quality, it has rapidly opened up the international market.

With the rapid growth of international market sales, it will support Anta's share price in the next few years or even more than ten years.

There is still a lot of room for growth in the domestic market, but Anta is beginning to prepare for the end of the good situation after 08 years.

Just like that year, if Mr. Ding graduated from junior high school, instead of going to Beijing to sell shoes directly, he would learn the way of retail development, and then operate it. Is there a Anta today?

Can not be expected.

But the former has achieved what Mr. Ding wants, and this is not denying the importance of something.

Passive business philosophy. In August this year, after the Economic Observer published in Anta, it interviewed Anta's chief operating officer Lai Shi Xian and Xu Yang, director of brand management center, on the possible strategic adjustment, upgrading of brand, adjustment of marketing strategy and product innovation to maintain its leading position.

The nature of newspaper interviews is that "decisions will not affect the fate of Anta, but will undoubtedly have a very important impact."

After listing, what is the change of strategy in the face of competitors?

For this problem, Lai Shixian said that foreign brands are located in the relatively high-end consumer groups, and Anta is positioned in the middle and middle income groups.

Lai Shixian said that Anta has a relatively strong competitive advantage in this market segment, and believes that the demand growth of this group will be the largest. So long as the market segments grow, Anta will lead in the competition.

Mr. Lai is too optimistic.

In a sense, there is no problem with its statement, but the strategy of the industry leader or competitor will not wait there for the benefits. The growth of the mid market segment will be the biggest and Anta will have to go.

Anta's efforts to cultivate the mid end market are also helping multinational brands cultivate their potential consumers.

The following two aspects can be explained, Anta's "waiting" passive business philosophy -- Anta has been waiting for a big growth in the mid market.

On the one hand, China's economy will continue to develop within a few years. McKinsey predicts that by 2010, the annual income of 40 million households will exceed 48 thousand yuan (6000 US dollars), which is equivalent to 24 thousand US dollars after the PPP adjustment, which is enough to reach the middle class level in the United States.

So those consumers in the middle end are very familiar with sports shoes. Because of their (or family) purchasing ability, they must choose the higher brand, so they must be divorced from the Anta in the middle.

Why do those former Anta consumers change their choices? This is not just the reason why purchasing power improves unilaterally.

In the interview, Anta brand director Xu Yang talked about an interesting thing.

Consumers saved a lot of money to buy a pair of Nike or ADI, the most wearing Anta on the golf course, may wear Nike when they date with their girlfriends.

Why?

A symbol of social status.

Chinese people have a natural "look up" mentality towards international brands. It is not impossible, at least for a short time, to change.

On the other hand, the international brand investigation agencies are not doing nothing. They also predicted that the segment market will grow very fast. They deliberately scale the price range from the high-end to the "high-end high-end" when pricing, and the intention is simple, so that the expanded price range can "grab" those consumers who were originally in the middle.

If Mr. Lai thinks that Nike's products are basketball shoes of several thousand yuan, it will be too far away from the real market.

If these two aspects work together, if Anta is still sitting in the middle end market, the share price may fall.

In terms of marketing, foreign brands are the concept of cool or fashionable. They may not only affect the high-end group, but also affect the middle end group of Anta. This influence is also long-term. What does Anta do in the face of this situation?

As for the answer to this question, I have some doubts about Anta's management.

Lai Shixian said so, "even if its promotion strategy will affect these middle end crowd, it has no product series suitable for this group, and there is no way to get the market."

(maybe there will be some impact, but not everyone will be affected and really spend thousands of dollars on basketball shoes. China is far from this reality.)

Lai Shixian's "calm" comes from "it has no product line suitable for this group, and there is no way to get the market".

Since 2004, foreign mobile phone brands have begun to fully intervene in the low-end market segments. They have completely defeated domestic brands through channels and price sinks, in addition to the mobile phone business of the rising stars.

Readers can take a look at the annual report of this year's professional mobile phone operators representing the waveguides. We can get a general understanding of the survival of domestic mobile phones over the past few years.

These four words can be used to describe the whole line of defeat.

Yes, Nike has launched about 200 yuan for the low - and middle segment market, but with its strength, it can come back again at any time.

Its mistakes are only due to the neglect of the industry's sensitivity to brands.

In other interviews, Mr. Lai Shixian said that if Anta launched high-end brands, it should not use Anta.

Nike's fault lies in its failure to sell its low-end products with a brand-new brand.

If Nike or ADI come back and start the new brand in the positioning of the low-end market products, with its strong R & D, channels, financial strength, in the short term to create a mid-range famous brand and Anta, XTEP, del Hui and so on, it is not difficult.

Of course, this is a bad idea.

Nowadays, many sports brands in Jinjiang are not enthusiastic about listing, and Nike and others are supporting them in research and development, marketing, capital, channels and management by acquiring their shareholding, and the consequences are not good.

Of course, they can also support some middle end brands through direct participation, cooperation and joint ventures to fight Anta.