Paris Olympics: A training ground for global sports brands

The Paris Olympics is not only an arena for athletes, but also a training ground for the globalization of sports brands. As the sponsor of the medal equipment for the Chinese delegation, Anta is taking advantage of the Olympics to accelerate its globalization. From the acquisition of FILA to the re-creation of Arc'teryx, Anta's globalization strategy demonstrates the dual power of capital expansion and brand reshaping. However, in the face of competition from international giants such as Nike and Adidas, Anta still needs to continue to work hard on product innovation and channel operations to truly realize the dream of "Anta of the World".

The Paris Olympics, which is in full swing, is creating a sports craze around the world.

Outside the arena of athletes, sports brands are also competing for voice, which is a great opportunity for them to expand their global presence.

In the eyes of Chinese people, the sports brands with the biggest voices in this year's Olympics are Anta and Adidas:

Anta is the award equipment sponsor for the Chinese delegation at the Paris Olympics and is also the sports brand with the longest cooperation with the Chinese Olympic Committee, while Adidas is the sports brand covering the most events at the Paris Olympics.

In fact, in the business world outside the Paris Olympics, the competition between Anta and Adidas has never stopped. In 2021 and 2022, Anta's revenue exceeded Adidas China and Nike China respectively. Today, Anta has firmly established its position as the "boss" in the Chinese sports footwear and apparel market.

However, from a global perspective, Nike and Adidas' revenue and influence far exceed Anta - in 2023, Anta's total revenue was 62.356 billion yuan, while Adidas' global revenue was 21.427 billion euros, and Nike's was as high as 51.2 billion US dollars.

A global training campaign by sports brands is taking place at the Olympics.

1. Behind the “Olympic Business”, Anta’s Global Ambition

Norman O'Reilly, co-author of Global Sports Marketing, once said, "The Olympics is a stage where the eyes of two-thirds of the world's population are focused at this time."

For sports brands, the Olympics is a huge traffic source that can help them build brand awareness more efficiently. There is a consensus in the business community that spending $100 million on sponsoring the Olympics can increase brand awareness by 3%. The same amount of money spent on other marketing areas can only increase brand awareness by 1%.

Nike is a typical example of using the Olympics to gain popularity. In the 1960s and 1970s, long-distance runners had only one type of suitable shoes to choose from: Adidas, but Nike broke this situation. In the 1972 Olympic trials held in Eugene, Oregon, marathon runners wearing Adidas shoes won the top three places, while runners wearing Nike shoes won the 4th to 7th places. Nike, which was still a small company at the time, began to become popular.

Then, in 1976, Nike bet on the top three in the Olympic 1000m trials, and the effect it wanted to achieve was that people would believe that only Olympic athletes wearing Nike could win gold medals. That year, Nike's sales doubled to $14 million, and its performance has been soaring since then until it has become the current industry leader.

At the Paris Olympics, there are at least 16 brands that provide clothing sponsorship for the Chinese team. In addition to well-known domestic sports brands such as Anta and Li Ning, there are also clothing brands that focus on a single field and emerging domestic niche clothing brands. Anta is one of the most eye-catching brands.

At this year's Paris Olympics, Huang Yuting and Sheng Lihao won the first gold medal for the Chinese team in the mixed team 10m air rifle gold medal competition, which was also the first gold medal of this Olympics. Sharp-eyed viewers noticed that when the two stood on the highest podium to receive the award, they were wearing ANTA award-winning uniforms.

In fact, ANTA is the official partner of the Chinese Olympic delegation, and all Chinese athletes on stage will wear ANTA's shoes and clothing for receiving awards. Zhang Yimou serves as the creative consultant for these shoes and clothing, which inherit the classic Chinese style and the main color of white space, and combine elements such as "dragon scales" and "dragon whiskers" with embossed patterns, splicing, embroidery and other techniques.

In addition, ANTA also holds the sponsorship rights for many national teams, including the Chinese gymnastics team and the weightlifting team. Therefore, Chinese athletes can be seen wearing ANTA customized clothing in many competitions. This not only brings ANTA huge exposure and traffic, but also strengthens the public's brand impression of ANTA's strong connection with the national team.

Just like Nike bet on champions, Anta also signed Zhang Yufei, Fan Zhendong and other athletes with "champion physique" in advance. As Fan Zhendong won the championship, his related topics also became a hot search. Tianyancha intellectual property information shows that many companies have applied for "Fan Zhendong" related trademarks before. At present, the "Fan Zhendong" trademark for fitness equipment applied by the sports company has been successfully registered.

Not only athletes, but also the sports shoes and clothing for IOC members and staff are provided by ANTA. As early as October 2023, ANTA signed a contract with the International Olympic Committee to become the official sportswear supplier of the International Olympic Committee for the next four years, with a contract period until 2027. The cooperation period will cover the 2024 Paris Olympics, the 2024 Gangwon Province Winter Youth Olympic Games, the 2026 Milan-Cortina d'Ampezzo Winter Olympics, and the 2026 Dakar Youth Olympic Games. These intensive actions at the Olympics are all for ANTA's globalization strategy.

Long ago, Ding Shizhong, chairman of the board of directors of Anta, set a small goal: "Don't be the Nike of China, but the Anta of the world." In March this year, Anta launched the global first release of Irving's first generation basketball shoes, officially launching its globalization strategy.

However, Anta's main brand influence around the world still lags behind Nike and Adidas.

This is mainly because, unlike Nike and Adidas, which expand their global influence through their main brands, Anta's globalization is more like a "capital expansion" - acquiring multiple foreign brands including FILA, Plandi, Xiaoxiaoniu, and Amer Sports to promote globalization.

2. Anta’s globalization chips

In 2009, Anta acquired the American sports brand Cordillera, thus entering the North American market and laying the foundation for globalization.

In the same year, Anta acquired the business of Italian sports brand FILA in mainland China, Hong Kong and Macau. In 2020, Anta once again acquired the business of FILA International in other regions, making it a wholly-owned subsidiary. The acquisition of FILA by Anta provides more opportunities for its global expansion.

However, in recent years FILA has fallen into a dilemma of sluggish growth.

According to the second quarter and first half financial report of 2024 released by Anta on July 9, the situation of FILA is not optimistic. In the second quarter of this year, FILA achieved a mid-single-digit year-on-year growth, which was lower than the 16.6% of the whole of last year and the high single-digit growth of the first quarter of this year. Looking at the long-term line, the revenue growth rate of FILA from 2019 to 2023 is 73.9%, 18.1%, 25.1%, -1.4%, and 16.6%, showing a downward trend year after year.

Founder Securities believes that FILA's growth decline is mainly due to the drag of the children's and fashion brands. Today, the children's clothing market is relatively saturated, while fashion brands are affected by cyclicality and lack of differentiation.

For example, FILA seized the retro trend from 2016 to 2018 and launched its first "dad shoe" Disruptor 2, which later became a hit. However, as a large number of brands entered the retro market, FILA's differentiated advantage gradually weakened. Coupled with its lack of innovation, its advantage was further weakened.

Compared with the declining performance of FILA, Amer Sports seems to be the new hope for Anta's globalization.

In 2019, Anta acquired the Finnish sports brand Amer Sports. Ding Shizhong described it as: "This is the most important decision I have made since I started my business." In fact, Anta wants to use Amer Sports as the main springboard for globalization. Amer Sports now has three major business divisions - technical clothing, outdoor performance, and ball and racket sports. Each business division corresponds to a core brand - Arc'teryx, a Canadian high-end outdoor equipment brand, Salomon, a French mountain outdoor cross-country brand, and Wilson, an American tennis equipment brand. They have a certain market share and loyal consumers overseas, among which Arc'teryx is the most outstanding one.

After acquiring Amer Sports, Anta almost rebuilt Arc'teryx from scratch, especially by enhancing Arc'teryx's high-end brand tone through marketing methods such as celebrity endorsements and catwalk appearances. For example, in 2020, Arc'teryx invited international supermodel Liu Wen to become the brand's first global spokesperson and appeared at the Paris Fashion Week in the same year.

Up to now, Arc'teryx has become the "social currency" and "status symbol" of many middle-class people in China. There is a popular saying about Arc'teryx: "Middle-aged men have three treasures: fishing, Maotai, and Arc'teryx." In 2018, Arc'teryx had 14,000 members in China, and as of September 2023, the number has soared to 1.7 million.

Since the beginning of this year, domestic consumers have continued to be enthusiastic about Arc'teryx. Around the Spring Festival this year, Arc'teryx's Dragon Year jacket was sold for 12,000 yuan. In February this year, Arc'teryx raised the retail price of its brand products across the board, with an average increase of about 20% to 30%.

Amid the craze, Arc'teryx's performance has been rising. In the first quarter of this year, among Amer Sports' three business units, Arc'teryx's technical apparel business performed best - revenue increased by 44% year-on-year to US$510 million, accounting for 61.2% of total revenue. The technical outdoor performance business was US$400 million, a year-on-year increase of 6%; the ball and racket sports business was US$270 million, a year-on-year decrease of 14.2%.

As Arc'teryx's performance increases, Anta is also pushing Amer Sports to go global. In 2022, Amer Sports was included in Anta's "globalization" strategy. In February this year, Amer Sports was listed on the New York Stock Exchange and entered the broader capital market.

The increase in Amer Sports' overall performance this year also sends more positive signals. In the first quarter of this year, Amer Sports' revenue increased by 13% year-on-year to US$1.2 billion, and its net profit increased by 44% year-on-year to US$39 million. It should be noted that Amer Sports has been in a state of loss for a long time, with losses of US$237 million, US$126 million, US$253 million and US$209 million in 2020-2023 respectively. This profit will undoubtedly inject more confidence into Anta's globalization.

However, Amer Sports and Arc'teryx still have many problems to solve, and Anta's globalization still faces many difficulties.

3. Why couldn’t Archaeopteryx fly?

Compared with their high popularity in China, Amer Sports and Arc'teryx still lack an overseas foundation.

In terms of performance, Amer Sports' regional growth in the first quarter of this year was still dominated by Greater China and Asia Pacific, which grew by 51% and 34% respectively. Europe, the Middle East and Africa (EMEA) grew by 1%, and the revenue in the Americas remained flat. It can be seen that Amer Sports is somewhat "biased" and its overseas performance is obviously insufficient.

Arc'teryx faces the same problem. According to Amer Sports' prospectus, revenue in Greater China will grow from US$202.3 million in 2020 to US$523.8 million in 2022, with a compound annual growth rate of 60.9%, and operating profit margin exceeds the overall profit margin of the business. Globally, Greater China is Arc'teryx's largest market, with 63 stores, contributing 80% of revenue share, and overseas performance is also not outstanding.

In fact, judging from the specific market situation, Arc'teryx is far less popular overseas than in China.

Why is there such a huge difference between domestic and overseas markets? The key lies in products and channels.

Overseas, Arc'teryx intends to penetrate the target population "from top to bottom" and establish a high-end brand mindset. However, the brand competition faced by Arc'teryx is more intense than in China, and it is more difficult to penetrate the population. For example, the popularity of the two top outdoor brands in North America, Patagonia and Mountain HARD WEAR, is also very high, and is not inferior to Arc'teryx at all.

In terms of products, Arc'teryx has a leading advantage in jackets, but is slightly less competitive in camping equipment such as tents, sleeping bags, accessories and other products.

In addition to products, channels are also key factors affecting Arc'teryx's global expansion.

After being acquired by Anta, Arc'teryx eliminated its original distributors in China and adopted a direct sales model. In the first quarter of this year, Arc'teryx had 146 direct stores at the end of the first quarter, a year-on-year increase of 12%, with a net increase of 16 stores.

Most of these directly-operated stores adopt the DTC model, which allows them to better control product prices on the one hand, and control brand image and product quality on the other hand, maintaining their high-end positioning, while improving consumer experience in terms of space, service, etc.

Overseas, Arc'teryx mainly relies on wholesale channels, that is, dealer channels, which are weaker than domestic ones in terms of price and experience control. Many products are sold at a discount by dealers, which affects the brand tone, consumer experience and group penetration, and also affects performance. In the first quarter of this year, Amer Sports' direct-to-consumer channel (DTC) grew by 41%, with DTC in each region achieving double-digit growth, while wholesale revenue fell by 1% year-on-year.

Ding Shizhong once summarized Anta's three core capabilities as: multi-brand collaborative management capabilities, multi-brand retail operation capabilities, and global multi-brand operation and resource integration capabilities. He believes that this is Anta's unique competitiveness and an important foundation for achieving globalization.

In the past, Anta's bargaining chip for globalization was indeed its ability to integrate resources, and it relied on continuous acquisitions to expand its size; but the next round of globalization will require more localized innovation in the products themselves, as well as more systematic operations in the channels.

In the future, the globalization of domestic sports brands will be the general trend. This road is bound to be full of challenges and difficulties. Brands need to have a long-term spirit and the courage to reform themselves in order to truly step onto the global stage.