Sporting chance to revive ‘golden years’
the company’s future growth recourses. “There’s no need for us to maintain low-income stores that can only rake in monthly revenues of less than 60,000 yuan,” stresses Zhang.
It might sound obvious to revamp the distribution channels, inventory situation and marketing strategy, and Kappa has to stick to its uniqueness.
“Having a chain of Omini logos, patterned on the ‘backtocouple’ and very much liked by consumers, is our DNA,” Zhang says.
From teaming up with Japanese designer Kazuki Kuraishi to launching a co-branded new product series, and conducting cross-sector collaboration with celebrities in the entertainment, music and art communities to lift brand exposure, Kappa is bent on being a trendsetter again, as it did when it first landed in China.
Positioning itself as a fashion sportswear brand, and not like any other brand, the company has sought to focus on diversified market segments like sporting accessories and women’s goods driven by their lust for gymnastics and yoga, says Zhang.
“But, for both general and specific Chinese sports companies, the major problem is how to gain and keep customers’ effective commitment from an emotional viewpoint”.
Zhang thinks Li Ning has done well as it had obtained a great base of people’s shoring up, featuring “Chinese Li Ning” and classical elements, which distinguishes itself from foreign competitors.
China Dongxiang has played its part too in promoting Chinese teenage football culture, which has far lagged behind that of Western countries. The Kappa brand has contributed to sponsoring the “Chinese Football Boy” video tournament and has received two billion clicks from viewers since last year’s debut.
Unlike being just a traditional sportswear company, investing has long been seen as a vital strategy by China Dongxiang’s directors. Based on the slogan “Being profit-oriented, working with high-caliber partners and being focused on competitive projects”, it has teamed up with many private enterprises, such as the Alibaba Group-backed Yunfeng Fund and storied US venture capital investor Sequoia Capital. As of late June this year, the company had held Alibaba shares valued at 1.98 billion yuan.
“Liquidity is our priority amid the market uncertainties, as well as beefing up our protective capability,” Zhang explains. The company’s financial investment segment currently boasts total assets of HK$11.3 billion.
Although not a diehard sports fan himself in his childhood, systematic learning about sports seemed to be the catalyst for Zhang to make his journey into the business.
“Thanks to sports, it binds my career with my interest,” he says.
Recalling his experience a few years back, when he tried to read financial statements in the pharmaceutical industry, every single nerve in his body was reluctant to work, he says in jest.
Having been with the sporting sector for well over 20 years, Zhang bears plenty of testimony to the ups and downs in the country’s sporting goods business.
In his life, one person stands out — Chen Yihong, currently chairman and the biggest shareholder of China Dongxiang, whom Zhang succeeded as chief executive officer.
Have known each other as colleagues at Li-Ning, where Chen was its first CEO, both were of the opinion that the Kappa brand was undervalued with lots of room for development.
“Our common cause to work for the future of the sporting goods business has brought us together,” says Zhang.
Before joining China Dongxiang, Zhang was president of LeSports — the sports arm of China’s troubled Chinese video streaming group LeEco — for less than a year.
He prides himself in having what he calls a “well-thought plan” and a clear future direction for the group. “The most uncomfortable thing for a leader is that you haven’t got any plan in case you know the problem and the solution. So, the only thing I need to do is to let time do it”.
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Zhang Zhiyong, chief executive officer of sports apparel maker China Dongxiang, says consumption upgrade and changing lifestyles play a big role in the reconstruction of the Chinese sportswear business.