Why Euro brands risk be­ing frozen out

China Daily European Weekly - - Comment - Mike Bastin The au­thor is a vis­it­ing pro­fes­sor at the Uni­ver­sity of In­ter­na­tional Busi­ness and Eco­nomics in Bei­jing and a se­nior lec­turer at Southamp­ton Uni­ver­sity. The views do not nec­es­sar­ily re­flect those of China Daily.

As the Bei­jing Win­ter Olympics loom, the sportswear mar­ket surge has not yet been matched by strate­gic Sino-Euro­pean part­ner­ships

Agreat many Euro­peans are now ea­gerly an­tic­i­pat­ing the 2022 Win­ter Olympics in Bei­jing and the op­por­tu­nity this brings for an ex­cit­ing, in­ter­na­tional sports-packed China va­ca­tion. But can the same be said of Europe’s sports and cloth­ing brands?

Not at all, de­spite the fact that China’s fa­vorite US win­ter cloth­ing brands, The North Face and Columbia, have pub­licly stated that the Chi­nese mar­ket, in the run-up to the games, rep­re­sents a great busi­ness op­por­tu­nity. Sadly and sur­pris­ingly, lead­ing Euro­pean sports and out­door cloth­ing brands such as Adi­das and Ree­bok ap­pear not to have fol­lowed their lead.

In fact, not only has Adi­das not po­si­tioned it­self at all for this un­doubted mar­ket growth, but the Ger­man gi­ant of the global sports in­dus­try con­tin­ues to shift pro­duc­tion away from the Chi­nese main­land and down­size its over­all op­er­a­tional pres­ence in China.

Yet Ree­bok, Adi­das and other Euro­pean sports and out­door cloth­ing brand pro­duc­ers need only take a look at the Chi­nese gov­ern­ment’s pro­mo­tional push where the 2022 Bei­jing Win­ter Olympics are con­cerned. As a re­sult of this State-led stim­u­lus, the out­door cloth­ing and re­lated mar­kets across China are set to out­grow com­fort­ably the over­all sports brand mar­ket in the coun­try.

Euro­pean out­door cloth­ing and sports brand pro­duc­ers need to not only wake up to this mas­sive mar­ket op­por­tu­nity over the next few years, but it is also im­per­a­tive that they ap­pre­ci­ate just how de­ter­mined China’s gov­ern­ment is to use the Win­ter Olympics as a spring­board with which to cat­a­pult win­ter sports and the win­ter sports brands for­ward with a quan­tum leap.

This is ev­i­denced by the gov­ern­ment’s stated goal of open­ing an in­cred­i­ble 1,000 ski re­sorts by 2030, more than twice the present num­ber. In ad­di­tion to gov­ern­ment tar­gets, China’s pri­vate sec­tor is get­ting in on the act. Prop­erty gi­ant Dalian Wanda, with an ev­er­grow­ing global pres­ence, re­cently opened what is widely ac­cepted to be the largest in­door ski re­sort, in Harbin, cap­i­tal of Hei­longjiang prov­ince.

Euro­pean com­pa­nies even in­di­rectly con­nected to, or de­pen­dent on, any area of the win­ter cloth­ing and sports in­dus­tries need to fo­cus fran­ti­cally now on the mo­men­tum al­ready gath­er­ing pace in the Chi­nese mar­ket­place. They should also ac­cept that the im­pact of the 2022 Bei­jing Win­ter Olympics could change the at­ti­tudes and be­hav­ior of a large pro­por­tion of the Chi­nese pub­lic to­ward win­ter sports. Sig­nif­i­cant and per­ma­nent changes in life­styles among the Chi­nese pub­lic could be start­ing now and could con­tinue long af­ter the 2022 games.

It is not just the im­mi­nence of the games that could con­trib­ute to more win­ter sports par­tic­i­pa­tion by the Chi­nese con­sumer. Euro­pean cloth­ing and sports brand pro­duc­ers must also be aware of chang­ing val­ues and life­styles and their im­pact on brand de­ci­sion­mak­ing, now in­creas­ingly ap­par­ent where Chi­nese con­sumers are con­cerned. While Chi­nese con­sumers re­tain many of their tra­di­tional val- ues, such as fam­ily ori­en­ta­tion, they now also dis­play a greater sense of self-iden­tity and ad­ven­tur­ous­ness — even re­bel­lious­ness. It is these more mod­ern val­ues that could also at­tract huge num­bers of the grow­ing Chi­nese ur­ban, ed­u­cated, mid­dle class to the raw, and of­ten rowdy, ex­cite­ment of win­ter sports.

Ad­ven­ture, even dan­ger, dis­tin­guishes many Win­ter Olympics sports, such as ski-jump­ing and ice hockey. But there are also abun­dant op­por­tu­ni­ties for self-ex­pres­sion and, there­fore, the con­struc­tion of a more re­ward­ing self-iden­tity.

In ad­di­tion, Euro­pean com­pa­nies in this area should be aware of the op­por­tu­ni­ties for co­op­er­a­tion and even co-brand­ing with in­creas­ingly in­ter­na­tional and com­pet­i­tive Chi­nese pro­duc­ers.

My re­search into the chang­ing set of val­ues now emerg­ing among Chi­nese con­sumers also re­veals the grow­ing im­por­tance of nos­tal­gia and na­tional iden­tity. A long-term tie-up with a suit­able Chi­nese com­pany, there­fore, could pro­vide Euro­pean play­ers with a solid and sus­tain­able com­pet­i­tive ad­van­tage when com­pe­ti­tion is only set to in­ten­sify fur­ther.

Please note that it is only strate­gic part­ner­ships — ones that last well be­yond the 2022 Bei­jing Win­ter Olympics — that should be con­sid­ered here. Any at­tempt at some sort of “quick fix” could back­fire and leave both the Euro­pean and Chi­nese com­pa­nies worse off and poorly placed to mount any sort of sig­nif­i­cant re­cov­ery. Chi­nese con­sumers, in ad­di­tion to the value changes dis­cussed pre­vi­ously, are also far more mar­ket savvy and de­mand­ing than be­fore. Sino-Euro­pean out­door cloth­ing and/or win­ter sports brand part­ner­ships have, there­fore, no op­tion but to take a long-term per­spec­tive, and be­hoves the Euro­pean part­ner to go much fur­ther than sim­ple co­op­er­a­tion. In­stead, the times now call for the build­ing of com­pet­i­tive co-brands where both the Euro­pean and Chi­nese- pro­duc­ers’ brand iden­ti­ties ap­pear vis­i­bly on the fi­nal prod­uct.

Such strate­gic part­ner­ships ap­pear to be in place al­ready be­tween ma­jor Chi­nese sportswear brand pro­duc­ers and for­eign com­peti­tors. Lead­ing brand Anta, for ex­am­ple, re­cently be­gan joint ven­ture deals with Ja­panese ski wear brand Des­cente and with Kolon Sport of South Korea.

For such part­ner­ships, which make per­fect sense given the com­ple­men­tary na­ture of the part­ners’ strengths and weak­nesses, it is es­sen­tial that the Chi­nese part­ner gains in brand iden­tity and is not sim­ply used as a low-cost and/or mar­ket-in­formed un­der­study.

But where are the Sino-Euro­pean part­ner­ships to match the Sino-Ja­panese and the Si­noSouth Korean ini­tia­tives men­tioned above ?

To date, there re­mains a telling paucity of Sino-Euro­pean part­ner­ships po­si­tioned to take ad­van­tage of the ex­pected surge in China’s win­ter sports and cloth­ing mar­ket. So where should the Euro­peans start?

Euro­pean com­pa­nies may find it rather sur­pris­ing if they delve into the list of lead­ing Chi­nese sports brands. Not only are these grow­ing do­mes­ti­cally, they are also ex­pand­ing in­ter­na­tion­ally. In ad­di­tion to top brand Anta, China boasts 361 De­grees and Peak In­ter­na­tional, among oth­ers, in its length­en­ing list of com­pet­i­tive sports brands. Both of these are now no strangers to in­ter­na­tional ex­pan­sion and spon­sor­ship of Euro­pean sports events and teams. 361 De­grees, for ex­am­ple, was proudly ap­pointed an of­fi­cial spon­sor of the 2012 Rio Olympics.

It is, there­fore, Chi­nese sports brands such as Peak and 361 De­grees that pro­vide the per­fect op­por­tu­nity for Euro­pean com­pa­nies op­er­at­ing in a sim­i­lar area to build a strate­gic mar­ket pres­ence across China by forg­ing longterm, sym­bi­otic re­la­tion­ships with the most suit­able Chi­nese part­ner.

Brand build­ing in China will only suc­ceed in the long term with an in­creas­ing ar­ray of suit­able and sub­tle Chi­nese el­e­ments that evoke strong feel­ings of nos­tal­gia, na­tional and even re­gional iden­tity in the minds of the now more con­fi­dent, de­mand­ing and knowl­edge­able Chi­nese con­sumer.

The buildup to the 2022 Bei­jing Win­ter Olympics will only in­ten­sify, with all its con­comi­tant com­mer­cial op­por­tu­ni­ties, in the short and long term. Surely it is high time the Euro­pean win­ter cloth­ing and sports brand sec­tors joined the party.


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