Warm outlook
Major outdoor apparel brands are optimistic about the Chinese market.
IBruno Feltracco, the vice-president and managing director of Outdoor and Action Sports of apparel group VF Asia Pacific, says the outlook is positive.
“I thinkwe’ll stay (inChina) forever because all the other countries are much less profitable than China, and China is still a growing market. Others can’t grow more than 6 percent a year,” says Feltracco, who was attending the recent North Face Outdoor Festival held in Beijing’s Yuyang Ski Resort.
Feltracco oversees the growth of VF’s brands of outdoor and action sports across Asia and the Pacific, including The North Face, Vans, Reef and Eastpak. One of his favorites, The North Face, is the No 1 brand for VF, which contributes about 18 percent of the total group sales. China is the second largest market in the world for The North Face, after the United States.
The US outdoor product company specializes in outerwear, footwear and outdoor equipment like backpacks, tents and sleeping bags.
One of its most celebrated products is a men’s chromium thermal jacket. It has a comfortable soft shell of fleece lining, and its hightech exterior fabric is 100-percent windproof. At the same time, it maintains a comfortable level of breathability.
Another outdoor label, Northland, is also optimistic about the China market.
“China is one of the largest markets for Northland at present. We are here to celebrate the brand’s 40-year anniversary,” says the brand’s founder Gerwalt Pichler, who flew from Austria to Beijing for the event.
Outdoor brands entered the Chinese mainland market in the late 1990s and early 2000s, much later than the luxury and fashion labels.
The North Face entered the market in 2000 under a licensing model, which means the brand did not open a store, but collaborated with its partners in China. In 2007, VF took over the business and started direct operation of The North Face brand. The same year, the brand saw a remarkable sales growth of 150 percent since the takeover.
Northland shares a similar path. It entered the Chinese market with partners in 2003, and now has several hundred stores in the country. Though the company did not reveal its specific sales figures, Pichler says China enjoys stable growth every year, and the country will be the brand’s future focus.
The North Face’s Feltracco says the outdoor garments are experiencing the second phase of its marketing in China.
“The first phase was the first four to five years, so we established and we raised The North Face flag. We have opened stores in mostly firstand second-tier cities. Nowwe have Phase 2, which is to continue to grow. It is very important to understand Chinese consumers, and we can give them the right things and what they really want. Overall, we n the glamorous fast-paced fashion industry, some fashion houses take about two weeks to turn a sketch in the designer’s handbook into a jacket display in the store. But for aNorth Face jacket, the process takes at least 16 months. Perhaps that iswhy outdoor garments do not look “trendy”, because they are often designed more than a year before theymeet the buyers. But these “not-so-trendy” garments arenowpartof one of the fastest-growing apparel sectors in China. are investing in the second phase,” Feltracco says.
For China’s outdoor sports fans, this is good news. By saying “investing”, the president means The North Face is doing TV campaigns for the winter, which has never been done in the Chinese market before.
The brand’s design team is originally based in California. But now, it has developed a design team in China to balance the global design elements. For example, a black jacket in theUS might be changed to red in China to cater to Chinese consumers.
For some brands, their “investment” gets innovative. For instance, Gore-tex, the well-known company providing waterproof and breathable fabric to outdoor brands, introduced the Outdoor Exploration Fund to China in 2007. The fund is aimed at helping promising athletes to pursue outdoor sports, by supporting them with the right garments and equipment. There were 300 applicants from China when the sponsorship first started, but this year, more than 10,000 applied.
According to statistics from the China Outdoor Commerce Alliance, outdoor brands in China enjoyed a 47 percent annual growth in profit from 2000 to 2010. In 2010, Chinese consumers spent 7 billion yuan ($1.15 billion) on this sector, and in 2012, the number soared to 14.5 billion yuan.
Local brands are also making inroads into the market. In 2009, there were 286 foreign brands in China, occupying 70 percent of the market share.
Now, there are 405 local brands and 418 foreign brands in China, an almost 50-50 market share.
Sun Guan, president of China Outdoor Commerce Alliance, says the market is still growing, and he sees great potential. He forecasts that China’s market will keep growing for at least another 10 years. Contact the writer at gantian@chinadaily.com.cn.