Business

Five Reasons Why China Is A Dream Come True For The Sporting Goods Industry

Whereas the more well-trodden markets no longer offer unlimited growth for the sporting goods industry, Asia still has all doors open for business. Here are five reasons why getting a foot in the door of China's markets in particular is more than worthwhile.

Saturated markets in Europe and North America make for a tough fight for customers.

In China, it's a different story: here, there are several factors that open doors to new possibilities and prospects for companies that have long since closed on the "old" markets. ISPO.com reveals five reasons why China is a dream come true for the sporting goods industry.

Sports are enjoying a wider acceptance in society

According to an IBISWorld study, the "Gym and Health" sector grew by 11.6% between 2011 and 2016, and in 2016 generated a turnover of more than US$ 6 billion. That still leaves China behind the USA with its US$ 30 billion market. However, the growth rate of 2.5% in the United States is significantly lower.

Demographics

One reason for this growth in the "Gym and Health" sector is of course demographic change. Especially the sheer number of millennials who are particularly keen on sports, sports clothing, and the whole lifestyle this sector brings with it makes for one happy industry. According to a study conducted by Goldman Sachs, in 2015, China was already home to more millennials than the entire working population of Western Europe and the USA: 415 million. In addition, China's middle class continues to grow rapidly, meaning that China's cumulative income will increase in the next 10 years to approx. three quadrillion dollars.

Digitisation

Regardless of the country's official internet censorship, China's citizens still find ways to read up on what interests them. Smartphones in particular are used in a more comprehensive and intensive manner in China than anywhere else on the planet. The communication platform WeChat, which started as an improved copy of WhatsApp, has now developed into a multi-function app used to make transactions, as a publicity platform for companies such as Adidas, and as a virtual noticeboard where sports groups and anyone interested in sports can find information on get-togethers and trips. The first quarter of 2016 saw approximately 762 million users on "WeChat", about 15% of these from outside China.

Athleisure and outdoor clothing as status symbols

China's young and consumer-heavy society is looking for new ways to cast off the socialist way of life that even extended to the world of fashion. Of course the increasing popularity of all things sports also feeds the population's interest in sports clothing, with international brands such as Adidas, Nike, or local players such as Anta and Toread having long since become a staple part of people's fashion diet: Athleisure has made it to China. In the last quarter, Nike reported a growth in sales of 9.5% to US$ 1.08 billion. In 2016, Adidas' sales grew by 22% to approximately US$ 3 billion dollars in China. According to a Euromonitor study, with US$ 28.4 billion in sales, China's sporting goods industry is the second biggest market in the world behind the USA with sales of US$ 103.6 billion. In terms of growth, China's 11% is significantly higher than the 5% recorded in the rest of the world.

Government support

One factor not to be underestimated is the support provided by the Chinese government. China's President Xi Jinping is a declared soccer fan and wants to be able to cheer on his country as something more than just an underdog at the next World Cup. That's why he wants to see the construction of 70,000 new soccer pitches by 2020 and a huge drive for more cooperation with international associations and clubs.

China's President want to increase spending in the sports industry to US$ 850 billion by 2025. Within the framework of the national fitness plan (which is to be implemented by 2020), the Chinese government plans to use sports to advance all sectors in the country, that is industry, state, and society.