Rich Chinese splurge on sportswear as luxury's lustre dims
Updated: 2016-02-19 09:44
This year China will host its first Ironman events after Chinese tycoon Wang Jianlin bought World Triathlon Corp for US$650 million. [Photo/Agencies]
China will host its first ever Ironman events this year after billionaire property developer Wang Jianlin bought World Triathlon Corp for $650 million. The deal is set to capitalize on a growing fitness craze which saw 134 marathon and road-running races held across the country last year, up 160 percent from 2014, according to the Chinese Athletic Association.
As part of its promotion of sport and healthier living generally, the government says that by 2025, more than 900,000 stadiums and gyms will have been built across the country.
For Under Armour and Lululemon Athletica, two of the Western brands already active in China, the country offers an opportunity to grow outside the mature markets of the United States and Europe.
No. 2 US sportswear maker Under Armour expects China sales to leap 25 percent a year until 2018, while Vancouver-based yogawear giant Lululemon says its first Hong Kong store is on track to make $8 million in sales this year.
But they face a strong field of Chinese rivals such as ANTA , Xtep and 361 Degrees whose share prices soared between 34 percent and 56 percent last year.
That compares with traditional luxury titans like Italy's Prada - a maker of fancy handbags - which sank 45 percent on the Hong Kong exchange last year as Beijing's clampdown on corruption and China's slowest economic growth in 25 years forced China's elite to change their spending habits.
Some of the money once spent on French wine and Italian leather now appears to be flowing into high-end heart-rate monitors and running shoes.
China's sportswear market will surpass the luxury goods market by 2020, according to Euromonitor, with double-digit growth each year to 280.8 billion yuan ($43.10 billion) compared with luxury's single digit growth to 192.4 billion yuan in the same period. Europe's sportswear market, by comparison, would be worth $64 billion by 2020, it says.
And China's market is only just starting to flex its muscles. The sports sector contributes 0.67 percent of China's total gross domestic product, compared with 2.2 percent in the European Union and 3.5 percent in the United States, according to Oriental Patron Research.