Mayor of China's 'footwear capital' says companies need to do more to reduce massive inventories

China's footwear makers need to improve their innovative and design capabilities in order to overcome the industry's ongoing high inventory crisis, according to the mayor of the nation's "footwear capital".

Liu Wenru, mayor of Jinjiang, in Fujian province, which produces 20 percent of the world's sports shoes and 40 percent of domestic supplies, said that it is time for Chinese footwear makers to emphasize innovation and designs as well as to enhance differentiation in marketing to compete with high-end foreign brands.

"The days when apparel and footwear makers easily made money by boosting their manufacturing capacity are a thing of the past," Liu told a news conference on the city's 15th International Footwear Exposition, which will be held in Jinjiang from April 18 to 21.

The city will hold its first industry design competition starting this month to promote innovation and design in the industry.

E-commerce is being encouraged to become a major marketing platform to reduce logistics, inventory and rental costs, the mayor said.

Jinjiang is home to many nationally renowned footwear and apparel brands such as Anta Sports Products Ltd, 361 Degrees International Ltd and Septwolves Co Ltd.

Selling products overseas also will help clear out high inventories, particularly in emerging markets, Liu said.

The municipal government has helped local companies expand their operations to Russia, Brazil, Southeast Asia and the Middle East.

Acquisition of overseas brands is one way to help Chinese footwear and apparel makers quickly gain a competitive advantage in overseas markets, he said.

Zhang Qing, from Beijing Key Solution Sports Consulting Co Ltd, said that these moves would strengthen brand competitiveness and optimize the sportswear industry.

China's sportswear industry has been plagued by high inventories and market saturation in recent years, forcing many companies to close stores.

Li Ning Co Ltd, China's leading sportswear maker, reported a net loss of 1.98 billion yuan ($318.78 million) in 2012, its first loss since 2004.

The company's revenue declined 24.5 percent year-on-year to 6.74 billion yuan.

Net profits at Anta Sports Products Ltd dropped 21.5 percent year-on-year in 2012 to 1.359 billion yuan.

Peak Sports Products Co Ltd, a major sports clothing manufacturer, saw its revenue fall 37.5 percent year-on-year during the year, with a net profit margin of just 10.7 percent, its worse result since 2008, according to its annual report released on March 11.

Li Ning Co Ltd cut its stores by 1,821 to 6,434 in 2012 and launched a strategy in December 2012 to improve the profitability of the group, while 361 Degrees closed 96 of its retail branches toward the end of last year.

wangzhuoqiong@chinadaily.com.cn

(China Daily 04/03/2013 page14)