Chinese sports brands wage price war

Twenty-two year old Wu Mingming is dressed head to toe in his favourite sports brand. Not Nike or Adidas, though the logo is uncannily similar to the Nike swoosh, but Li Ning, founded by one of China’s famous gymnasts. Wu says Li Ning products are just as good as Nike’s range, only a bit cheaper.

“I don’t see much difference in quality between Nike and Adidas, and Li Ning, except that you pay less for Li Ning products,” says the young electrical engineer.

It is exactly the kind of message that a host of other up and coming Chinese sports brands are also trying to push.

Reliable and affordable
With a domestic sportswear market now worth around $6 billion and growing by more than 20 per cent each year, companies like Li Ning, Erke, Anta and a handful of others have swollen in scale, helping to keep costs down even as they rapidly expand distribution networks.

And it won’t be long before they reach international markets. Erke, one of the newest names in Chinese sportswear, started exporting to Kenya and Nigeria in the last quarter of 2007.

An older name, Doublestar, is present in South Africa and Tanzania and looking for a Kenyan distributor. Both claim to offer good value for money.
“We want to be like Toyota cars. We want to be reliable and affordable,” says Denis Wu, chief executive of Erke.

That the brands can undercut the market leaders in price comes as no surprise to anyone familiar with Chinese manufacturing.

Big producers
Erke’s middle of the range sports shoes sell for just Renminbi (RMB) 270 (Sh2523) a pair in China, and even less in Kenya (about RMB180-200) to correspond with lower purchasing power.

Anta’s middle price is slightly higher. Even though raw materials for synthetic shoes have soared in line with rising oil prices, the firms are such big producers that their suppliers don’t dare to pass on price rises.

The low prices have made Erke one of China’s fastest growing sports brands and earned it success abroad too. In the Middle East, it claims to be one of the top five best-selling brands. It has also seen rapid growth in South American markets entered in early 2007, thanks to a combination of reliable quality and value for money, says Mr Wu.

But when it comes to competing on a global level, image punches well above price in the sportswear field.

Nike’s image has been built on its cutting edge technology. Can the Chinese brands ever hope to convey the same kind of advantage to top athletes?

Mr Wu is keen to point out that Erke is investing in quality and technology too. “Erke’s quality standards are sometimes higher than Nike’s,” he claims. To test the resilience of Erke shoe soles, they are bent 200,000 times at a temperature of -20 degrees Celsius to resemble the freezing winter temperatures in China’s north-east. In extreme cold, soles become more fragile. Mr Wu says Nike tests fewer times and at a higher temperature.