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Sportswear market competition to increase in China: Report

BEIJING
2016-06-03 20:14

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The Chinese sportswear industry is expected to expand rapidly over the next five years, but expansion by existing foreign market leaders and new entrants will intensify competition, according to a report by international ratings firm Fitch.

Fitch forecast that the sportswear market in China will be worth about 300 billion yuan (45.6 billion U.S. dollars) by 2020 from 100 billion yuan in 2015 based on the General Administration of Sports' five-year plan, which projects that over 435 million Chinese people will do regular exercise by 2020.

Leading foreign sportswear entities will accelerate expansion into lower-tier cities in China to tap into the new consumer base, which account for about 50 percent of the gross sportswear market in China.

They will be supported by their strong brand recognition and product offerings across different price tiers. For instance, nearly half of the new stores opened by Adidas in the past five years were located in lower-tier cities.

With rising disposable income and a shift toward more healthy lifestyles, consumers in lower-tier cities may seek more value in brand identity and product differentiation, which are areas of weakness for domestic brands.

Fitch expects foreign players to continue to lead the sportswear market in top-tier cities in the next five years and smaller domestic manufacturers' margins to come under pressure due to increasing competition, their limited pricing flexibility to distributors and rising labor costs.

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