As the financial crisis continues, Chinese sporting goods industry value shrinks from 2010. Even though Li-Ning sponsors CBA 0.4 billion Yuan yearly, the whole industry is at a loss, with high inventory and operating cost and many stores closed.
How can sporting goods industry break through? That is a question the whole Chinese sporting goods industry needs to think about.
First, under bad economic condition, corporations need to adjust their structures as well as help andfavorable policies from the government.
Customers tend to cut their spending, GDP drops from 14% to 8%, middle class shrinks, and stock market falls from 6124.04 to less than 2000. So does sporting goods industry, regardless of sales or capital. For an industry not to produce necessities of life, corporations should transform, accelerate capital and inventory turnover, adjust structure and development strategy; meanwhile central and local government should give some help to reduce tax and release other favorable policies, improving the survival condition of sporting goods industry.
Second, Chinese sport population is at a low rate. Increasing sport population and cultivating the market are beneficial to sporting goods industry development.
Total Chinese people is more than the sum of American, Japanese and European population, but only 0.6 pair of shoes for sports per capital, far less than 4.5 in America, 3.5 in Euro and 4.4 in Japan, which implies that there is a big opportunity for sporting goods market and sport population.
For many years, Chinese people has a little of spare time, students and workers are lack of exercise while the retired becomes the main sport population.
Increasing sport population can enlarge sporting goods market. How to cultivate this market is worth thinking about. At this point, Li-Ning’s sponsor to CBA is very smart, because it invests into basketball too.
Third, from a long term point of view, it is necessary to improve technology included in sporting goods, which can enhance corporation competitiveness.
Chinese sporting goods industry is still at a low level, far behind the international brands in technology investment. Fashion and low price only fit corporations in the early stage. In fact, technology is at the core of sporting goods corporations’ competition, without that corporations will be weeded out. Thus sporting goods corporations should accumulate their own technical and science patents and use them to add value to products and brands.
Fourth, investing into physical education will improve sporting goods market size.
Shortage of investment and cognition of physical education brings about small sport population. Market size is not enough while inventory excesses, which intensifies imbalance between supply and demand. We need to develop mass sports, which can benefit the sporting goods industry.
Sporting goods industry depends on the development of sports. It is necessary to increase purchasing power and develop mass sports, and then sporting goods industry can obtain more opportunities.