【Industry Trends】Sports Consumption Had Great Potential in China, and Sporting Goods Enterprises Had Bright Prospects

　　Domestic sporting goods enterprises released their annual reports one after another in which most income decreased due to phased business mode of this industry, however Chinese sports market still had great potential at the initial stage. As the accelerated urbanization and sports socialization, huge sports consumption market would be discovered, and sporting goods enterprises like Li-Ning had bright prospects.

　　Energy of sports consumption was still not released

　　2008 Beijing Olympic Games brought China sports to an unprecedented height. During the 11th Five-Year Plan (2006-2010), sports industry developed rapidly as an important component of the whole sports, while high performance strength became stronger and sport for all was flourishing.

　　According to official data, sports consumption and employee grew quickly. The number of people with sport-related jobs was estimated at 3.17 million in 2008, with GVA of 155.5 billion Yuan and 0.52% of GDP; GVA reached 222 billion Yuan in 2010 and 0.55% of GDP, increasing 13.44% which was higher than the growing rate of GDP.

　　Sporting goods contributed 80% to sports industry growth, but the core sports industry only took up 10%. Compared to developed western market, sporting goods consumption just accounted for 30% of the whole sports output value, and the sports competitive performance and recreational fitness were the main parts.

　　Wang Chaoyong, CEO of China Equity Group, said at 2013 Yabuli Chinese Entrepreneur Forum, sports industry accounted for 12% of GDP in America compared with 0.7% in China; therefore China sports industry had a tremendous development space.

　　The revenue of China sports industry was 160 billion Yuan in 2011, which was less than 1/10 of the revenue 2.3 trillion dollars in America. Supported by China government, sports market would value 250 billion Yuan in 2015.

　　Mr. Li Ning, founder of leading domestic sporting goods brand Li-Ning, expected: “urbanization supplies essential condition to sports industry development. If sports consumption gets active, and reaches half of the western consumption level per capital, the market will worth 2 trillion Yuan.”

　　Li-Ning changed first and led the industry transformation

　　Although the whole condition of this industry was not optimistic, it was still at the early stage which implied huge development space.

　　Who adjusted and broke through first would catch the opportunity. Under the structural adjustment of Chinese economy and changing economy growth method, sporting goods industry needed to transform urgently. As the leading brand, Li-Ning first released strategy to transform business mode. Li-Ning suggested business mode relied on wholesale had to transform to retail and consumers oriented mode.

　　The enterprise which changed first and executed efficiently at this stage would be the best choice to invest. Insider indicated that investors focused on the leading ones when the industry was still at the beginning, those enterprises would win recognition and experience share price growing. If the enterprises wanted to keep increasing, they must have strong execution power.

　　Li-Ning was a successful story. Since Mr. Li Ning and new executive vice president Jin Zhenjun launched business transformation, Li-Ning focused on Chinese market through strategic steps, from being sponsor of CBA in the next 5 seasons to sign NBA superstar Wade as spokesman, reflecting its 3 focuses development strategy.

　　Meanwhile, Li-Ning put forward 3 phases transformation blueprint and 4 plans to identify the changing direction, they were: improving channel operation efficiency, changing business mode, improving overall operation capability, brand construction and product creation. As the expanded part, channel revival project highlighted Li-Ning’s decision of clear inventory. All these measures needed high efficient execution.

　　Facing complicated economic conditions home and abroad as well as challenges from China sporting goods industry, Li-Ning’s courage to advance and transform won recognition. It was widely believed that measures rolled out by Li-Ning showed professional sports brands’ direction, which was expected to lead the industry recover even through transformation needed a long time.

　　When Li-Ning talked about company business, it expressed that the transformation would be smooth and the company believed Li-Ning would be the first one to finish adjustment.