Last year Li Ning’s sportswear sales shrank by 6 percent and its profits fell 65.2 percent on a year-on-year basis. Now, the Chinese company is looking to the promising children’s wear market to lift sales.
Children’s wear is one of the fastest-growing markets in China, largely helped by international brands such as Nike, Adidas, and Dior that came into the field with attractive products aimed at children and teenagers.
Chinese companies started to jumped on the trend. Some partnered with global brands to take over the domestic market. According to China Daily, “GoodBaby Co Ltd, a children’s wear maker who has partnered with Nike in China, reported that the revenue gained from Nike’s children’s wear topped 1 billion yuan in 2011.”
“Children’s wear is far more profitable, given that the sizes are smaller, but the prices are similar,” said Yang Qingshan, guest researcher on luxury goods and services at the University of International Business and Economics in Beijing.
Others, however, are not convinced that Li Ning’s strategy will unfold the way the company intends it to. “The adults’ and children’s market are totally different and manufacturers still have a lot to learn,” said Niu Haipeng, deputy director of marketing research center of the School of Business at Renmin University of China.
For the past three years, Li Ning has partnered with local children’s wear company Paclantic, but the venture has not proved successful. Li Ning explained that Paclantic, as an independent manufacturer, cannot carry out Li Ning’s strategy. However, Li Ning has switched to a new partner, Tianjin, to design its children’s clothes.
Starting next year, the new partner will be an exclusive distributor of Li Ning’s children’s wear and Li Ning is a shareholder in Tianjin.
The China National Garment Association predicts the country’s children’s wear market will be worth 100 billion yuan ($15.88 billion), with an annual output of 5 billion units by next year. Now that the offspring of single-child families become major consumers, Chinese manufacturers hope the growth with will last for as long as a decade.
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