China Consumer

Home advantage

Local brands take on multinationals… and win

Now open in Oregon too

Although there were no fireworks or dragon dancing, Chinese sportswear label Li Ning was in celebratory mode on opening its first retail store in the US this month.

Perhaps it was sending a message too.

It chose Portland, Oregon – the same city in which Nike’s HQ is based – for its debut store.

Back in China, Li Ning is thriving. According to Advertising Age, its share of China’s sportswear market had surged to 14.2% by December. That took it past Germany’s Adidas as the country’s second largest sportswear maker, trailing only Nike’s 16.7% share.

Much of that rise is down Li Ning’s investment in its brand. The company has enlisted NBA stars like Shaquille O’Neal and Baron Davis to promote its basketball products, and hired agency Leo Burnett to handle its national advertising efforts.

Analysts now expect Li Ning’s 7,000 stores in China to post Rmb8.5 billion ($1.24 billion) in sales for 2009, up from Rmb6.7 billion in the previous year, says CBN Weekly.

The company’s goal is to become one of the top five global sporting goods brands by sales volume by 2018.

Realistic? Well, as Li Ning’s slogan says: “Anything Is Possible” (which sounds a little similar to the Adidas “Impossible is Nothing” tagline, although Advertising Age reckons that Li Ning’s slogan pre-dates the Adidas one).

With an increasingly sophisticated customer base, Chinese consumer goods makers are starting to pay more attention to brand-building. That is going beyond the simpler product-based advertising towards the aspirational messages used to engage consumers in more developed markets.

Zhou Shaoxiong, chairman of Septwolves, a company that makes men’s jackets, made the point to the Southern Metropolis Daily recently: “As a fashion label, it’s not about how special your designs are but how you market an entire lifestyle.”

In a Septwolves commercial currently getting primetime screening, a man is shown helping his son who has been injured playing soccer. The next scene is of a man walking a few steps ahead of his colleagues who stops to show them a picture of his children on his mobile phone. The ad ends with another man, this time hitting a golf ball off the edge of a cliff.

The tagline: “Men have more than one dimension, which one do you want to show today?” We think we get it: success is about being a good father, a successful businessman and of course, a great golfer. And wearing a Septwolves suit too, presumably…

The campaign seems to be working. Rivals are trying to cash in by launching competing labels with similar names, like Wolf Zone and Temptation of Wolves. Septwolves is currently in the process of suing its imitators.

Alongside efforts to create the “intangibles” of brand, other Chinese firms are focusing on differentiating themselves through top-quality design. That is a departure (and not always an easy one) from notions that Made in China brands are cheap and cheerful.

One firm trying to make the transition is Lilanz, a menswear manufacturer with 2,600 retail outlets nationwide.

In terms of quality, Lilanz apparel is indistinguishable from foreign brands, says the Financial Times. Cashmere jackets from the Chinese label look pretty similar to those sold by Armani. But they cost “a fraction of the price,” according to a Lilanz shop assistant quoted in the article. “People won’t see the label, so it will look like you are wearing Armani,” she helpfully suggests.

Her comment is a revealing one. Lilanz may have upped its product quality to catwalk standards. But you know a brand has some way to go when the sales pitch still relies on ‘looking like’ a foreign product. Lilanz will be hoping that the day is not far off when it can sell suits not as cut-price alternatives to Armani and enjoy instead a brand premium of its own (in China at least).


© ChinTell Ltd. All rights reserved.

Exclusively sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.