The world might still be watching the exciting London 2012 Olympic games, in China sports apparels, winners four years ago have a hard time, compared to the rest of the world, explains business analyst Shaun Rein in CNBC.
“I’m very negative on sports apparels over the next six to 12 months. The sector is going to get hard hit as Chinese consumers cut back on apparels and spend more on food and beverage,” said Shaun Rein, Managing Director at China Market Research Group and author of “The End of Cheap China.”
“People are still a bit worn out from the Olympics in China four years ago. Chinese sportswear companies expanded too fast and then discounted heavily,” he added.
Li Ning is especially hard hit:
“Local brands such as Li Ning are mid-level brands that people tend to cut back on when the economy slows,” Rein said.
In order to get back into the game over the long-term, a strategy change is required from China’s sportswear makers, analysts said…
Li Ning, which is backed by U.S. private equity fund TPG, last month replaced its CEO and said it plans to cut back on new store openings.
“The Li Ning brand does have resonance but the company needs to fix its inventory management, supply chain and stores – it has too many stores,” said Rein at China Market Research Group.
Li Ning had 8,255 stores at the end of 2011, compared with about Nike’s 7,500 outlets in China.