If you love sports, would you spend 400 to buy Double Hongxing Erkeqi Bomb Lite, or 500 yuan to buy Double Anta Overbearing 3.0?
The gap of less than 100 yuan, one is to experience the ultimate running feeling brought by “artificial muscle materials”, and the other is to experience the sense of star chasing brought by the top NBA player Thompson co-branded basketball shoes, which one will you be excited about?
But this is not important, the important thing is that domestic brands in the sports shoes and clothing industry are constantly rising. In recent years, ANTA, Li Ning and Hongxing Erke have continued to rely on products to get out of the circle, and Anta has even surpassed Adidas to become the world’s second largest sporting goods group, and the era of belonging to domestic brands has arrived.
However, Hongxing Erke, which started with Anta and Li Ning at the same time, seems to have taken a big step slower: falling out of the top five in the industry, declining market share, poor sales and so on. So now, Hongxing Erke, who continues to sponsor global tennis events, takes the lead in launching artificial muscle running shoes full of technology, and is the first to enter the skateboard market, can rise with the east wind of the national tide?
First to go public in Singapore: the glory and shadow behind the glory
As a member of Jinjiang footwear and clothing enterprises, China’s shoe capital, Hongxing Erke has a bitter development history.
Founded in 2000, Hongxing Erke started with two rough factories, but Wu Rongzhao, who went to Australia for two years for further study, was influenced by the capital market and believed that in order for enterprises to achieve rapid development, they must break through the capital bottleneck and introduce foreign strategic investors.
In 2005, among the many shoe companies in Jinjiang, Hongxing Erke took the lead in the road of stock market financing and successfully listed in Singapore. After listing, using the funds raised, Hongxing Erke quickly expanded production and opened stores, opening more than 7,000 stores at its peak, ranking among the top five in the industry.
At that time, Hongxing Erke had its own clear goal, “To Be No.1 and always strive for the first”, and the corporate value was “to build the world’s leading sports brand”. Subsequently, Hongxing Erke focused on tennis events at home and abroad, and successively cooperated with well-known events such as the China Open and the WTA Istanbul Year-end Finals, laying his professional image in the field of tennis.
But like most shoe companies, Hongxing Erke tasted the “bitter fruit” brought by blind expansion. In 2008, the Beijing Olympics boosted the market enthusiasm, and the major shoe companies continued to expand blindly, but the market judgment was too optimistic, and the backlog of inventory finally broke out in 2011.
In this year, Li Ning, Noble Bird, Peak, Hongxing Erke, etc. went downhill one after another, among which Li Ning’s business continued to decline, and was overtaken by Anta 4 years later.
Peak also did the same, with net profit falling for three consecutive years since 2011, and its share price continued to be depressed in 2016.
Hongxing Erke’s situation is not very good, falling out of the top five positions in the industry, the price of most products is around 200 yuan, such as the Qidan series of 400 yuan products are very few, it is more difficult to compete with international brands such as Nike and Adidas, and it is difficult to catch up with Anta and Li Ning, which rank first and second in the domestic industry.
It can be seen that the history of the rise and fall of any brand is inseparable from the background of the times, and if the strategic layout is unbalanced when the market sentiment is high, the company may plummet.
The national tide style “shuffled” the sportswear industry, can Hongxing Erke return to the top five?
Nowadays, the era of domestic brands has really arrived.
In the domestic beauty industry, the trend of Korea and Japan is gradually fading, and domestic beauty products are constantly rising. As the early entry into China, the performance of Etudi’s House, innisles Chimes and Marie Dejia’s Korean cosmetics brands has declined year after year, of which Etudi’s House has cut to less than 10 stores nationwide. On the other hand, emerging domestic brands such as Perfect Diary and Hua Xizi have risen rapidly, and the annual sales of Perfect Diary have reached 3 billion yuan in more than two years, surpassing the 30-year growth performance of L’Oreal single brand.
The sweeping robot industry used to be the world of overseas brands such as iRobot, Dyson, and Fina, and now domestic Cobos and Stone Technology have leapt to the top two and top three in the world. In the mobile phone industry, Huawei, Xiaomi, OPPO, and VIVO have long replaced the era of Samsung and Nokia.
Similarly, in the sports footwear and apparel industry, the performance of Anta and Li Ning has continued to rise, of which Anta has surpassed Adidas to become the world’s second largest sporting goods group.
But do you remember the Ali programmer who was rejected for “wearing Xtep to date” a few years ago?
Around 2018, the domestic brand of sports shoes and clothing was still only a label of “earthy”, “low-grade” and “not good” in the eyes of the Chinese, and Lu Xiaohu, vice president of Hongxing Erke, ridiculed at the time, “Because programmers wore Xtep shoes blind date and were disliked, we were also splashed with blood.”
At that time, the market only recognized international big names such as Nike and Adidas. Nowadays, the national tide is constantly rising, and in the recent Xinjiang cotton incident, it can be seen that the market has turned to domestic brands. Everyone vigorously resisted overseas big brands such as Nike and Adidas that did not use Xinjiang cotton, and at the same time unanimously supported the performance of Xinjiang cotton domestic brands, such as Li Ning, Anta, and Hongxing Erke.
Supporting everyone’s growth is the huge potential of China’s sports footwear and apparel market. According to iMedia data, China’s sportswear retail sales reached 252.3 billion yuan in 2020 and showed an upward trend, and it is expected that in 2021, China’s sportswear retail sales will reach 269.6 billion yuan, an increase of 6.9% over 2020.
However, unlike the crazy signing of domestic popular spokespersons after the Xinjiang cotton incident, Anta signed Wang Yibo and Li Ning signed Xiao Zhan, Hongxing Erke chose pragmatic products, and it began to get involved in the field of skateboarding and officially became a strategic partner with the China Roller Skating Association.
So, if you want to take advantage of the “national tide” east wind and get involved in the skateboarding field, how to go down the river?
“Technology” has become a sports brand keyword, how much does Hongxing Erke win the face?
A brand is out of touch with the times, which is reflected in brand awareness, market position, products and sales are all “dropped”. The above analysis Hongxing Erke is gradually not remembered by the market, and its market position is difficult to compete with Anta and Li Ning, and product sales are not very ideal. It can be seen that Hongxing Erke is in the same situation as the noble bird and peak that fell from the sky.
But it is not without the opportunity to rise, the brand must catch up with the trend of the times to rise, and can work hard from brand positioning, products, marketing, after-sales and other aspects.
In the early days, Hongxing Erke’s brand positioning was “To Be No.1”, and now it is mainly “new domestic products of science and technology”, deeply cultivating the mass sports market. The positioning of the two is actually in conflict, one for the high-end market and the other for the mass market.
Therefore, Hongxing Erke first has to overcome the pain point of unclear positioning, and now emphasizes that the mass market must be steady.
Moreover, Hongxing Erke has always been deeply engaged in tennis apparel, sponsored major tennis tracks around the world, and is the first brand of tennis apparel in China. But this is not enough, now is the era of the national tide, only sports elements can not do, but also have to add national tide elements. Just like Li Ning, breaking the decline in performance relies on appearing on the international fashion stage and launching a series of products such as “China Li Ning” national tide, which has driven the “national tide fever” in China’s sports shoes and clothing industry.
Therefore, Hongxing Erke also has to deepen the national trend elements, or can refer to the international fashion stage, or create a number of national trend series products.
China Business Daily has revealed that sports brands usually expand their influence by sponsoring sports events, and Hongxing Erke is no exception, sponsoring the WTA year-end finals is a good marketing method. However, in the third- and fourth-tier cities of Hongxing Erke, such groups do not coincide with the target customers of tennis events, resulting in good marketing methods not being effective.
So this has to be done in a different way, either to improve the brand positioning or to start with other marketing methods. At present, the company may not have to compete with the two major brands of Li Ning and Anta to grab popularity, that is, invite top stars to stand on the platform, but it can break the circle from niche industries.
For example, two-dimensional, live broadcast, etc., just like young people under Generation Z have many two-dimensional enthusiasts, Hongxing Erke can establish cooperation with the B station of the two-dimensional gathering place, jointly or separately launch some anime series of shoes to help boost sales and brand recognition.
Or you can also start from the live broadcast, it is said that last year was the first year of live broadcast goods, the industry was highly explosive, and Hua Xizi in the live broadcast beauty industry became popular. Hongxing Erke can also use such marketing methods to open up performance.
The company once disclosed that Hongxing Erke insists on 100% self-production of products, invests tens of millions of yuan in research and development expenses every year, and establishes the first footwear and clothing testing agency in China that has obtained CNAS national certification.
But this is not enough, the financial report shows that Anta, Li Ning and 361 degrees reached 789 million yuan, 362 million yuan and 214 million yuan respectively in R&D investment in 2019, ranking first, third and fourth in the list of R&D investment of sports listed companies.
Moreover, in previous years, Hongxing Erke’s brand image was not good, and it was frequently exposed that products and design were plagiarized. Therefore, the company has to deepen the product direction, in recent years, Hongxing Erke’s product investment results are quite effective, such as creating a sense of science and technology series of running shoes, focusing on marathon running groups, which can alleviate the pain caused by exercise, and has been praised by People’s Daily.
After-sales, the emphasis is on the user’s experience after purchase, that is, whether the customer is satisfied and willing to repurchase again, and what Hongxing Erke wants to do is also the emphasis on the after-sales experience.
For example, the reason why the odd bullet series of running shoes became a popular model is mainly because they are comfortable to wear, and they have a very relaxed experience when running or pressing the road. At this time, after-sales tracking, such as questionnaires, small gift gifts, SMS return visits, etc., is enhanced in interactivity and conducive to the construction of brand image, and reserves for improving the repurchase rate in the future.
In general, if you want to take advantage of the national tide, you must first deepen the brand image of domestic products, and the second most important thing is the product. Therefore, if Hongxing Erke wants to rise, it must first shake off the unclear label, and then work the product to create a few more popular technology running shoes, which may be the opportunity for its rise.
Author: Ye Xiaoan
Songguocaijing (ID: songguocaijing1)