Under Armour faces growing competition from domestic brands in China
The specialist told us this changing trend has “long existed” but was being accelerated by an incident last year when Chinese consumers boycotted some western clothing brands over their choice not to procure cotton from the Xinjiang Autonomous Region in western China. The specialist said the Xinjiang cotton incident had been a “trigger” that was causing international sports brands’ sales to fall while “significantly” raising revenues for domestic brands – to the point that the previous advantages of international sports brands were no longer “obvious”.
International sports brands have also been affected by domestic sports stars seeking to align with domestic sports labels. The recent Beijing Winter Olympics saw Chinese stars such as Eileen Gu sign up to Chinese brands like Anta, helping them to further consolidate their position as leading brands for younger Chinese consumers. The specialist said this was “troublesome” for international sports brands, who will fear they can no longer capture younger Chinese consumers.
For Under Armour, Chinese consumers’ preference for domestic brands has affected sales. Despite “considerable” growth in China between 2016 and 2018, the specialist told us China would no longer be a major contributor to the company’s future growth, having reached a “bottleneck” in online traffic and full-priced product sales yet to return to pre-pandemic levels.
The specialist said in the short term, Under Armour could increase the price tag of some of its products to raise profit margins, as well as give more support to its distributors. However, they noted that it is unlikely to increase investment in marketing fees, or that expanding its distributor channel will positively affect sales.
The specialist concluded that as long as politics continue to impact Chinese consumers’ spending habits, then international sports brands will face “a great challenge” in China.
To access all the human insights in Third Bridge Forum’s Under Armour & International Sports Brands’ Development in China 2022 Outlook Interview, click here to view the full transcript.
Related Transcripts
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
For any enquiries, please contact sales@thirdbridge.com
