Xtep Entertainment Star Effect Sticks to Sports Life

Owning a pair of Nike or Adidas sneakers used to feel like a far-fetched dream for students in the "City 80s." But now, domestic brands such as Xtep, Anta, and 361 Degrees are providing affordable and attractive alternatives.

On September 22, Ding Shuibo, the CEO of Xtep, announced that the top five "Happy Girls" had become the brand's official endorsers. Simultaneously, Xtep inked a long-term cooperation agreement with Tiancheng Media Co., Ltd. This marks a significant move for Xtep following its collaboration with Huayi Brothers earlier this year, further solidifying its presence in the branding landscape. During the press conference, Securities Daily had the chance to sit down with Ding Shuibo for an exclusive interview.

Xtep’s Strategic Expansion via the Capital Market

Nine years ago, Ding Shuibo was known as the "King of Foreign Sales" due to his 100% focus on OEM (Original Equipment Manufacturing) exports. Fast forward nine years, Xtep now boasts 5,405 branded retail stores, an increase of 349 compared to the start of the year. Ding Shuibo represents the epitome of China's private sector transformation.

Ding Shuibo shared with reporters, "Nine years ago, we were entirely focused on foreign trade. Last year, Xtep's exports accounted for just about 8% of the total, and in the first half of this year, it dropped below 1%. The shift is straightforward—Chinese consumers' priorities have evolved. While price was once paramount, brand awareness has taken precedence. Xtep capitalized on this change." By integrating into China's second-tier cities, Xtep utilized the capital markets to fuel its growth. This reporter learned that in 2007-2008, Carlyle Capital invested in Xtep, acquiring a 9.5% stake. In 2008, Xtep International went public in Hong Kong. "According to our agreement, Carlyle will not invest in any other apparel brands. Additionally, they might even increase their holdings in Xtep soon," Ding Shuibo noted.

The Dominance of Jinjiang’s Sporting Goods Industry

Adidas announced plans to target China's second-tier cities a few years ago, but its ambitions remain unfulfilled largely due to the success of local private sports brands like Xtep. "The sports brands in Jinjiang hold a 70% share of the Chinese market. With around 2,000-3,000 companies in the industry, it's no exaggeration to say that aside from global brands, Jinjiang dominates the sports goods market. These enterprises now possess the capability to operate brands effectively and are leveraging the capital markets to drive growth. This highlights the immense potential of the market and how it can sustain so many businesses," Ding Shuibo explained.

Creating New Channels for Growth

Despite being only nine years old, Xtep faces stiff competition from established brands like Adidas, which has over 88 years of history, and Nike, which has been around since 1963. To carve out a niche, Xtep focuses on offering affordable, domestically-made products that resonate with consumers' preference for local brands. "A pair of shoes priced at 800-900 yuan remains out of reach for most Chinese people. Xtep targets this vast demographic, offering high-quality, fashion-forward sports concepts," Ding Shuibo stated. This strategy has enabled Xtep to rapidly expand its network of 5,405 branded retail stores across second-tier cities. "Our vision is to become the world's leading sports brand. Xtep remains committed to the sports brand ethos and the idea of sports lifestyle," Ding emphasized.

For sports apparel companies, consumer perception and brand influence are critical to survival. Leveraging renowned sports events like NBA games, football leagues, and tennis tournaments to promote sports concepts and boost brand awareness is a dream for every company. Ding Shuibo is no different. However, the harsh reality is that international brands like Nike and Adidas have already secured spots in these prestigious events, leaving little room for domestic brands like Xtep to break through.

"Young people today enjoy sports and are drawn to music and idols," Ding Shuibo remarked. Under this premise, Xtep found a unique way to enhance its brand visibility. Since 2001, celebrities like Nicholas Tse, Pan Yubai, Jolin Tsai, and TWINS have served as endorsers, significantly contributing to Xtep's success in capturing second-tier markets in China. "Through endorsements, strategic partnerships, and other factors, the 'Xtep miracle' of selling 1.2 million pairs of shoes was born," Ding proudly recalled. Clearly, Xtep's approach has paid off, allowing it to thrive amidst fierce competition. Hence, today, Ding Shuibo collaborates with Tiancheng Media to sign the "Top Five Happy Girls," aligning perfectly with Xtep's philosophy of sports lifestyle.

In terms of brand marketing, Ding Shuibo skillfully navigated challenges, breaking free from monopolistic patterns set by larger corporations, creating a favorable environment for his brand. This achievement is possible thanks to the vast Chinese market, which provides national brands with the necessary support to flourish.