Olympics a Win for Sporting Brands Sold in China
The post-London sports landscape is clear, says David Wolf, president and CEO with Beijing-based management consulting firm Wolf Group Asia: "I expect we will see an increase in people in the pool because of China's improved swimming performance, and there will naturally be an increase in ping pong and badminton play."
Although China still regulates the sporting industry, keeping up some barriers against private firms, the government aims to expand and liberalize the elements that can breed champions and promote public fitness, Matt Beyer, associate director at the public affairs consultancy North Head in Beijing, wrote last year in a US-China Business Council publication.
Meaning, it's hard to lose in China's 106 billion yuan ($16.6 billion) per year sporting industry after the Games if you're a clothier such as Adidas, Nike (NKE) and their top Chinese rival Li Ning.
Li Ning's share prices have sunk by a stiff 80% over the past five years because of rising costs, a dip in pre-Olympic demand and competition from foreign brands. But Nike share prices are up 48% and Adidas 30% over the same period. Adidas boasts that company share prices gained in 2011 despite drops of 15% in the DAX-30 and 4% in the MSCI World Textiles, Apparel & Luxury Goods Index. The sports clothier says on its Web site that it "intends to propose" a 25% higher dividend this year versus last.Those three can depend on sales to younger Chinese who fret about brands, since they are already internationally known names, says Donald Ruan, principal partner with Ryan Retail Consulting in Shanghai. "The brand recognition does make a big difference," he says. "Those young people need to be able to show their friends." ANTA Sports Products, which designed and made uniforms for the Chinese athletes in London, should also sparkle in the months ahead. Its logo crossed the television screen every time the national delegation was shown at an event. That Chinese brand had also lost luster before the London Games as foreign competitors edged it out. ANTA share prices have sunk 38% over five years and a more shocking 74% since their five-year high in October 2010.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts