Li Ning rejoins race in children's wear market

Updated: 2012-05-12 10:41

By Wang Wen (China Daily)

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The race to control China's children's wear market has escalated, with Chinese sportswear company Li Ning rejoining the battle, which has never seemed to lack major players.

Li Ning Co Ltd is pinning its hopes on the nation's huge children's wear market after its net profit fell behind some other local sportswear brands.

The company, which saw its sportswear sales shrink by nearly 6 percent and its profits fall 65.2 percent last year on a year-on-year basis, has launched a new campaign, using its franchised stores and affiliated shops in China to sell children's clothing.

It said at the end of March that children's clothing would be the company's key focus in the near future.

Li Ning's products for children are still mainly sports and leisure clothing.

The China National Garment Association predicts the country's children's wear market will be worth 100 billion yuan ($15.88 billion), with an annual output of 5 billion units by next year.

Manufacturers hope the growth will last as long as 10 years, as the offspring of single-child families become major consumers.

The move by Li Ning highlights the fierce competition to win Chinese children's hearts and their parents' spending. The market is already crowded with major players from global sportswear makers to domestic newcomers.

361 Degrees International Ltd, a domestic sportswear manufacturer based in Fujian province, said in January that the company plans to open 600 more stores specializing in children's wear and expand its total number of outlets to 1,700 this year.

"The expansion to second- and third-tier cities will continue in 2012," said Chen Zhicheng, general manager of 361 Degrees' children's wear department.

China's children's wear market took off when international brands, including sports brands Nike and adidas, as well as luxury brands like Dior, entered this field with casual wear products aimed at teenagers.

The trend soon spread to Chinese garment makers, some of which allied with global brands to take over the domestic market.

The revenue gained from Nike's children's wear topped 1 billion yuan in 2011, according to GoodBaby Co Ltd, a children's wear maker partnered with Nike in China.

"Children's wear is far more profitable, given that the sizes are smaller, but the prices are similar," said Yang Qingshan, guest researcher on luxury goods and services at the University of International Business and Economics in Beijing.

"There is much room for international brands to fight for in this battlefield," Yang told China Daily.

However, some business insiders are not optimistic about Li Ning's new strategy.

"The adults' and children's market are totally different and manufacturers still have a lot to learn," said Niu Haipeng, deputy director of marketing research center of the School of Business at Renmin University of China.

Over the past three years, Li Ning has teamed up with local children's wear firm Paclantic, but switched to a new partner in Tianjin to design more attractive children's wear. The new partner will be an exclusive distributor of Li Ning's children's wear from next year.

Li Ning explained that Paclantic, as an independent manufacturer, cannot carry out Li Ning's strategy, but Li Ning is a shareholder in its new partner.

The new partner can take instructions from Li Ning while also being able to independently develop its products, said Nan Peng, a senior executive of Li Ning, who was recently assigned to direct new products targeting young children, China Textile News reported.