ANTA Sports: “China’s Nike” is growing strongly, promising prospects but competition risks

Commercial value of Chinese ski star Eileen Gu

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Chinese sportswear company ANTA Sports (OTCPK:ANPDY) is expanding market share and sales, partly due to pandemic-driven demand for fitness products as well as the Xinjiang Cotton incident that saw overseas competitors lose market share. More short-term market share gains are possible, and long-term tailwinds, including rising incomes, channel expansion and ANTA’s international ambitions, may propel growth in the years to come. However, competitive risks are significant.

The strong growth momentum could continue

Chinese sportswear giant ANTA Sports, known as “China’s Nike,” is enjoying robust growth, fueled by a surge in interest in sports and fitness amid the pandemic, as well as Chinese consumers’ boycott of foreign brands following the Xinjiang Cotton incident.

Sales of sneakers in China, foreign and domestic brands, controversy before and after the Xinjiang cotton


Sales of sneakers and sportswear in China, foreign brands versus domestic brands, 2018-2021


ANTA’s revenues grew 38.9% YoY to CNY49.3 billion in 2021, helping the company overtake adidas (OTCQX:ADDYY) to become China’s second-largest sporting goods supplier with a 16.2% market share and the NIKE (NKE) which remains the leader with around a quarter market share (25.2% market share) by a wide margin. Domestic rival Li Ning (OTCPK:LNNGF) outperformed ANTA with a 56% year-over-year jump in revenue, but Li Ning came from a lower base with 2021 revenue of CNY22.57, about half of ANTA’s revenue.

Sportswear Market Share in China 2021


Momentum continued into 2022, with ANTA’s retail sales growing in the single digits and the FILA brand posting 10% to 20% growth in the quarter ended September 2022, despite fewer offline stores due to pandemic-related mobility restrictions . ANTA’s performance contrasts with foreign competitors whose revenues in the country have declined. Adidas sales in China fell by double digits, while Nike said sales in China fell 16% year over year in the quarter ended August 2022.

More short-term market share gains are possible as Chinese consumers still seem to prefer Chinese brands over Western ones, a trend known as “guochao” (“national trend” or “national wave”) that shows little sign of abating. German sports giant Adidas has lowered its growth outlook for the remainder of 2022 on weak sales in China, while German rival PUMA (OTCPK:PMMAF) cannot say whether sales in China will return to growth in the country this year is also on a downtrend, and while the company attributes the declines to Covid rather than a shift in Chinese consumer preferences, the sudden drop in its wealth in China (China was Nike’s fastest-growing market in the quarter ended December 2020 with a Sales Up 24% YoY Despite Covid Lockdowns and Associated Supply Chain Shifts) indicates an unmistakable deterioration in brand equity among Chinese consumers as a result of the BCI cotton incident in Xinjiang.

Looking ahead, the prospects are promising.

Pushing towards high-end segment, increasing pricing power could increase sales, profit and market share

Consistent investments in branding, marketing, product development and R&D over the years have helped ANTA steadily expand its value proposition and increase market share, giving the company pricing power and enabling it to move up into higher segments while increasing margins. ANTA’s revenues have consistently grown at double-digit rates over the past few years, while margins have consistently trended upwards.

YoY Nike, Anta Sports, Li Ning Revenue Growth %


Nike, Anta Sports, Lining Gross Margins %


While opportunities for further margin growth may be relatively limited (ANTA’s gross margins are already higher than Nike’s and Li Ning’s), the growth opportunities for market share, revenue and profits in the coming years are significant.

Incomes in China are rising, and rising incomes offer more opportunities for recreation. The Chinese government wants citizens to spend more time doing sports and is aiming for a larger domestic sports industry by 2025. China’s 14th Five-Year Plan (2021-2025) for the development of sports aims to build China into a sports power (with the country’s sports industry). expected to grow to CNY5 trillion by 2025, up from CNY2.95 trillion in 2019), a target that bodes well for domestic sports brands as the plan focuses on improving fitness accessibility as well as nurturing talent (both in at home and abroad). which could open up branding and marketing opportunities. The Beijing Winter Olympics, for example, catapulted a number of Chinese brands into the global spotlight, including ANTA, which garnered significant media attention thanks to its Superstar Ambassador, Eileen Gu.

China’s “guochao” trend shows little sign of abating and remains popular, particularly among China’s younger Gen Z consumers, a coveted consumer base that already accounts for 13% of China’s household spending. This consumer base is expected to remain a major driver of consumption in China, and as they move up the income ladder in the years to come, their interest in homegrown brands and homegrown cultural elements represents a growth opportunity for local brands, not only in terms of sales volume, but also in terms of opportunities to improve consumption, opening up avenues for sales growth as well as profit and potentially some margin improvement as well. As part of its five-year strategic plan, ANTA has underlined its intention to increase its appeal to Gen Z consumers by planning to partner with KOLs and young sports idols like Eileen Gu.

DTC and channel expansion efforts to increase sales and competitiveness

Following an omnichannel strategy, ANTA has invested heavily in its offline business network as well as its online retail stores to increase sales and improve competitiveness. The company plans to invest in expanding and upgrading its stores in China’s upscale cities and doubling the number of stores in malls.

ANTA is also investing in digitization (over 400 million CNY has been allocated for this purpose by 2023) to increase traffic and boost repeat purchases. Online sales are expected to account for 40% of total sales by 2025. Meanwhile, ANTA’s DTC efforts (which began in 2020) aim to raise operating standards and improve competitiveness through better access to consumer shopping trends and preferences. ANTA’s DTC efforts have already yielded results, with ANTA highlighting DTC as a factor in strong ANTA brand sales in 2021. However, short-term margins are under pressure as store costs (such as staff and rental costs) increase, but longer-term the DTC model is likely to increase competitiveness and accordingly can also help to support margins.

International ambitions

In the next ten years, ANTA aims to become a global sportswear player. The company’s brand portfolio already includes sports brands with a presence outside of China, notably FILA (which was acquired in 2009) and Wilson (which acquired ANTA through its 2019 acquisition of Finnish sporting goods company Amer Sports), and they could potentially leverage their global distribution networks to to promote their brand ANTA also abroad.

The company is cash flow positive and has a decent debt position (total debt to equity of 55 versus 79 for Nike and 91 for Adidas) which allows it to make the necessary investments in marketing, branding, channel building, product development and acquisitions relevant to drive market share growth. Under ANTA’s five-year strategic plan, about CNY 4 billion will be invested in R&D to help the company rise up the high-end, and under its ten-year strategic plan, the company plans to invest CNY 20 billion in R&D to to support its global ambitions.


Although domestic brands like ANTA have opportunistically benefited from the challenges faced by foreign brands since 2020, it remains to be seen whether they will have the long-term staying power to sustain their recent market share gains. Both ANTA and Li Ning have seen slowing revenue growth in recent quarters.

Anta Sports, Li Ning Quarterly YoY Revenue Growth %


Moreover, despite the declining fortunes of foreign brands in China, the country is still too big to ignore, and executives at foreign sportswear giants Nike and Adidas say they are doubling down on China. In the long term, both have immense financial resources to surpass ANTA, which is still relatively small compared to Nike and Adidas (Nike’s sales are almost six times higher at USD 47 billion than ANTA and Adidas’ EUR 21.3 billion). is almost three times as high as ANTA). Additionally, both are adjusting rapidly as both Nike and Adidas launch Chinese-culture-inspired sportswear collections, efforts that may help stem the erosion of market share and reclaim some brand equity lost in the wake of the Xinjiang cotton incident has been lost.

In addition, the competitive pressure from domestic competitors, especially Li Ning, who has the advantage of having a national sports master as its founder (the founder of Li Ning, known as the “prince of gymnastics” is a household name in China), cannot be overlooked.


Chinese sportswear giant ANTA is enjoying robust growth, driven by growing demand for fitness and a shift in consumer interest away from foreign brands and towards local names. This “guochao” trend shows little sign of abating, suggesting possible further market share gains at the expense of foreign brands in the near future.

In the longer term, rising incomes, an encouraging political environment, expansion of distribution channels and international ambitions could drive sales growth. Risks include competitive risks as foreign competitors, notably Nike and Adidas, both of which have significant resource advantages, step up efforts to regain lost market share over the long term. ANTA and domestic rival Li Ning have already seen slowing growth in recent quarters.

With a P/E of 27, ANTA compares relatively cheaply to Nike (P/E 35) and domestic competitor Li Ning (31); However, as ANTA’s ability to sustain its market share gains over the long term remains a question mark, a P/E of 27 can be viewed as somewhat expensive, and investors might choose to wait for a price that offers a better risk-to-reward trade-off. Analysts are heavily bullish on the stock.

Analyst Rating - Anta Sports



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