Full transcript below:

Hello everyone. This is China Paradigm, where we, Daxue Consulting interview season entrepreneurs in China.

Matthieu David: Hello everyone. I’m Matthieu David, the founder of Daxue Consulting and its podcast, China Paradigm. Today, I am with Guillaume Sergent. He is French. You are the founder of Ailion Golf. I was asking you how to pronounce it. It’s a very good name. I really like it because I think it gives both a sense of elegance and something like flying. I don’t know if it is the influence of French in this word. With power and also easy to translate in terms of pronunciation for Chinese and we are at China Paradigm, you are based in Shanghai and that’s why I am insisting on the Chinese perception. You started a business in 2015 first in France and then you developed in China and my sense is that it took off and you dedicated more time to your business when you arrived in China because at the time, you found suppliers, you found people to work with and today, you focus more about the brand that is focusing on golf apparel in China. So, it’s about golf apparel in China including jackets; maybe more and you are going to tell us if it’s more. Some numbers about China’s golf industry. You are selling in China and in France. I would say to France because I believe it is more on the website in France and more offline in China’s golf industry. So, the growth market in China; a few numbers and a few dates. In ’93 there were no golf courses in China. Not a single one. The country had opened to the world nine years before and still, there were no golf courses, no China’s golf industry. The first one opened in 1983. It’s said that we have about 1.2 million players in China. France would be 2% of the population, but for China, it’s still pretty niche. Golf is associated with success, to wealthy people and used only 1.4% of the worldwide golf in China compared to 45% in the US. So, if you compare the room for growth, it is huge. It may be a bit mistaken to compare it this way, but still, we are at a ratio which is ten times less. So, we can imagine that it is going to improve. It is a conception. You use golf to show off. You use golf to show you are successful, but yet it is not something that the government wants to show. So, officials are not allowed to join golf clubs (learn more about the golf ban in China). So, it’s sort of a paradox in China as always and golf is represented as one of these that we are presenting as a paradox. Thanks for being with us. It is a long intro because I’d like you to say a few words about China’s golf industry. So, what about Ailion? Can you tell us more about what you do and about the size of the company?

Guillaume Sergent: Yes, thank you so much. A great introduction. I really like first how you explained the business and the golf and the paradox of China’s golf industry. It is exactly like this here. So, about Ailion, I would like to come back to the name. As you guessed, Ailion in French it is a mix of two words. Eagle is that is called “aigle” in French and “lion” which is the lion. So, it’s two words that are combined and we try to make it easy for everyone around the world to pronounce the name of our French golf brand in China. So, that’s the name, and as you pronounce you can say, Ailion, “Ileon”. It depends on the nationality of the consumer. Then about our DNA, I would say we are a fashion lifestyle brand inspired by a golf-like style. The idea about our French golf brand in China at the beginning was, “I’m a golfer” and when I play golf in France, it’s in the middle of my normal day which is the morning I could go to the driving range and I could have a meeting. So, I don’t want to change my clothes and still look elegant and comfortable. So, it was really the beginning of the idea to create a brand, especially pants which are our aero products. Then about our size. We are still a start-up so, we are basically less than 5 people working and we have partnerships here in China and in France, we are just using consultancy. We have Sonny Anderson who is a former football player who played for Barcelona. In the past in France, we sponsor a lot of big events which are the oldest prom in France; 25 years existing with more than 400 players and also the biggest growth charity in France which has helped to increase our brand awareness. In China’s golf industry, we developed our partnership with golf clubs and as you said, we try to mix offline and online shops because as a new French golf brand in China, people need to touch and to see our real product.

Matthieu David: So, you gave a sense of the size of the team. Would you mind sharing the number of clients, number of SKUs, revenue; a bit of a sense of where you are in terms of development. Still recent captains, fifteen or let’s say sixteen. So, it is still as you say a start-up. If you can share any number that would help people listening to us to understand where you are in your development?

Guillaume Sergent: Yes, so at the beginning, we started just by one product because it was just a crazy idea to give to all golfers and also like normal guys like you, for example, to be able to wear pants that is elegant and you can play golf or even ride a bike without having to be wearing sportswear. So, we started just by one product and then, with the success of this product we decided to have more SKU’s and so now we are around 20 SKU’s, but we are not thinking about in terms of SKU’s because now, since a few months by chance, the retail mindset changed a lot and the fashion mindset changed a lot and this is something that we tried to improve which is sustainable predictions. Start producing tons of SKU’s which just makes no sense for everyone and not even for the customers, but even also, for the world. So, we have like reasonable SKU’s with products that you can wear like Diva Life and also then the outdoor activities.  In terms of revenue, we are around 10 000 revenue which is still like the beginning and we are still looking for the second investing time. So, during this special time because as you know, with the Covid-19 it is really special. We try to induce more change with this business model of making on order which we have started to think about before the crisis. So, we will see because, to be honest, this time we are facing a big change.

Matthieu David: Yeah, we are recording on the 18th or 19th of March, 2020. No, it is 20 March 2020 and the crisis seems to be averted in China, but still, it’s recovering. Retail is not I think entirely open, but it’s on the track of being 90% open and it’s in Europe and the west that difficulties are appearing (learn more about China’s Covid-19 recovery). I’d like to talk about the product. What is interesting in the start-up and especially when we are in China is how do you create your first product? I don’t think you have the background of the fashion industry, or as a designer or in finding a clothing manufacturer in China and I think that is a question people have. Where do you start? What do you start with? I listened to one video and you said you found a clothing manufacturer in China at the campus and you saw people shooting and you were asking these people what they were shooting and then they connected you to a producer, but more largely, how do you find a clothing manufacturer in China? How do you manage it and how many can you produce for a start because that’s also an issue you mentioned;  all the factories you have met initially were asking for a huge amount of production. So, if you could give a sense to the people who are listening to us on how you deal with low orders, finding factories you can trust; knowing that you can trust the and there is one more thing is that you are mentioning that you have an innovation with your croquet which can clean golf balls. That is also something that could be interesting. How do you establish innovation? Is it all by yourself? Is it with the factory? So, about the product generally speaking, how do you develop it and how do you produce?

Guillaume Sergent: Okay, so first I had the idea a really long time ago. It was funny; maybe more than 10 years. I even don’t think about launching a company or a product. Just, I realized when I was playing golf and you know when you are playing golf, the only moment you can catch and bring your ball and clean it is when you are on the green and as a golfer, I am really picky with my style and I don’t want to dirty my red pants and so it was really annoyed and in France, we don’t have caddies as they have in China. My type was really far away. It took me really long to think of how to clean my ball and finally, the gamers behind us wanted to play and my friend says, “Hey, we have to play now.” I missed my shot. I was really, really angry and I felt like, “Oh, why?” Why couldn’t we have accessories to help us focus on the stroke? So, I started to have a look on the internet and I just found really just weird things; accessories that you could put on your pocket, which was really not convenient. So, I started to think, “Okay, why we never wrote golf pants?” I mean a golf brand pants itself because it is super expensive, first and then you will not wear it a long time or for example, in the beginning, I was playing golf and I would say, “Oh, I want to buy one pant I will wear like what; 3 or 5 times a year.” So, I think about, “Okay, what about creating a product that you can wear like for your everyday life and also, which could be really easy and comfortable for golf” and then about the accessories about the pocket, we said, “Okay, golfers like to have excuses if they are badly made shorts. So, in the beginning, we thought about just a towel you can plug on all the pants, but most of the time people are not warming up and I was sure they will give the excuse about this accessory. So, we started to think about what about integrating this pocket on our own products. So, we did research. I just did it by myself. I’m just a fashion addict and I’m a golfer, so I just know what I don’t like and if when I swing, I feel discomfort, I say, “Okay no, I don’t pull the pocket on this way. I just use a zipper and not a button.” So, we just iterate a few bends. During this time, I was in Paris.

Matthieu David: So, the first prototype – we talked about a prototype earlier – so, you created it yourself, right?

Guillaume Sergent: Yes. I created it myself.

Matthieu David: So, when you had to find a clothing manufacturer in Chinayou would be able to already show a product?

Guillaume Sergent: Yes, definitely. Before that, of course, I designed it on paper, but then to make it, I hired some designers to just make it.

Matthieu David: How did you find a designer?

Guillaume Sergent: One of my best friends created a company; a professional company and they gave me the first advice of, “Okay, hire a designer.” So, then I just contacted a fashion school which is plenty of designers and they are all looking for experience. So, I met the woman and she did a good job. I gave it to her and we think of how to plug all the details; the feet of the pants. I gave it to her. They are not my favorite pants and said, “Okay, I want it like this fit and it has to be like this; the button” and all the details and so we built it together.

Matthieu David: I see. Which fashion school did you contact? I try to be as specific as possible.

Guillaume Sergent: It’s the classic one; ESMOD.

Matthieu David: ESMOD is in Paris and they have also a school in Beijing. I believe there is an investment from China? The founders are both in China.

Guillaume Sergent: So, I was able to draw, but I was not able to make it. By the way. I choose my own fabric that I really like and then, the same as I had the advice from my friend to hire the designer. I started looking for good fabric and so then I went to an exhibition in Paris to find the proper fabric which I had a really high expectation because during my marketing research I just showed really sporty pants or really fashionable pants. I want to give my customers something really in between, but if you are wearing golf apparel in China; the purpose was, “Okay, you need to be able to wear it with a jacket and with a tie.” It was really tough at the beginning to say, “Okay we need elastin, but not too much because if you put too much elastin you can guess, it is like really sports trousers. So, finally, I found in Switzerland has a very famous manufacturer which is Solo, which used to supply Nike and so on. So, it was pretty expensive, but it was real and it is still the best one. The first words from my customers when they try the pants are, “Oh my god. It is so comfortable. You didn’t lie.” I say, “I know.”

Matthieu David: We’re talking about the fabric? 

Guillaume Sergent: Yes, the fabric of the pants. So, then I did one prototype with the final fabric and to have the exact shape. Also, the number of meters and seeing like manufacturers. So basically, at the beginning as you said, I was in France and at this exhibition, I met some manufacturers, but they asked about ten thousand or like a thousand pieces. So, I was like, “No, I don’t want that. I want around a hundred pieces.” So then, by chance, I moved to China and I followed my wife. She was relocating here. So, I was thinking., “Okay let’s go and see China. It is really known about manufacturing and so I am sure we will find a manufacturer.”

Matthieu David: For the prototype; by the time you had a designer, the designer is doing drawings. I understand you found the fabric. I understand that you created your own prototype yourself, but if you want to go beyond the prototype and to have something comfortable which fits people you need to work with someone who knows how to produce those pants. Who did you work with to produce the prototype? Was it in a small shop? Was it with a small designer who was also able to produce a prototype? Was it yourself?

Guillaume Sergent: No, no, no it was the designer. Me, I provided the drawings and then we worked together about the fit, and then she stitched with the fabric I bought in Paris and we said, “Okay, here you have like too many fabrics. Here we need to add some blabla.” So, we did it like this. At the beginning towards like almost the final prototype which is not really final, but which fitted and then, which was the most important thing which is we did the final drawing on Lectla which is a software you could print the drawing and make the pants through the drawing and you just cut the fabric with the drawing.

Matthieu David: How do you spell Lectla?

Guillaume Sergent: L-E-C-T-L-A.

Matthieu David: Very interesting. So, you have this software that helps you to communicate with manufacturers and with people who produce easily with these standards.

Guillaume Sergent: I will add, ‘supposed’ to talk with the manufacturer. Why suppose? Because in Europe they are using this software and I came into China and so as you said, I found-

Matthieu David: So, we go back to China now?

Guillaume Sergent: Yeah, so those women who are just photo shooting for a fashion brand; they look like say westerners, but they are French. So, it was funny, easy and we started to talk and they gave their contacts to me about their manufacturers which were really small. So, able to make small quantities. So, I was super happy to find a clothing manufacturer in China. So, I met this woman who was managing the smaller manufacturer, and then that’s probably how it started. Why; because they didn’t have like traffic here in China. They are not using this software. So, it was like I had something, but we couldn’t print and we started because China is really strong to make garments. So, we talked together and they were doing fashion in small quantities and so they introduced to me their suppliers. So, when I met her, I came with my software drawing and I say, “Okay I have everything. So, let’s try to make some samples.” Unfortunately, I discovered in China electro was really not used. So, I did just by a copy at the beginning and what I did… 

Matthieu David: You gave the product to them?

Guillaume Sergent: Yeah just my size to be able to wear it, to see and to test them, but at least you really need to have all the software because the software gives you all the sizes. The idea of our product was to be like not tailor-made, but half tailor-made. So, we did the gradation which is like we are using American sizes for our golf apparel in China. So, from 30-40 with the lengths of the legs. So, we need to print these. It was quite tough and finally, by chance, I found the contact of Electra in Shanghai who printed for me the drawings of our golf apparel in China. So, then I could give my small manufacturers the drawings and they could cut my fabric and make the first batch. 

Matthieu David: So, at that time it was a prototype. How much money did it involve? Did you need to pay them for consulting for the time spent with you or what are we talking about? Is it something that they were willing to waste time on before you produce more?

Guillaume Sergent: You have to pay to put it up then they deduct the price when you get your order. The kind of money to make this kind of prototype; because you need to run around and buy fabric and also your time, but at least it is around 5 000 Euro, at least.

Matthieu David: 5 000 Euro for the prototype and the fabric and so on?

Guillaume Sergent: Yeah because you buy the fabric and you are buying small quantities and the small quantities mean it’s more expensive and then you hire the designer to have the drawings. Yeah so, maybe I add more than ten prototypes in my wardrobe that we are not using at all because at the beginning we had these that they made the prototype but on the wrong side of the fabric. Our fabric is waterproof and so on so, that was inside. 

Matthieu David: I see.

Guillaume Sergent: You can guess. You couldn’t have just 3 meters of the fabric. You need at least 10 meters of fabric.

Matthieu David: And then you produce about 100 units? Is that correct?

Guillaume Sergent: Exactly.

Matthieu David: So, we talked about the product. I understand now how you started and I understand the key differences and the unique proposition of the product. Let’s talk about marketing (learn how to achieve your marketing goals in China). You said that you do offline marketing in China’s golf industry and online marketing as far as I understand; online sales with France. Could you tell us more about how you connect clients with your French golf brand in China? In some interviews before you said it’s a lot of connections, it’s a lot of contacts; building clubs, golf clubs, going to shops as well to add your products. Would you mind elaborating more on that?

Guillaume Sergent: Yes, so first what is really interesting is to remember our agents. Four years ago, all of WeChat, Weibo, and KOL (learn more about KOL marketing in China) was not so strong in China. It was really the beginning and now, the game has changed completely. So, at that time you didn’t have so many and so many groups like this. I even don’t know if TikTok was still existing? So, you couldn’t have any chance to promote your product like this, which is the case now for two years, I would say. In France, we realized and when I started a project there, I met golfers and for me, it was the best way to help people to know the brand because we are not known at all and you have so many brands, so many competitors. Everyone is not just a golf brand, but just fashion brands. So, the big thing was, “Okay, how a French guy could sell a product without speaking Chinese in China’s golf industry.” So, I talked with friends who of course were playing golf a lot. I started to meet golf directors and so on and we decided to follow the same strategy as we did in France, which is sponsoring golf events in the golf courses to promote our golf apparels in China. We met our customers and we helped them to know the French golf brand in China and know me, even play with me golf and also, what I learned in China and all the advice I got from people like you who are living there for a while said, “Okay, you should promote yourself” and at the beginning, to be honest, it is a bit tough to promote yourself and sell yourself because you are not the brand and I am not famous. So, it was more about the product. So, that’s the strategy we tried to have; sponsor different golf tournaments and help people to know about our French golf brand in China, know about our value proposition and start this and also, what is fabulous with China is you talk (learn about the importance of networking in China) with people and if they like the product they say, “Okay let’s go.” We started it just like this throughout some shops and throughout some pants and said, “Okay, why not? We try it and that’s it.” It failed. It worked on others. So, it was quite like fun to see how these things go fast in China compared to France.  

Matthieu David: One thing I’d like to go back on is you talked about sponsorship. What kind of sponsorship are we talking about? Is it about moderating an event? Is it about giving some products for free? Is it paying for your logos to be somewhere? I believe that is maybe something you may spare for a later time because that may be costly, especially for golf because golf is where wealthy people go so it should be an expensive place to do advertising and to show your products. Would you mind sharing more about what a sponsor can be when you start your business in China’s golf industry?

Guillaume Sergent: True. So, as we did that at the beginning it was, we tried to pay and give money because people want money, but hopefully, we are a brand so in all golf competitions they are looking for gifts. So, in the beginning, we started like this; providing products like caps and for the winners some pants, some Polo shirts and so on. Then also, a chance at how to promote a brand was to organize by ourselves or with other companies and so as I developed a good network in the golf club, I started to meet some others in the industry of hospitality, fashion, retail, as F&B to say, “Okay, I am a French golf brand in China. We are organizing or we are trying to organize some competitions. So, what do you think about joining us?” You could meet like the final customers which are really tough in China to meet them and to meet us. So, also with the French government, we organize a big and huge competition at the Sushant Golf Course in France. So, the idea was the gathering of the French community, the French style on the competition and all the golfers of course really, really loved it. So, this is the first part of it and then of course as you mentioned, you need to give free gifts and free products to influencers and this is the part that is tough because you give some products to teachers, you give products to people who have good networks, but then you need to push a marketing plan to be involved and when you are starting a fashion business, marketing is really key. Of course, for us, it was our weakness because as you mentioned, my background is a bit funny. I did a business school and so I was really bad at marketing. So, I hired some consultants and we improved that, but then it was also after that, the next step to build brand awareness; a brand story because at the beginning it was a product story. So, that was really key and really expensive also and of course, we did mistakes. I guess this is a start-up life. 

Matthieu David: I see. It is interesting to look into sponsorship at this time because when you look at luxury brands, some took off with strong sponsorship and we are talking about one that is very famous, which is Louis Vuitton (learn more about Louis Vuitton in China). It took off in the US by sponsoring the American Cup and being very present at this competition. That made a difference and we know with horse riding which is sponsoring races; it is also actually a key component of luxury events or gatherings where you have sponsors and myself; my first company was a gift box company and I sponsored as well. There was a question: What is the return on the sponsor in China’s golf industry? It is not clear. WeChat now with the fact that people can write articles on you and sell it themselves after the product gets commissioned. I feel that it’s getting more and more trackable, which is I think the good news for the future.  How do you get an ambassador? You have an ambassador which is I think pretty famous.  I am not good at football (learn more about the football industry in China). I am not good at sports, but he seems quite famous. How do you get him to work with you? He is called Sonny Anderson, right?

Guillaume Sergent: Yes, exactly. It’s a funny story. Because of China, it is funny. So, as you know, we have a lot of WeChat groups here and a friend said, “Oh, my cousin is working in the sports industry and we want to know about the sports industry in China.” It was funny. It was three years ago and almost no one was there and I remember all the comments were, “Oh wow, why is your cousin now coming on this time that no one is there?” Instead, I say, “Me, I am interested and blabla.” So, I was available and I said, “Oh, I want to meet you.” We connected through WeChat. We got a drink and we talked about his business, my business and I said, “Okay” it was already like 6 to 8 months I was doing business in China’s golf industry and I was looking for more things in France and I know France is really important for them to have like luxury and so we started to talk and he was really involved in football which is really famous in France and I just asked, “Do you know any famous people playing golf?” He told me about, “Yeah I know Sonny Anderson.”  I was like, “Oh my god. Are you kidding me” and it was funny because he was one of my idols when he played in Europe and France? So, I was surprised and said, “Okay maybe I would like to meet him or to be in contact with him.” In fact, I learned by the past that he was the best friend of his daughter. He gave me the contact of the daughter and we started talking. It was really interesting and then we got phone calls and I have to say, he is really amazing. He’s really kind, really mindful and we made it through there in France and we started and he helped to develop a business in France, introduced me to some good relationships of him and we started like this, but he liked the product, again and he wanted to also involve himself in start-up’s and so that’s why I think he came into the project.

Matthieu David: Has he invested in the company? Has he done within the company or you… what do you give to him? Is it purely kindness or truly help?

Guillaume Sergent: No, of course. We ‘ve got a contract. He didn’t put money, but he is wearing and advertising us on his social network and we try to develop networks with people inside his network, but for now, he did not invest.

Matthieu David: You said in one article that you have a partnership with CTrip (learn about the possible secondary listing of the company in Hong Kong) and I interviewed another entrepreneur and she is in the travel business. So, it’s more understandable that she is partnering with CTrip and one of the questions we had is, how come CTrip which is a huge company is partnering with the small companies, start-ups who have just started? How do you enter it? How do you contact that? If I am correct. You said that you have some partnership and contact with CTrip, right?

Guillaume Sergent: So, it was funny. During trade golf once, I saw on the golf course, a CTrip event which was organized by the Citroen golf branch. So, I talked with a woman and I said, “Oh, I have French golf brand in China. I would like to sponsor one of your events. Could you introduce me to your boss?” She said yes. So, we had a couple of meetings with them and we sponsored one of the events in the Chi Chong golf course. It was purely random and it’s just because I was playing golf during an event and as I know, every time you organize a competition, you are looking for sponsors so it was a good opportunity and again, they liked the product. They liked the cap very much and it was like this.

Matthieu David: The learning I get from the talk today so far, is that it is important to be present at events, to connect, to be openminded and even to connect with online players like CTrip because actually, they go to the event, they connect as well and here you have your opportunities. Do you agree with that? Is it the way you see immerging your business to be active in the communities, to be present, and to engage with people?

Guillaume Sergent: Yeah, I completely agree. Even big companies need to have new projects, new products and they need to innovate. So, they don’t care if you are a start-up or not and even I think what is funny is just you have to pretend that you are bit bigger than who you are and what you have to be careful of is, don’t pretend you are bigger than who you are, but just be able to deliver good products or I don’t know; good things. Good training, good whatever and even big companies would be happy to have an innovation or to provide innovation to their customers. What they provided in this competition was a unique brand, a unique French golf brand in China and after that event, it was really funny because we started to see some Chinese golfers with my cap with my logo and it was fun because my friends sometimes send me pictures of those  Chinese guys wearing my caps and they were like, “Oh my gosh. They are starting to wear your brand.” So again, I think as you say, the most important is what is the risk to just try to talk to someone except a no? So, it’s really my mindset about that in China’s golf industry.

Matthieu David: What I feel and correct me if I am wrong, but the fact to be a foreigner in China actually is opening you up some doors. It is clearly closing some doors to some settle that you cannot join, but it’s also making you so different, so unique in an event that you can get access. You can get into contact with people and people will not dare not to answer. We are not there not to help you a little bit. So actually, opportunities happen as well by your own identity as a unique identity. Do you agree with my conclusion?

Guillaume Sergent: Yeah completely. I think they are curious and they want to know, they want to learn and again as you say, of course, we can’t access from a certain circle until you are speaking Chinese until you are speaking full about their habits and so on. So, for me, this is the best thing that I would like to bring back the day I come back to Europe is to be open-minded and full. Just listen to people and you don’t care about this Chinese, this American.

Matthieu David: And I feel it’s not happening necessarily in the rest of the world not necessarily in Europe. You are seen as an outsider.  You are seen as someone we don’t want in a lot of circles in Europe, but in China, when you are on this site, we are very different. We want to know why you are here, what do you do? You are a foreigner in a country where it is difficult to make business when you are a foreigner. You are on the golf course and you are a foreigner. What are you doing here? You are creating some curiosity. I’d like to talk about marketing which is more like offline marketing with people. I went to your website because I like technology and we do a lot of research with tech. I understand that you are using Shopify, you use Google Analytics and Facebook Pixel as well. So, you do a bit of online marketing to the west, I believe otherwise you wouldn’t use Facebook Pixel on Google Analytics. So, what do you to create traffic on the website? Do you do anything? I didn’t see anything for the newsletter I believe you have, but I didn’t see a Mail Chimp or anything. Could you tell us more about what kind of technology you use?

Guillaume Sergent: So, we’ve got two strategies. First, for China and another one for Europe because after a few months ere, we tried to use the same marketing and communications tools (learn more about what marketers in Europe can learn from China), but it didn’t work at all. So, for China, we are using Weibo and WeChat and articles not promoting at all almost our product.

Matthieu David: Sorry to interrupt, but do you sell on WeChat because you cannot sell on Weibo, but you can sell on WeChat. Are you selling on WeChat? You don’t sell on Tmall, Tao Bao, but you decided to sell on WeChat?

Guillaume Sergent: Yes, exactly. So, we are using this offline and for now, we are still thinking of how to provide a new program that would be different so we need to think of how and that is really important.

Matthieu David: Why would you need a new program, if I may ask? Is it to add a layer of engagement to other mini-programs?  

Guillaume Sergent: I think it could be more about if you are reading a new program it is more about the experience and how we can give something different because again, we sold a lot of mini-programs, but for me, they are just like embed something or just like embed and/or the classic process and you didn’t have any purpose on this so, again I don’t like to do something like everyone else does because you have to do it. Be different because if you are not different people will give up the mini-program and so on. So, it is more we attract people to be different and do like different content which is creative with China. For Europe, we used to have a light newsletter and we are using a lot of Instagram and Facebook and we are also using our KOL’s a lot because we have got also golf teachers now and they are promoting themselves and help us to promote the brand and also, of course, Sonny Anderson.

Matthieu David: How do you help them because helping; I believe there is something like a relationship with them?

Guillaume Sergent: Yes, we give them some products for free.

Matthieu David: Alright so it does not commission on what they help you to sell? It’s a few products for them for free and if you find out that they are very active, you would continue to sell them products.

Guillaume Sergent: Exactly it is more about steps and if they are able to introduce us to some business. We can talk about the next steps, but until they are, we are just like this, but to be honest, at the beginning we thought about this business model just engage teachers to sell our product, but it didn’t work because teachers are teachers. They are not sellers. So, it was interesting because at the beginning we really thought about this.

Matthieu David: I found out that we always think that people are rational economist people and if you tell them that they will get 30% commission on it, they would sell and they would think to sell, but actually they would do a better job if you actually get them involved in building the product, getting feedback, offering for free or thanking them on Facebook or Weibo or WeChat and soon; getting them involved, getting them visibility and also, thank them actually for most people who could help. That’s good enough and they are not looking for an additional business to make it as a business. That is maybe the mistake of business people or entrepreneurs who always think rationally about relationships. You said that you do Instagram and you are using also Shopify as a tool for your website. For people who don’t know about it, when you create a shop online in the west, you have a few choices with Shopify and it is certainly one that is growing faster. You could use Woo Commerce with Word Press, you could use PrestaShop which is very fresh and you can use Shopify which is Canadian and is doing like 40 billion, I think USD now. It’s is growing fast. 14 or 20 billion to open your own shop, not like Amazon where you would actually be on the marketplace competing directly with people. So, when you need to create a brand, Shopify is a very smart solution. Could you tell us more about your experience with Shopify?

Guillaume Sergent: So first, in the beginning, I started to use Word Press and Woo Commerce because it was just a landing page, but it was too basic and really not appropriate for e-commerce from my point of view. Then we switched from Shopify because PrestaShop is great, but at the beginning of a start-up I will never recommend it and all the consultants I met said, “Okay, you can have PrestaShop, but it’s like give it to you and you just get your license.” So, don’t go and don’t invest in something that you will not use as it has to be used. So first, I did like Shopify and you can make something really, really nice and really friendly. So, that’s why we pick Shopify.

Matthieu David: The comment you just said is also usually what people say about Magento which was built by E-bay which is a very heavy solution and people have the same comment as you said for PrestaShop. You need to start low key. You need to start with a few sales. You don’t want to build a gas factory when actually, you need a small shop to start. 

Guillaume Sergent: Exactly, so then also, I was really inspired by China for making Shopify wide because in China, you buy in maximum and all the solutions we got in Europe was really too slow, but I tried to find a way to make it really short because again, we didn’t realize how European and French people are not really internet friendly, especially when you are in the golf industry which is more on budget. We say 40 or a bit like 30 people, but most of them are between 45 – 65 years old. So, they are not really open-minded and even they are going more on the internet, they don’t know how to buy it. So, we think about that and we try to make something really smooth and simple, actually. In three clicks you can buy it. For me, it was really the most important thing with Shopify and again, we just have really good feedback about our website.  I guess we did it well.

Matthieu David: saw by looking at your website and inspected your website in code, you are using Facebook Pixel. What do you do with Facebook Pixel? Are you retargeting people going to your website through Facebook and Instagram? Are you doing a custom audience? Are you doing look-alike? What do you do with Facebook and does it work?

Guillaume Sergent: Customer audience. It works. We have more and more traffic and we have more and more sales. So, Facebook is not really a complicated tool. It is really useful. I am not managing this on my own. I have a consultant doing it for me. Again, what I learn and what we learn is it takes time. So, you have to be patient to build and to know more your target and to learn your audience because you make tests actually with Facebook and they change a lot or really frequently the tool and you have to try to say, “Okay I pick up someone who is following this kind of brand from this part of the world; Europe, France” and then sometimes you don’t know why your agents are increasing or sometimes it didn’t work. So, we did some tests and sometimes the tests were really good and some were really bad for two reasons from my point of view is just again, in Europe they have more and more advertising, more and more processes so with the new LGBD policy in France it was a bit complicated at that time to target it and to know and people don’t want to get bored about advertising and also because you are a new brand, you need to investigate some ways. So, until that, it was really up and down and now starting to be more stable.

Matthieu David: So, first of all, you need to test on Facebook, but I understand as well that Facebook is a bit working like the brain itself. The more data it has, the more it would be able to target actually your custom audience with the Facebook Pixel helping. So, that takes time because it needs to learn who likes your post? Who is spending time on your post? Who is going on your website from Facebook and so on? So indeed, that’s not like Google where you pay and you get immediate traffic. That is something that takes time. It is so true. It takes time. About funding; you talked about funding in some articles and interviews in the press. Have you gotten any funding and what is your view on getting funding in the fashion industry? I am especially asking that about the fashion industry because fashion seems like something that people want to start because they like it themselves and not necessarily because there is a business behind it, not necessarily because there is a rationale behind it. So, I think the investment industry is less mature in this segment because a lot about the likes and the fun to start a fashion brand. Could you share a bit of your view on that?

Guillaume Sergent: Yeah, it’s even if I can say, irrational because as you say, fashion is kind of a dream. It is like for me to have a sports club and you see all these billionaires are buying football clubs and it’s funny how it’s the same comparison. People want to have their own brand to sell, “It is my brand.” So first is we go to smaller investing as I say, family and friend investors and then we got another investor from the fashion industry and so that’s the product and that’s how we started.

Matthieu David: In France, right?

Guillaume Sergent: No, no in China.

Matthieu David: At the time you were in France?

Guillaume Sergent: No, no at the time we were in China, but it was a French investor.

Matthieu David: Okay.

Guillaume Sergent: So, then I think again about funding that was a key point at the beginning. Involve people who are concerned about you or the industry and not just about money because at the beginning if you are involving people who are not committed to the industry, they will put too much pressure on your business and on you and you don’t need pressure. You already have so much pressure as an entrepreneur. So, that’s the thing and then also, the business model is crazy. We are talking now about the crisis and everything, but if I can, I just have feedback and a reminder that since 6 months, now people are more aware of how to change the fashion business, but before that, when you talked about a new model or producing by orders and everything; people were laughing at you. So even investors, when you present this kind of model, were really skeptical about that. So, it was and it is about finding how you will make your plan first, and then you have to adapt your speech regarding the steps you are funding. So, at the beginning like family and friends, it is easy then. You need to have a plan about how you will settle the brand and so on and then the other steps for a bigger investment are more of what is your new value proposition about fashion because I will not say it is easy to make T-shirts, but almost, you know? If you have a bit of money tomorrow, you can start. I am sure you will have followers and people, but how you can be sustainable and why people will buy our T-shirts more than mine or more than picking other kinds of shirts? It’s more about that. It is a complete process about how to promote your projects and find a good investor for good funding. So, that’s a bit crazy and be aware of me, if I can say that advice; like how you choose the funds and it is really important when you have funders to make some setup’s really clear meeting about who you are, what you want to do, what is the target because fashion is crazy and it can change in one click. So, just be aware of that.

Matthieu David: Thanks for your time. It is one hour already. It goes fast, as you can see. I hope everyone is doing fine, who is listening to us. Stay safe everyone. We are still in the middle of a crisis in the world and thanks for listening to everyone. Thanks for joining us.

Guillaume Sergent: Thank you, Matthieu.

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

Do not hesitate to reach out our project managers at dx@daxue-consulting.com to get all answers to your questions

This article China Paradigm transcript #96: The reality of brand building in China’s golf industry is the first one to appear on Daxue Consulting - Market Research China.

The company Adidas Sports (China) Ltd entered China and built headquartered in Shanghai in 1997 with a core business of men’s and women’s sportswear and footwear. The company also entered the market of children’s wear in 2001. Adidas in China is one of the most popular athletic apparel brands, and is equal footing with Nike.

In 2019, the net sales of Adidas were shared by Footwear (57%), apparel (38%) and hardware (5%). Adidas represented 1.9% of the overall Chinese apparel market, equal to Nike.

Adida’s expansion into China

The Chinese market of Adidas is blooming. According to statistics, Adidas has a national distribution network of around 12,000 stores in China, reaching in more than 1,200 cities and expects to accelerate its expansion to 2,400 cities. It was stated to have 1000 more stores in China in 2019. Adidas is not successful worldwide but one of his important metrics is the speed of the sales growth in the Greater China. In this country including Hong Kong, Macau, and Taiwan, the German sportswear group has kept its growing trend. During the third fiscal quarter of 2018, the growth sales surpassed 23%, which indicates the 11^th successive fiscal quarter with above 20% growth rate.

In fact, Adidas witnessed a slump before sustainably growing in the Chinese market. While in 2008, Adidas had 14.9% market share, but it plunged to 9.6% in 2009. Adidas run a new campaign ‘Way through 2015’ at that moment. It aimed to expand to lower tier Chinese cities and opened more stores. The stores were designed to different needs. For instance, the tone of Adidas Women is gentle and soft. The strategy switched focus from ‘sell in’ to ‘sell through’, which means that Adidas aim to not only sell products to distributors but also empower them to sell product to the final-consumers.

Production of Adidas in China

Around 25% of Adidas’ products are manufactured in China. Although Adidas has been transferring some production capacity to countries like Vietnam due to rising labor costs, China still is an indispensable production base for the company, according to a recently conducted market research study in China.

Market Position of Adidas in China

Despite the market boom, international companies are being challenged by local rivals in the Chines market. According to Euromonitor, Adidas takes up 19.5 % of the total market retail value, followed by Nike at 19.0%, Anta at 11.1% and Li Ning at 6.1%.

According to the research, Nike was the third most popular footwear brand in 2018 in China. Adidas earned 80% of all Weibo engagement on activewear brand accounts in the one-year period studied. This was mainly generated by posts featuring its brand ambassador Qianxi Yiyang, a member of the superstar boy band TFBoys.

Strategies of Adidas in China

• Product and pricing strategy: Instead of competing with low prices alone, Adidas sought to expand into lower tier segments by enhancing both products and pricing.
• Multi-brand strategy: Adidas used different sub-brands to improve different aspects of the brand. For instance, the company’s “Originals” line strove to increase retail value sales share to enhance awareness of the brand. While Adidas NEO targeted teenagers of 14-19, priced about half lower than Adidas Originals, and helps the company penetrate into lower tier cities.
• Sponsorship strategy: Adidas increased its brand awareness by sponsoring certain sports events and activities.
• Innovation Product Strategy: Adidas actively released new products to attract consumer attention. For example, NEO Label released in 2011 targeted at younger customers by combing sports and fashion elements.
• Internet Strategy: Adidas entered the Chinese e-commerce market in 2010 by launching the online store, tmall.com. Adidas sought to reach consumers of lower tier cities and further develop its distribution network.
• Cooperation with Chinese designer to launch new products, e.g. Angel Chen.
• Hunger marketing: Yeezy series were greatly applied with the hunger marketing strategies. It was sold in limited amount; thus, a large number of Chinese consumers were queuing for hours just for a pair of Yeezy.

• Brand ambassador: Adidas chose some Chinese celebrities to be the brand ambassadors, such as Qianxi Yiyang, Yifei Liu, Lun Deng and etc. It raised a high engagement between the brand and the consumers in social media platforms. Each topic regarding the announcement of the brand ambassador reached more than 100 million views. The hottest reached more than 1 million discussion in Weibo.

Adidas during COVID-19 in China

Affected by the epidemic, the offline retail sector was worst hit in China. Adidas’s revenue in Greater China is decreased by about 85%, comparing to the same period last year.

• To stay presented, Adidas China put more focus on its online strategies. On February 20, 2020, Adidas hold its first online product announcement in Taobao live. It had more than 2 million views and gained more than 3 million likes. 6000 sneakers were sold in the first 10 minutes.
• Discount: Adidas gave both online and offline discount to boost sales.
• Online work-out lectures: On its official Wechat mini program, Adidas provided online work-out lectures for free to maintain the interaction with their consumers. Moreover, consumers can buy products directly from the mini program.

Future Goals and Directions of Adidas in China

• Adidas moved its Asian Pacific headquarters to Shanghai in 2019. According to James Grigsby, VP of Cities and Marketplace Transformation, Shanghai is an important city for Adidas which empower Adidas to build both domestic and international brand image.
• Sales of the e-commerce channel increased by 36% to 2 billion euros. Adidas is seeking for a balance between online and offline distribution channels.
• Due to the epidemic, basically all sport events were cancelled or postponed. Adidas should look for a platform to stay its presence and talk to the consumers.
• The company’s target annual growth of 15%-20% in China in the coming years (according to a market research in China).
• Adidas understand that a majority of their consumers (90%) would first approach digital platforms to get to know the products. The digital strategies would always stay relevant for Adidas.
• Back to 2018, Simon Peel, global media director of Adidas confessed that they over-invested in digital advertising. 77% of budget was spent on performance while only 23% on the brand. A commercial published on April showed a group of Chinese entertaining celebrities just within 60 seconds. Adidas was accused of putting too much effort in entertainment marketing and forgetting to emphasize its brand core value. Adidas might need to find its sweet spot to leverage entertaining marketing in China.

Today developers, designers, and managers are part of its creation center based in Shanghai, with constant new product concepts especially made for the Chinese consumers. For the group, it is a success that will be continued. Indeed, the group expects China to contribute to a large part of their global sales growth. They will then extend their sales from lower tier cities since they are more and more attracted to sportswear not only for fitness but for daily casual wear.

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This article Adidas in China: Reaching low-tier cities with high-tier products is the first one to appear on Daxue Consulting - Market Research China.

Energy drinks are not traditional Chinese drink, but they are gaining popularity among youngsters. Recently the variety of imported energy drinks to China is increasing. Today, China is the largest energy drink market. Statistics show that the retail sales value of canned energy drinks in China increased from 9 billion yuan in 2009 to 87.5 billion yuan in 2019. China as the largest energy drink market also has the highest market growth rate in the world. Sales amounted to over 1.3 billion litters in 2015, a year-on-year increase of 25 percent. In 2019 sales grew by 15 percent year-on-year to CNY 64.5 billion. It was one of the fastest growing sub-categories in the Chinese beverage market. Easy access and availability as well as the growing consumer purchasing power contributed to the increasing sales.

Energy drinks market in China has a huge potential

The size of energy drinks market in China has maintained an annual growth trend from 2011 to 2018. It grew from 9 billion yuan in 2011 to 36 billion yuan in 2018. Forecast shows it will rise to 48 billion yuan in 2021. In 2019, the total sales volume of the energy drink market in China was 42 billion yuan.

Per capita consumption of energy drinks is still quite low in China

The energy beverage market in China started expanding quite late. The per capita consumption level of energy beverages is still significantly low, with broad room for growth. According to the data compiled by Euromonitor, the per capita consumption of energy drinks in mainland China in 2017 was 2.2 liters. This per capita consumption amount was 50% less than in Hong Kong. The gap was even more with the United Kingdom, Japan, and the United States.

Consumer groups are gradually expanding

The consumption group of energy drinks has gradually expanded, and consumption scenarios have become more diversified. In terms of occupational classification, the main consumer of energy drinks were drivers, couriers, medical workers. Currently energy drinks have more consumer groups such as students and white-collar workers in China. The consumption scenes have gradually expanded from overtime, staying up late to more casual such as parties and travelling. Some energy drink brands have begun to sponsor games and music festivals in China.

The expansion of consumer groups and diversification of consumption scenarios are important drivers of the growing energy drinks market in China.

China is the largest energy drink market with an exploding growth rate

Energy Drinks Market in China. Concerning global beverage consumption in 2021, China is expected to reach a 47.2 percent share, according to Beverage Daily, compared to the prediction of a 17.9 percent share of North America and Western Europe combined. Functional beverages have especially been enjoying a higher demand recently. Functional beverages are a sub-sector of the non-alcoholic industry and canned beverage, for instance, further classified into energy-, sports, or nutrient-enhanced drinks. Sports drinks primarily contain sodium, potassium, and magnesium, whereas nutrient-enhanced drinks usually include an extra supplement of vitamins, as reported by the Global Times. However, especially energy drinks, which already make up most of the functional beverages, are growing rapidly.

According to China’s General Administration of Quality Supervision and Standardization Administration, energy drinks are classified as “drinks with other special functions” as they contain caffeine, taurine, and sugar together with other ingredients such as guarana and B vitamins. Statista shows that the retail sales value of canned energy drinks in China increased immensely from CNY 9 billion in the year 2009 to an estimated CNY 87.5 billion in 2019.

Over the past decades, China’s industrialization and urbanization have been in the process of converting a large population to urban dwellers. This leads to increased regulations economic growth has continued to soar and develop into a market-based economy.  The rising income and disposable income levels, and a constant improvement of living standards of Chinese people have resulted in modernized, busier lifestyles which is one of the primary drivers of the increase in demand.

The largest energy drink market China also has the highest growth rate in the world. In 2015, sales amounted to over 1.3 billion liters, a year-on-year increase of 25 percent, and sales grew by 15 percent YoY to CNY 64.5 billion, as analyst CCM stated. Easy access and availability through improved distribution infrastructure as well as the growing consumer purchasing power contributed to the increasing sales.

Energy Drinks Market in China: Red Bull remains the top market leader

Canned and bottled energy drinks are now sold everywhere in China, from supermarkets & hypermarkets to convenience stores, grocery stores, bars, nightclubs, and online. They have been enjoying a surge in popularity nationwide among its primary consumers such as gym goers, sports people, the working class, and school students who prefer a boosting beverage to recover their energy and stay awake.

China remains a fertile ground for the beverage market, and its energy drink segment and the vast market has attracted many businesses. However, the leading international player Red Bull dominates it. Competition is, therefore, rough. Red Bull in China unequivocally maintains the top position in the market. Bloomberg reports Red Bull having global energy-drink sales of $43 billion in 2015 and a global market share of 30.2 percent. Comparing global revenue of Red Bull in 2015 to their main competitor, Monster Beverage Corp with a market share of 21.10 percent, the picture on Chinese grounds looks entirely different.

Red Bull in China, which is not carbonated, accounts for a significant market share of about 80 percent. Eastroc Super Drink follows with about 10 percent, and others like Dali’s Hi-Tiger or Wahaha’s Qili share the remaining. Also, Monster Beverages has entered the Chinese market. According to Reuters, Coca-Cola Co bought a 17 percent stake in Monster Beverage Corp, also seeking to expand into the fast-growing energy drink category.

However, it remains unclear how successful Monster Beverages will be. Not only because of the intense competition but also because of beginning difficulties, as its trademark has already been registered in China, according to CCM Data and Business Intelligence.

A new trend towards flavored energy water?

The changing consumer preferences in China, such as a growing awareness about health and fitness benefits, and the willingness to pay more for a quality difference, indicates the energy drinks market will have to show adaptation. Concerns regarding high sugar content require upgrading products. In particular, as the young population at the age of 25-35 years is the target customer for energy and sports drinks, the brands should match their new expectations which are not only low-calorie, high nutrition, functional features but also natural and fashionable drink products.

One of the brands in the Chinese functional drinks market is Glaceau Vitamin Water. The world’s largest beverage maker, the multinational Coca-Cola Company, produces this brand. Unlike other energy drinks, which usually contain caffeine in combination with other energy-enhancing ingredients such as taurine, herbal extracts, and B vitamins plus calories, Glaceau Vitamin Water is made with natural ingredients preserving their nutritional values and gets rid of artificial flavors and preservatives which give it a wider appeal to existing and potential consumers.

The Chinese beverage brand Nongfu Spring launched Victory Vitamin Water, prompting Coca-Cola to accuse them of plagiarism, as reported by China Daily. Additionally, the success of Mizone, the flavored energy water brand owned by Danone, highlights the trend by taking first place in the sports drinks segment.

Nevertheless, energy drinks like Red Bull, for example, are very popular in the energy drinks market in China, yet each can (250 ml) contains 80 mg of caffeine which amounts to two cups of coffee or a cup of tea. Other brands of energy drinks contain several times this amount without displaying the presence of caffeine. William Reed Business Media describes energy drinks as controversial, but successful. The reason behind that phenomenon may be their efforts in marketing and advertisements, claiming energy-boosting effects as well as an impressive image, which consumers believe, according to Euromonitor. The Chinese government also keeps an eye on the production of energy drinks and has been controlling and mini increased regulation for the energy drinks industry. These include the production standards and strict acceptance standard given that energy drinks are directly related to the health of the consumers.

Energy Drinks Market in China Prospects for the industry

Energy drinks market in China will tend to be more competitive. Leading brands will consider investing more capital and energy on distribution penetration, marketing campaigns, and research and development of energy and sports drinks made of natural ingredients while preserving their nutritional values to fit requirements from the high-end market consumers. Other domestic players in the energy and sports drinks industry will put their focus much more on second- and third-tier cities and enhance their distribution channels to create an affordable alternative to the key players in the market.

Nevertheless, growing personal disposable income, changing lifestyles, and increasing consumer spending on food and beverages will further drive the energy and sports drink market in China. Thus, the segment provides immense opportunities in China. However, at the same time, one should not underestimate the challenges it entails and should do a professional market analysis and research in advance.

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This article Energy Drinks Market in China: The beverage market’s fastest growing segment is the first one to appear on Daxue Consulting - Market Research China.

We observed Chinese consumption during the Coronavirus and witnessed a radical shift from brick and mortar physical services towards online services in China. Given the number of people self-quarantined in their homes, those that frequented physical stores, gyms, and workplaces, are now trying out virtual offerings. Newcomers such as remote work platforms are emerging from the depths of the APP store. Understanding the changes in Chinese consumer demand during the Coronavirus allows seeing new occasions through the fog. Here is a peek at what China needs more of during the Coronavirus outbreak.

Pet owners are looking for pet sitters

While many Chinese people remain stranded in their hometowns, an invisible but significant number of furry friends are left alone at home, far away from their beloved owners. The Coronavirus outbreak boosted the pet sitting market in China, so we spoke with a pet-sitting business owner to get more insight.

Two years ago, after struggling to find someone to take care of her puppy when she was travelling abroad, Julie Chanal, a white-collar worker in China, had the idea to launch her own platform to link pet sitters and pet owners.

“At that time, I could not have imagined letting my rescued dog Polo alone or entrusting it to friends since my little one was young and a little crazy.” In December 2018, Julie decided to launch HappyNest, “A pet lover community to take care of your furry friend the time you need.” In slightly more than a year, the platform already reached around 150 pet sitters located in Shanghai.

[Photo Source: HappyNest, a pet sitting platform in China that has seized Chinese consumer demand during the Coronavirus]

Surge in pet-sitting demand during Coronavirus outbreak

During the outbreak, the platform registered a surge in demand for pet sitting. “We had a lot of booking of sitters, and some pet owners wanted to extend the duration of their pet sitting because they were extending their holidays as well.” Chanal says the outbreak also creates trouble for her business, “On the other hand, the epidemic is putting a strain on our community, with people meeting difficulties to get out of their homes to take care of other’s pets.” The time remains challenging for the young entrepreneur who is continuously seeking to extend the pet sitters community to fulfill the growing demand. Anyway, with or without the Coronavirus, HappyNest aims to double its community by the end of 2020.

Chanal is likely to achieve her goal. According to China Pet Market, it is not only a new Chinese consumer demand during the Coronavirus, since the pet population is expected to reach 755 million in 2022, with an 8.2% compound annual growth rate. The growing middle class, a massive move to cities and other demographic changes – such as having children later in life – also explain why pet owners in China would spare little expenses to make their loved ones happy. Chinese consumers are set to spend 46.3 billion yuan ($7 billion) on their pets by 2022, up from 17.5 billion yuan ($2,5 billion) in 2017.

The need to work and study online: a new model of Chinese consumption during the coronavirus

Despite offices remaining closed, Chinese companies are eager to start operations. Remote work APPs  are booming on the back of the Chinese demand during the coronavirus to study and work from home.

Tencent Meeting and Alibaba’s DingTalk apps are here to make you keep working at home while keeping in touch with your colleagues. From nearly zero downloads before the outbreak to more than 500,000 daily downloads as of late February, the two apps skyrocketed to the very top of the Appstore in a matter of days.  

[Data Source: Qimai, iOS downloads of Tencent Meetings and DingTalk show the Chinese consumer demand for remote work APPs during the Coronavirus outbreak]

The trend also extends to students whose schools rely on such tools to deliver online lectures amid the epidemic. However, Chinese students don’t see it that way. These digital natives are massively giving one-star ratings to the most downloaded applications in hopes of making them deleted from the Appstore.

[Photo Source: Apple Store – DingTalk ratings, behind the scenes of Chinese consumption during the coronavirus]

Despite some angry reactions from the young ones, the intensive use of online office tools by companies in recent weeks is expected to continue even after offices reopen. China’s remote-working solution market could reach $477 million by 2024, up from $169 million last year.

Live-streaming platforms to relieve offline businesses

While local authorities closed gyms across the country, the Chinese are looking for ways to stay in shape. Mobile fitness apps are seizing the new Chinese consumer demand during the Coronavirus to make people do exercise at home.

That’s the perfect example of an entire industry switching from offline presence to online interactions, promptly following Chinese demand during the Coronavirus. Keep, one of the most popular fitness brands in China, smartly used the Douyin live-streaming feature to move the classes online, boosting its followers by 185% from the start of the Chinese New Year. The company releases daily fitness class schedules via Weibo and WeChat, driving traffic on Douyin, ByteDance’s Chinese version of TikTok.

Clubbing from the safety of your livingroom

The Keep moving phenomenon doesn’t stop there, with clubs deciding to live-stream mixing performances on Douyin. A five-hour set at OneThird, a nightclub of Beijing, brought back to the club $285,000 in tips donated by the viewers on the short video platform. Banking on the trend, Douyin’s short video rival Kuaishou is now making deals with clubs across China to stream their shows.

[Photo source: Bloomberg, One Third – A DJ performs to a live stream audience at OneThird in Beijing]

Live-streaming and short videos are an answer

Industries are focusing their efforts to answer the Chinese demand during the coronavirus towards online services in China, sometimes accelerating existing trends. One example is this shift towards live-streaming, which already exploded in 2018, with a 745% growth year on year, thanks to improved connectivity and video maturity.

[Data source: Statista, China short video market revenue]

Outside of partying and staying fit, the Chinese are also extensively using video platforms as a way to stay informed and share their feelings during the epidemic. The Chinese demand during the Coronavirus turned to the news on the outbreak, or life hacks to fight boredom. According to Forbes, between January 20 and February 2, 574 accounts on Douyin and Kuaishou each gained between 100k-500k new followers.

Given Chinese consumption during the coronavirus of short videos and live-stream contents, there are obviously no better times to become influencers on Chinese video platforms. Sleeping in front of the camera could even make you rich!

A chance for the gaming industry

The Chinese demand during the Coronavirus for mobile games has never been so important with Tencent’s Honor of Kings, a multiplayer arena battle game, reaching up to 100 million daily active users. Plague Inc. was ranked #1 in the paid game sector of the apple store in January, before being removed by the Chinese authorities on January 28.

The increase is attributed to the impact of the novel coronavirus, which led to more gamers staying at home instead of traveling or socializing outside of the home, allowing more time to play games. The craze for video games trickles on another Chinese live-streaming platform, Douyu, specialized in gaming content. On Douyu, Honor of Kings, PlayerUnknown’s Battleground and League of Legend are twice as popular than they were during Chinese New Year 2019.

On February 13, Douyin’s maker ByteDance appointed exclusive head to take care of a gaming branch, signaling its new ambitions in the mobile gaming sector. Rushing into this new consumer demand in China, the company looks to further monetize its millions of users outside of advertising, through mobile gaming.

Crisis management and market opportunity in China

In Chinese, ‘crisis’ (危机) includes the word ‘opportunity’ (机会), arguing that opportunities for growth arise during crisis. The cessation of activities caused companies to step up as leaders during Coronavirus crisis management. Chinese consumption during the coronavirus of online services in China is a game-changer for the entire Chinese economy. Anticipating the Chinese consumer demand during the Coronavirus opens new market challenges in China for those capable of thinking outside of the box. Who would have imagined virtual clubbing entertaining millions of people?

Author: Maxime Bennehard

The ultimate Coronavirus economic impact in China report

This article Changes in Chinese consumer demand during the Coronavirus is the first one to appear on Daxue Consulting - Market Research China.

The hashtag about Kobe Bryant’s death (#科比去世#) on Sina Weibo had accumulated about 6.5 billion views by February 3^rd. The fatal coronavirus, which started in Wuhan has ravaged China since, had dominated the Chinese social media for the past week. However, Kobe Bryant’s death on Chinese social media still reached to the top of trending searches and temporarily buried discussion about the coronavirus.

[Source: Weibo ‘Kobe Bryant’s death’]

Kobe Bryant was the primary ambassador of the NBA in China

Some reviewers think Chinese reactions to Kobe Bryant’s death is even stronger and wider than in his home, the United States. Kobe Bryant has had a good reputation in China for a decade. In fact, Bryant’s jersey was the biggest-selling in China, eclipsing even Yao Ming‘s.

Kobe Bryant established the Kobe Bryant China Fund, which donated supplies and raised money for education to poor children with the support of the Chinese government. In the United States, the fund sponsored Chinese cultural programs, such as Mandarin-language lessons.

What are Chinese reactions to Kobe Bryant’s death on Weibo?

Bryant was also generous with his Chinese fans. Two days before his death, he posted a Lunar New Year greeting video on his Weibo, wishing a happy new year (“Xin Chun Kuai Le”) to his “dear friends in China” and thank you for their support, which has had 146,250 replies by February 3^rd. Most of the replies could not accept the fact of Bryant’s death.

[Source: Weibo ‘Kobe Bryant’s Lunar Year greeting video’]

Chinese reactions to Kobe Bryant’s death is continuing. Many young Kobe Bryant’s fans in China see Bryant’s death as the end of youth. Bryant is the permanent memory of youth of the post-80s and post-90s generation. For basketball fans who missed the era of Michael Jordan, Kobe Bryant was their Michael Jordan and their legend. Bryant is a distinct icon of the NBA. Kobe Bryant’s fans in China said that, even if there would be a second Kobe Bryant, they could never chase after youth.

Sean, who ranked the #8 rapper in China tweeted on Weibo, said: “‘The way to make art more accomplished is to make it disappear under the attention of everyone.’ I believe that your death is an act of God. Your life has brought us a lot of persistence and strength. It is time for you to take a good break in heaven. I will continue to chase my dreams like you once. R. I. P, my legend.” Sean’s Weibo is a representation of Chinese reactions to Kobe Bryant’s death and speaks the hearts of Kobe Bryant’s fans in China.

[Source: Weibo ‘Goodbye, my legend’]

What deserves to be mentioned is that even the Chinese state media, the Communist Party Mouthpiece People’s Daily honored Bryant: “His fearless spirit, both on the court and in real life, is worth cherishing. (不惧风雨的奋斗精神，不论是篮球还是生活，都值得铭记)”

[Source: Weibo ‘Kobe Bryant’s spirit is worth remembering’]

Chinese reactions to Kobe Bryant’s death spiked search engines

[Source: Baidu Index ‘search index of Kobe Bryant’]

Concerning the data of Baidu Index, it shows that Kobe Bryant related searching rose dramatically from January 27^th, straight after the death of Bryant, and the search index is still higher now than before the helicopter crash. Kobe Bryant’s death on Chinese social media is still being discussed. Chinese reactions to Kobe Bryant’s death are not only belonged to his fans in China but also people want to know him more and people who regret not knowing him earlier.

Chinese reactions to Kobe Bryant’s death on WeChat

[Source: Wechat Index ‘search index of Kobe Bryant’]

Data from WeChat Index, which is derived from the communication and information-sharing software WeChat in China, shows the similar search frequency trend of Kobe Bryant as the Baidu index. The news of Bryant’s death was explored in WeChat ‘moments’. Many Kobe Bryant’s fans in China posted friend moment on WeChat to mourn Bryant. Some fans even changed their avatars to a photo of Bryant and Bryant’s daughter, Gigi, like what Bryant’s wife, Vanessa did. The relevance of Kobe Bryant’s death on Chinese social media shows the true impact he had on Chinese society. There was also a trend of girls who are not interested in basketball also mourning Bryant for their boyfriends.

A Chinese question-answer forum (Zhihu): shows us what Chinese netizens think of Kobe Bryant and his death

[Source: Zhihu ‘what do you think of Kobe Bryant’]

On Zhihu, there are 27,097 followers and 2.6 million views of the discussions about what people really think about Kobe Bryant.

(This answer has about 30,000 upvotes)

(This answer has about 27,000 upvoters)

[Source: Zhihu ‘what do you think of Kobe Bryant’]

Kobe Bryant will be missed in China

The answers are unified. Chinese reactions to Kobe Bryant’s death on Zhihu are shocked and sad. Chinese NBA fans grew up with Bryant in the spotlight and thought would grow old with him as well. They believe Bryant would be forever young, and he would challenge God in heaven. They confirmed his honor, but what they cherished more was his spirit, diligence, enthusiasm and willpower.

Kobe Bryant’s death on was deafening. Bryant boosted popularity and reputation for the NBA in China. Kobe Bryant’s fans in China described him as a “real man” and a “real fighter”. They adore him, learn from him, and they will always miss him.

“The superstar went down, goodbye Kobe Bryant, goodbye our youth.”

R.I.P.

Learn more about the popularity of professional athletes in China through the licensed sports merchandise market report

This article Chinese reactions to Kobe Bryant’s death show influence has no boundaries is the first one to appear on Daxue Consulting - Market Research China.

The sports market in China is expected to reach 5 trillion RMB by 2025 through the Chinese government lifting the sports industry as a part of a national strategy. In 2018, the size of the sports industry reached 2.4 trillion RMB. Between 2018 and 2025, the government plans to double the size of China’s sports market. Basketball, Football ( Soccer) and e-sports are the main three sports markets in China. Viewing sports online is not uncommon in China. Online sports such as e-sports, have numerous media platforms that have been established by IT giants such as Tencent (Tencent Sports) and Sina (Sina Sports). With a market, sports advertising in China  uses multiple channels: traditional advertisement, digital advertisement, endorsements and sponsoring.

Slight decline of traditional sports advertisement in China

Traditional advertising includes the use of billboards, posters, television commercials, radio, and print materials such as magazines.  Traditional media continues to decline since China shifted to a digital ad ecosystem. This means that there was a decline in spending on television and print. However, poster and billboard sports advertisements are still used outside athletic facilities or recreational centers such as gymnasiums, stadiums and sports centers. At bus stops located near these locations, there are also printed displays of sports team for sports such as basketball, soccer, gymnastics, etc.

 [Source: Reuters/Aly Song, traditional sports advertising in China, at the Oriental Sports Center in Shanghai]

Although China is deeply embedded in the digital age with the Internet of Things and digitizing, these traditional methods of advertising are still used because of their ability to reach local targeted audiences easily such as the silver economy.  Sports teams, especially individuals of sports teams, are often featured in magazines for categories such as fashion, sportswear, and other items in which they may have been chosen to model for or be a representative of.

Digital advertising dominates

Digital advertising spending in China is rising. In 2019, ad spending in the Digital advertising market reached $52,513 million US. That largest segment of the market showed to be Search advertising, which has a market volume of $22,562 million US. Digital displays are very common in China as digital display screen line bus stops, subway stations, and are all throughout malls. Online sports media platforms in China like alisports and Tencent have also taken off in recent years.

Mobile advertising

Mobile ads are becoming one of the leading as spending channels in China and by 2023, 35% of total ad spending will be generated through mobile. With mobile ads, you have various categories: Social media advertising, Banner advertising, Search Advertising, and Video advertising. Within their own media platforms, E-sports advertising mainly utilizes video advertising to reach targeted audiences. On social media apps such as Weibo and WeChat, sports advertising is not uncommon either as ads for a sporting goods brand or sports team would appear.

Social Media Advertising

Sports advertising in China is often through social media. These ads often appear as, but are not limited to, sponsored posts with content or alongside the news feed of the social networking site. Brands such as Nike, Adidas and other sports/fitness brands will utilize these forms of advertising the get their brand across to wider audiences.

Banner Advertising

Banner advertising is a form of digital advertising that comes in various shapes, sizes, and formats and are displayed on a website and mobile-enabled website, or app. Formats includes wallpapers or pop-ups that link to a landing page of the advertiser. They generally match the form of the environment in which they appear. The banners can be static, play sounds, animations or even videos. Along with its very own category on Weibo, E-sports events and popular players are usually part of Weibo’s banner ads that pops up right after the app’s logo screen when you open it. Sporting goods and sportswear  brands may utilize this form to generate more traffic to the brand’s direct website/platform for awareness.

Search Advertising

Also known as Paid Search Advertising or Search Engine Advertising includes advertisements that are displayed on search page results above or next to organic search results. They are usually text and image based. Keyword advertising and sponsored links are also a part of search advertising. When it comes to sports advertising in China, sporting goods or apparel would appear in this form.

Video Advertising

Video advertising carries across all ad formats within web-based and app-based video players. They are often in the format of video ads that appear before, during or after the streamed video. Text or image overlays that appear while watching a video are also video ads. 

Sports Sponsorship in China

Sports sponsorship is a marketing technique that consists of an association between a company and a sports club or team. The licensed sports merchandise market in China is growing at a rate of 10-15% every year. In sports sponsoring, both the sponsor and the sport club benefit. The goal of sports sponsoring is for the sponsor to generate brand awareness and customer loyalty, and the sports club to receive a financing source. Chinese tech companies have become leaders in sports-sponsorship choosing to partner with major sport leagues. Along with increasing brand awareness, sport sponsorship provide the potential for increased sales and reaching a wider audience base for companies. Many companies utilize sports celebrities such as Yao Ming (basketball), Chen Zhihao also known as Hao (esports), and Zhu Ting (volleyball) as endorsers or ambassadors of their brands and organize some activities or events with them. [Source: daxue consulting, sponsorship in sports advertising in China]

Segmentation for sports advertising in China

China’s sports market is very large, but different tier cities have different sports media consumption habits

First-Tier Cities – Big cities like Shanghai and Beijing have well developed markets that are ready for high class or expensive sports good. Consumers within this tier will care more about quality and function.

Second-Tier Cities – Consumers in second-tier cities possess personal incomes that will be reflected on their consumption. They are more likely to focus on a brand name.

Third-Tier Cities – Rural areas, with low consumption power of brands. Third-tier consumers are increasingly joining the middle class and becoming more consumers that are sophisticated. When it comes to sports advertising in China, low-tier city consumers are future targets, as they are already being primed with exposure to sports media like the NBA.  

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How many Chinese tourists travel to the United States each year?

200,000

1 million

3 million

9 million

Correct! Wrong!

Nearly 3 million Chinese tourists travel to the US annually, according to 2018 statistics.

Which is the most popular American fast food chain in China?

Mcdonald's

KFC

Burger King

Taco Bell

Correct! Wrong!

KFC is by far the most popular fast food restaurant in China with more than 5,000 restaurants in 1,100 cities in China.

According to Daxue Consulting, which American monument is the most popular with Chinese tourists in New York?

Statue of Liberty

Times Square

Empire State Building

Central Park

Correct! Wrong!

The Statue of Liberty was the most popular New York monument among Chinese tourists in 2018.

Which American film series is the most popular in China?

Avengers

Star Wars

Harry Potter

Terminator

Correct! Wrong!

According to Daxue Consulting, Marvel’s success in China is outstanding: Avengers has grossed more than $629 million in box-office in China, whereas globally it has grossed a record-breaking $2.79 billion.

The NFL opened in China in 2008, how many Chinese viewers watched the 2019 Super Bowl?

500,000

1 million

2 million

8 million

Correct! Wrong!

The Super Bowl 2019 aired on the morning of the Chinese New Year’s Eve and drew a live audience of more than 8 million in mainland China.

1 in 5 school age children in the US has obesity. How does this compare to China?

Obesity in China is not yet remarkable

1 in 10 Chinese children is overweight or obese

1 in 5 Chinese children is overweight or obese

2 in 5 Chinese children is overweight or obese

Correct! Wrong!

The issue of obesity in China is becoming increasingly important and worrying. New generations have access to more sweets, especially from abroad. In 2019, it is estimated that one in five children are overweight in China, as in the United States.

How many Chinese from Mainland China are fluent in English?

1%

9%

31%

80%

Correct! Wrong!

Between 4 million and 10 million Chinese people have L2 proficiency in English (based on national results on the CET-4), which means less than 1 % of the total population.

Which state in the United States welcomes the most Chinese students?

Texas

California

New-York

Ohio

Correct! Wrong!

California is the most popular state for studies among Chinese students, followed by New York and Texas. In 2018, a total of 360,000 Chinese students chose the US as their study destination.

When did Coca Cola come to China ?

1921

1945

1979

2001

Correct! Wrong!

The first crates of Coca Cola arrived in Beijing in 1979.

Which is the first Chinese Silicon Valley of Hardware?

Shanghai

Beijing

Hangzhou

Shenzhen

Correct! Wrong!

Unlike the US, China’s tech hubs are scattered in several cities, 17 zones are considered to be national-level innovation demonstration zones. But Shenzhen is considered the first China’s Silicon Valley, the Silicon Valley of Hardware, because Huawei, Tencent, JXD, One Plus all began there.

Cultural and social ties between the US and China

Well done! But there is still room for improvement.

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Very impressive! You seem to be an expert in American culture in China!

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Oops... You have a lot of things to learn!

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This article China quiz: Cultural and social ties between the US and China is the first one to appear on Daxue Consulting - Market Research China.

The Chinese online sports market

In 2014, the State Council of China issued the No. 46 document Comments Relevant to Accelerate the Development and Consumption of Sports Industry. The Chinese government stated that sports industry would be lifted as a part of a national strategy; and by 2025, the total output of sports industry in China would be 5 trillion RMB. The policy triggers the development of the sports industry of China. As a result, the Chinese online sports market is also booming.

The scale of the Chinese sports market

In 2018 , the market size of sports industry in China is 2.4 trillion RMB, while there is a 2.6 trillion RMB gap between the current market size and the goal of the Chinese government. In addition, according to the data of Forward-The Economist, the percentage of contests and performance in the sports industry of China is only 1.05%, which is tiny compared to 25% in the sports industry of the U.S. This indicates that the sports industry in China has large room for further development.

According to the estimate of PwC, the sports sector in China will embrace a tremendous annual growth to 15% in the next five years, which outpaces the expected annual growth of the world.

The number of people who watch sports online in China

Statistics offered by General Administration of Sport of China and Bohai Securities shows that the online sports audience in China rose from 80 million in 2012 to 410 million in 2016.  The 100 million average annual increase reflects the continuous growth of Chinese online sports market.

Online sports media platforms

With the sports industry initiative of the Chinese government and the number of people who watch sports online in China, the IT giants in China are establishing their own Chinese online sports media platforms. Tencent, one of largest tech companies in China, has performed the best in distributing sports information to Chinese sports fans through its established Chinese online sports media platform, Tencent Sports. Tencent Sports provides sports news and information not only related to China, but also reports on the global sports scene. The biggest achievement of Tencent Sports to open its market is that it cooperates with NBA in the U.S. to broadcast all NBA games, helping the NBA improve its influence in China. Based on Tencent’s vast social network services, Tencent Sports easily spreads to every corner of the nation and garners a large number of users, and it successfully became the main source of sports content distribution in China.

Sina, another IT giant company in China, set up the first Chinese online sports media platform Sina Sports to provide sports content in China. Sina sports is a popular Chinese online sports media platform and it has huge influence on the internet in China as it leverages the network of Sina Weibo by sharing marketing and sports information, and therefore convertsWeibo users to its own users.

New entrants of the sports media platform market are also noticeable. Alisports, a new Chinese online sports media platform backed up by Alibaba Group, entered the market in 2015 and have spent a good deal of money to grab its market share. Began with the e-sports in China, Alisports expanded its platform by cooperating with several international sports organizations and games and sponsoring advertisement, human resource and technical support to improve its popularity. Alisports can establish a new retail sports platform that gives different parties chances to share and exchange sports resource and information.

Tencent Sports: Tencent online sports media platform

Tencent, as one of the three biggest internet companies, has built up its own Chinese online sports media platform and has taken an important position in the market. It is also a good example to unveil the Chinese online sports media market at present.

The establishment of Tencent Sports

Tencent Sports used to be a part of Tencent’s web portal as an informational channel called “sports channel” which provided sports content in China since 2003. At that time, Tencent’s “sports channel” performed just like other online sports media, merely acted like an online sports reporter offering a sports newsletter.

In 2008, Tencent Sports began to develop Tencent live streaming to broadcast a few games. As the number of competitions was not sufficient to support continuous user inflow, Tencent’s “sports channel” picked out some highlighted matches for Tencent live streaming to attract Chinese sports fans to visit the website.

Development of Tencent Sports: starting from the NBA Tencent game

In 2014, Tencent Sports started its business independently and now is led by Zhao Guochen, who is former deputy editor-in-chief of Tencent’s website. Unlike what it did in the past years, Tencent Sports determines to be a more comprehensive online platform and offers a variety of functions. At the beginning, Tencent Sports negotiated with the NBA and bought out its broadcasting rights in China for five seasons to improve Tencent Sports’ popularity. The NBA Tencent game stimulated users inflow to Tencent Sports, and Tencent Sports began to introduce more sports association and obtain their games broadcasting rights in China on the net, such as the English Premier League and the National Hockey League. Tencent Sports acted like an online TV station on which Chinese sports fans can watch sports online in China just as on TV through its website, app and other Tencent online platforms. With stable and high-quality images, Tencent Sports soon became the most popular Chinese online sports media platform.

Data on Tencent Sports

Data reveals that Tencent Sports has advanced performance in the Chinese online sports media platform market compared to other counterparts. Besides, it also shows that Tencent Sports room to develop.

Picture of users of Tencent Sports

Data on Baidu index reveals most users of Tencent Sports mainly concentrate on people in their 30’s and 20’s, which make up 80% of those who search Tencent Sports.

When it comes to the gender distribution, Baidu index shows that males are more interested in Tencent Sports than females, with almost 90% of the searchers are male and remaining are female.

Data extracted from Tencent Sports app is somewhat different from what is shown on Baidu index. The age distribution of Tencent Sports users is basically identical with what is shown on Baidu index, with age groups under 35 are the majority of Tencent Sports users. The percentage of female users of Tencent Sports is higher than that of searchers of Tencent Sports, which may suggest that females are more easily converted as loyal users than males, or it could be explained my males use Tencent Sports at a higher frequency.

Profits and cost of Tencent Sports and its users

Although no public financial data has been provided from Tencent Sports, the CEO also admits that the Tencent online sports media platform, just like other online sports media platforms in China, has not obtained any profits.

The cost now is too high for Tencent Sports, and it mainly consist of the broadcasting rights in China of different renowned sports leagues. Taking the NBA as an example, Tencent Sports signed the broadcasting contract with the NBA in 2014 the five following seasons, and it took Tencent Sports about 500 million USD to win the contract, which is a great deal of money. The prices of broadcasting rights in China of other top sports leagues are also rising, which is a huge burden for Chinese online sports media platforms.

As for the fees collected from the audience and users, Tencent Sports charges much less money than its counterparts abroad. At present, Tencent Sports charges fees for add-value services like better quality of images, which is different from foreign counterparts who deliver authorized matches services after the users and audience pay the fees.

How does Tencent Sports operate and make their marketing and advertisement

Tencent Sports now is the most successful and representative Chinese online sports media platform, and its success should give the credit to Tencent Sports’ operation, especially its marketing and advertising strategies.

Seize top sports rights and cooperate with top leagues and authorized TV channels

By utilizing the NBA’s broadcasting rights in China, Tencent Sports soon gained a lot of attention from Chinese sports fans. The NBA successfully helped Tencent Sports market itself as a Chinese online sports media platform. This cooperation between Tencent Sports and the NBA is mutually beneficial, as Tencent Sports began to pursue vast cooperation with other top sports leagues to expand its influence on Chinese sports fans. On the other hand, sports leagues that cooperated with Tencent Sports became more popular than before in China, as their matches had more opportunities to be exposed to Chinese sports fans and was broadcasted on Tencent Sports, which is a perfect platform to showcase itself to more potential audience.

But Tencent Sports doesn’t act irrationally, as it gave up to contend for broadcasting rights in China of all the top sports leagues with other platforms or TV stations. Instead, the cooperation between Tencent and ESPN was put forward to help Tencent to fulfill as much sports content distribution in China as possible. The cooperation between Tencent and ESPN allows both parties to share the broadcasting rights and broadcasting channels with each other. Besides, by providing editing and producing Tencent live streaming of matches for other TV stations who own their broadcasting rights in China, Tencent Sports can get access to these matches with fewer cost and expand its influence in the market. The pattern of the cooperation between ESPN and Tencent is also used by Tencent Sports with other TV stations.

Tencent Sports advertisement

As most TV stations and live streaming platforms do, Tencent Sports inserts advertisements between the breaks of each match’s video on Tencent live streaming. Except for the users who pay for the add-value services, all common users will go through the advertisements when they watch sports online in China, and this may trigger a lot of potential consumption of these companies who sponsor the advertisements on Tencent Sports.

For the advertisements that Tencent Sports makes for itself, as a subsidiary of Tencent, Tencent Sports takes advantage of Tencent’s vast social media network to reach every corner of the internet. For example, Tencent Sports leverages Tencent and Weibo to create sports topics that are reported in Tencent Sports and attracts the Weibo users who are potential sports fans in China to visit Tencent Sports and therefore achieves the sports content distribution in China, which may improve its popularity and brand-awareness. In addition, with a great deal of users on WeChat, Tencent Sports can distribute sports content in China by the links of game results and game forecasts on WeChat and redirect the users to its own platform.

Tencent biology: Sports + games, online and offline social interactions

To expand Tencent Sports’ influence and market sports content in China, Tencent Sports utilizes online and offline resolutions to build up its biology chain in the market. On the net, Tencent Sports uses Tencent mobile apps like Tencent Sports, Tencent news to grant users more accesses to the matches videos or Tencent live streaming. Besides Tencent Sports assigns games commentators to renowned athlete or sports experts to interpret each game. It also leverages social media like Weibo and WeChat to create sports discussion topics, such as sports stars, matches forecast and sports teams, for sports fans in China. Teams and athletes can also create official accounts to operate their marketing activities and advertisement. Tencent Sports also maintains a Tencent Sports community, an online community for users to discuss sports, which allows user of Tencent Sports to obtain extra sports content in China provided by UGC (User Generated Content) and PGC (Professional Generated Content). Users in Tencent Sports community can not only obtain professional analysis of specific sports events and athletes, but also participate in or even create interesting sports topics and discussions, marketing the sports content in China more comprehensively.

Tencent Sports also arranges different events with KOLs or famous athletes to market sports content in China. For example, Tencent Sports invited pop stars and sports stars to compete in contests, which attracts not only sports fans in China but also the fans of the pop stars, gradually influenced the latter ones to pay attention to Tencent Sports who distributed the sports content in China and became the users of it. In addition, as the contests of events attracted a lot of attention in China, many brands like Benz and Nike sponsored Tencent for such contests in exchange of their advertisements during the contests. The cooperation between ESPN and Tencent also helped Tencent Sports to broadcast its contests via ESPN’s channels in different languages, and therefore made the contests be widely viewed around the world.

Apart from what mentioned above, Tencent Sports also plans to set up Tencent online sports retailing market. The market is a part of Tencent Sports to attract users to immerse more in the platform, and Tencent online sports retailing market mainly provides the commodities relevant to the sports leagues it has broadcasting rights in China. For example, Tencent online sports retailing market can sell products endorsed by Kobe Bryant who is a popular NBA star. Currently, Tencent Sports community shoulders part of this function by letting users to share their collection of sports kit, and therefore some of the users may trade among themselves, which incurs the inspiration of the users to immerse in the platform.

What does it mean to potential partners of Tencent Sports?

The pattern of Tencent Sports’ operation is inspiring for potential partners of Tencent Sports, especially the NBA Tencent game is a good example for Tencent Sports partners to evaluate the cooperation with Tencent Sports. Besides, there are also aspects for potential partners to consider when they want to enter Chinese market via Tencent Sports.

Tencent Sports may be monopolistic in the online sports media market

Chinese online sports media platforms are led by three main platforms, respectively are Tencent Sports, Sina sports and PPTV. While Sina sports is the traditional Chinese online sports media platform and PPTV is a emerging platform, Tencent Sports has been the most leading sports platform in China, as it leverages the influence of NBA and NBA Tencent game successfully attracts more users than broadcastings on other platforms. Besides, Tencent Sports establishes cooperation with different sports leagues, making it become the most influential Chinese online sports media platform. With substantial influence and the most users who watch sports online in China, Tencent Sports becomes monopolistic in the market and a suitable platform to market sports content in China.

Weaker negotiating power as Tencent Sports become more mature

As mentioned above, Tencent is more and more influential in the market, and counterparties may lose negotiating power when Tencent Sports expands more because other platforms have fewer contests to watch, which attract less attention from Chinese sports fans and is disadvantageous for newly entered sports leagues to market sports content in China.

A good deal of audience based on Tencent users

Tencent Sports utilizes its network shared with associates within Tencent Group and can market sports content in China more conveniently. Partners that cooperate with Tencent Sports have more incentives to sell sports content in China via Tencent Sports and more access to WeChat to spread content and convert users to using Tencent Sports to watch sports online in China.  The cooperation between ESPN and Tencent is a good example model for potential partners.

Author: Dennis Deng

See our report licensed sports merchandise market in China:

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China’s fitness industry has experienced both an explosion and now a recession

The history of fitness centers in China

China’s fitness industry started around 2000. After that, Beijing’s successful bid for the Olympic Games in 2001 and the SARS epidemic in 2003 set off a nationwide fitness trend. China’s fitness industry was in its prime. During that time, many well-known chain brands such as Hosa Fitness, Nirvana sports, and UION Life began to appear. The industry gross margin exceeded 40%, attracting a large number of players to enter.

After 2004, the fitness industry in China showed explosive growth. In 2010, Beijing had 530 fitness clubs. However, due to the serious homogenization of fitness clubs and the single profit model, gyms competed with price wars. On the demand side, the global financial crisis in 2008 and the rise in housing prices, the spending of white-collar workers on fitness decreased, and the growth of the fitness industry market slowed down. In 2011, the number of gymnasiums in the country showed negative growth.

Until 2015, with the rise of fitness apps represented by “Lefit“, “Keep“, “Super Monkey“, the fitness industry once again ushered in rapid development. However, the new direction of development did not favor traditional fitness centers, and exposed the problems of fitness centers in China.

The current conditions of China’s fitness industry

The population of gym-goers in the United States accounts for 20.3% of the total population, while in China it is only 3.1%. Though China still has a large gap in the number of fitness clubs and the number of fitness members, China’s fitness industry is continuously expanding. According to the National fitness plan 2016-2020, the number of people who take part in physical exercise at least once a week will reach 700 million in 2020, and the number of people who take part in physical exercise regularly will reach 435 million

Compared with the North American market, the development of China’s fitness industry is relatively lagging due to the following reasons: Firstly, the domestic cost of fitness is higher; the per capita fitness expenditure in China is more than the US. Additionally, the fitness industry in China has a single format and a serious homogenization of service content.

Hosa Fitness collapsed overnight. The mass closure of fitness centers in China

Problems of fitness centers in China: the prepaid model leads to high debt ratio

According to the 2018 fitness industry report, nearly 84% of fitness clubs last less than 12 months. There are various reasons for the closure, such as increased competition in the market, poor management, the downturn in the economic cycle, etc. However, problems of fitness centers in China are all about “cash flow drying up”.

Just as most service industries, China’s fitness industry adopts a prepaid model. Fitness clubs receive cash flows for the next year or even five years at the moment they sell their year cards and private courses, which makes the payoff period extremely short. Some clubs can even recoup their investment costs as soon as they open, and locking up customers at the same time. The problem, though, is that these huge cash flows are not counted in the club’s profits. There’s a joke going around in the fitness industry.

“When the club’s membership consultant makes money, the coach makes money, and even the front desk makes money, the boss doesn’t necessarily make money.”

Sales commissions for membership consultants and coaches are paid out the same month. In order for a fitness center’s owner to profit, the gym needs to continuously acquire new customers. Many clubs’ owners bet on the ‘hot headed’ compulsive buying of fitness beginners. In other words, the gyms profits are dependent on the immediate decisions of beginners, but not on retaining loyal customers. Under this condition, many fitness centers are more concerned with the selling power of membership consultants and coaches rather than the quality of service they provide for current members.

This creates a vicious circle. A fitness club can only roll cash flow by absorbing new members without any intention to improve service quality. Without improving service, there will be no renewal rate in the second year. Therefore, it is the norm for fitness clubs to go out of business after only two or three years. The biggest problem here is that the prepaid model makes the club’s debt ratio too high.

The impact of debt on fitness centers in China

What are the consequences of a high debt ratio?

From the management perspective, the fitness club will only have expenses with no income in the coming year for every member. The gym loses money even if members only come to bathe without using any equipment.

In terms of capital, high debt ratio makes the club’s ability to resist risks very weak. Once the market environment changes, it is easy for traditional fitness centers to crash. Hosa Fitness is a typical example. Once Hosa International (the parent company of Hosa Fitness) stock price crashed, the company’s capital chain fractured. Negative news triggered consumer panic, causing the performance of the Hosa Fitness to decline. Because the cash flow was no longer sustainable, Hosa international was unable to provide support, and Hosa Fitness failed to seek financing alone and eventually collapsed.

In fact, when Hosa Fitness announced its official opening in 2017, it should have encountered insufficient funds. Normally, fitness chains insist on directly operating their stores, but Hosa Fitness had to switch to franchising their stores to get funds.

For the prepaid model, China’s government departments lack effective regulatory measures. According to the “Corporate Bankruptcy Law“, when enterprises are bankrupted and liquidated, the wages and labor insurance expenses owed by the enterprises are preferentially paid off. Then is the taxes owed by the bankrupt enterprises. Since gyms that bust tend to owe large salaries, there has been a lot of spending chaos. For example, it is hard to re-sell memberships, and the gyms refuse to give refunds, hence gym members encounter unfair treatment in the fitness centers.

Traditional gym chains in China are often battered with negative reviews. According to the comments on Dianping, among the 18 fitness clubs of 6 well-known chain brands, the lowest rate of negative comments is at 9.7%, the highest at 31.1%, reaching 21.5% on average, and the rate of positive comments is only 65.6% on average.

How can China’s traditional fitness center survive and go further?

With the warning of Hosa Fitness, is there a way out for China’s traditional fitness centers? What are solutions to the problems of fitness centers in China?

Firstly, reducing the prepaid period can reduce debt, switching the annual membership to a monthly system. America’s experience may be instructive here. The mainstream of fitness clubs in the US offer monthly membership. In general, the monthly card is charged 50-60USD, and the high-end one is about 100USD per month. Also, there are some compromised approaches, such as a seasonal card or half-a-year card, etc. But this way will also increase the pressure on cash flow, pressing higher requirements for the operation.

Another option is to improve the attendance of classes. Registrations for classes and training sessions are good indicators of the success of a fitness center, as they are a method to make secondary profit from current members. Data show that in 2018, the average number of private training sessions in Hosa Fitness was only 67.3 classes per month.

There are also ways to improve cash flow by increasing retail sales, such as water bars, nutritional supplements, and peripherals. But for now, this is still a small supplement. According to the 2018 fitness industry data report by 三体云动, retail sales account for only 3.1 % of gym revenue.

It is difficult to achieve a low debt ratio in traditional fitness clubs without changing the target users and product forms. In terms of problems of fitness centers in China, traditional gyms need further transformation and upgrading. The model of traditional fitness clubs in the future must not be as sales-oriented and must pay attention to service and reputation. The profit model in the past will be gradually eliminated, and the traditional fitness clubs will eventually return to being service-oriented.

For example, gyms can use group classes to attract new customers. The Chinese fitness population is small and the starting point is low. Classes offer a good starting point for beginner, and can stimulate secondary consumption. Judging from the popularity of Super Monkey, Spacecycle, Keepland, traditional fitness clubs in China also need group courses to increase users.

Group classes can also increase the stickiness of service. Under the current system, the level of private coach’s service is widely criticized. On the one hand, the expertise of fitness coaches is uneven. The data shows that half of the coaches in China have been in business for less than two years, and the coaches from professional sports colleges only accounted for 25.2%. On the other hand, the sales-focused model of fitness clubs does not play a positive role in consumer experience. Therefore, to improve service and increase the stickiness, the key is to improve the level of personal trainers and create a consumer-focused management system.

The new emerging business model of the fitness industry in China

The threat of new-style fitness centers

As mentioned earlier, the new type of fitness club is threatening the traditional gyms. The following will introduce the profit model of the new type of fitness club in China.

Take SUPERMONKEY as an example. SUPERMONEY is a fitness brand from Shenzhen. The first group class studio of SUPERMONKEY came out in 2015. Most of its studios are located in business districts, with class times before working hours, during lunch, and after working hours.

SUPERMONKEY profits mainly from two aspects: one is cash flow, and the other is cost structure control. In terms of cash flow, the price of each class of SUPERMONKEY ranges from 69 RMB to 239 RMB. Normally, one studio can hold 300 training classes a month, with about 15 people for each class, so the annual revenue of a single store is about 3.8 million RMB.

SUPERMONKEY classes are booked through the WeChat mini program, which allows customers to select and pay online based on store location, class type and class time.

In terms of cost structure, there are six types of SUPERMONKEY stores: universal stores, theme pavilions, bicycle studios, parent-child stores, static stores, and fitness cabins. The area of a store generally between 200-300m² often located on the second or third floors of malls and office buildings. To reduce costs, there is no front desk or locker rooms. The coach only comes during class, and the users can enter the classroom by entering a code sent only to those who register for the class, which greatly reduces spending on employees.

In the course development and coaching reserve, half of the courses currently come from Lesmills courses, and others are the independently development by SUPERMONKEY. The copyright price of introducing a Lesmills course is high, more than RMB 100,000. Therefore, 90% of the gyms in China, especially the small gyms, do not purchase copyright. In addition, SUPERMONKEY established the Super Scarlet Academy to train its fitness instructor. This is also a preparation for the SUPERMONKEY to start a large-scale private training course or even open a comprehensive fitness center.

A good way to target fitness beginners as the main customers

Whether it’s SUPERMONKEY, Lefi or Keepland, they are all doing the same thing: targeting fitness beginners. Once again, the penetration rate of the fitness population in China is only 3.1%. According to insiders, 99% of those who signed up for an annual membership in traditional fitness centers are fitness beginners. In terms of the current market and the people’s fitness levels, group classes are more in line with the needs of fitness beginners.

Specifically, what are the needs of fitness beginners? They do not need to time and money into a rigorous training schedule with a personal trainer. Rather, they desire to experience the feeling of fitness, find happiness in sweating, and even to show off their healthy lifestyle in WeChat moments. Therefore, the pay-per-visit group classes are enough to meet the needs of fitness beginners.

What about the future?

Targeting fitness beginners is just one of the hottest trends in China’s fitness industry right now. Whether it is a traditional fitness club, or a new type of group classes studio, it is not that easy to lock-in customers. Li Lu from Daxue consulting says,

“Nowadays, customers are disloyal, especially younger ones. Group exercise classes and traditional fitness centers have to find their own irreplaceable points to lock-in customers.“

Unique courses, professional coaches and appealing studios can all be features of a fitness club. Fitness centers need to provide a sense of belonging to disloyal customers. In addition, marketing measures for traditional fitness clubs are old-fashioned, such as flyers and telemarketers. Gyms are better off switching from flyers to digital marketing. When the focus shifts away from desperately making profit to serving the customers, a lot more fun and attractive business models are available to gyms.

Author: Rita Fan

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This article Hosa Fitness closed its doors. What is causing the downfall of China’s traditional fitness centers? | Daxue Consulting is the first one to appear on Daxue Consulting - Market Research China.

A booming market – factors for the success of martial arts in China

A focus area for development in China’s sports industry

Traditional Chinese martial arts are recognized throughout the world and are a force of Chinese soft power. Martial arts developed in China around 500 AD, notably, in the famous forest mountain temple Shaolin. These traditional martial arts can be called Kung Fu or Wushu. As for Shaolin art, it is a kind of Kung Fu only practiced in this temple and called Shao Lin Kung Fu.

Therefore, because of its strong tie to Chinese culture,  the Chinese government wants to put this art back in the spotlight in its national economic plan: the Chinese Martial Arts Five-year Development Plan (2016-2020).

This plan entails building more than 3,000 new martial arts schools in China by the end of the decade to create an industry worth over 1 trillion yuan.

Today, Chinese people practice a wide variety of martial arts. For example, Wing Chun is more popular in Guangdong province. Shaolin martial arts are more prevalent in northern China. The Shaolin Temple of Dengfeng in Henan Province is the origin, and still a Shaolin Martial Arts teaching area today. Today, students still spend their summer holidays at the Shaolin Temple practicing martial arts. This is a testament to the continued success of martial arts in China, even among young people.

Chinese martial arts in art and entertainment

Another factor for the success of martial arts in China is the art, cinema, music, and pop culture around it.

We reminisce of the widely adored Kung Fu movies by Bruce Lee and the Hong-Kong born actor Jackie Chan, who is an emblematic mirror of Chinese culture. He has even become an advisor to the Chinese government on soft power and martial arts promotion strategies since 2013.

Martial arts are also active in pop culture. On Bilibili, a famous Chinese sharing video platform,  short Kung Fu videos can reach up to 3 million views.

On Ximalaya, the most popular podcast platform in China, nearly 200 original series discuss Kung Fu.  

The love of Kung Fu has brought billions of dollars to China through movies and sports clubs.

Indeed, studying Taekwondo, Boxing, Judo, or other courses in a club or gym can be very expensive over the long term. An hour-long class costs around 100 yuan for group lessons and 300 to 500 yuan for private lessons.

A traditional art that has proven to be a lucrative force and a source of admiration for athletes around the world.

Various martial arts in China

Taekwondo in China: a market with very high potential

Taekwondo, martial arts coming from Korea, is currently the most practiced martial art. Many gyms and clubs in major cities offer Taekwondo classes of various levels, which are generally attended by children aged 5 to 14, mostly boys.

Taekwondo gyms and clubs are well distributed in China, across 31 provinces, municipalities and autonomous regions. The average number of Taekwondo dojos in each province is 300. The trend of Taekwondo in China is now spreading beyond the first-tier cities to second and third-tier cities. 

In recent years, one practice of Taekwondo has been particularly popular: Aishang Taekwondo. It is a training institution for young children willing to reach a high-level or even become professionals. Founded in 2011, it has now 40 dojos in China and has become the leader of Taekwondo training institutions in 2018 with revenue of about 40 million yuan.

In 2018, Aishang Taekwondo training institute even received an investment of 10 million yuan from OneSmart International Education Group, a well-known educational group in China.

Tai Chi, the most famous ‘‘soft Chinese martial art’’

Practiced for more than 400 years, Tai Chi is a form of exercise that combines elements of martial arts, dance, and meditation. Tai Chi in China is considered as a ‘‘soft martial art’’ because of its roots: the Taoist monk who created it wanted a non-competitive and slow style of fighting. 

Tai Chi in China is a daily routine for millions of people, especially the elderly who like to practice it in parks or public spaces in China.

On Bilibili, some videos of Tai Chi classes can reach a million views. 

Muy Thai and Boxing in China

Boxing in China is rather seen as a foreign martial art. However, centuries ago, a certain type of boxing, quite different from the contemporary style, was practiced throughout the country: in the Han dynasty (206 BC-AD 220), boxing was mandatory for soldiers of the national army.

Today, it is estimated that there are 80 million boxing athletes in China. Most of them are reported to be between the ages of 18 and 30, mostly men. The market is therefore still very young and faces some difficulties such as the fact that Chinese people find it too difficult to learn boxing seriously.

Boxing practitioners mainly practice this sport as a secondary activity when they go to gyms or other general sports clubs. More and more gyms in China now have coaches specialized in boxing.

Despite a good dynamic in recent years, boxing in China has not yet developed well on the professional side. The boxing profession began flourishing only in 2004 when the athlete Zou Shiming won a gold medal at the Athens Olympic Games.  

Thus, more professional and specialized boxing clubs are still in the minority. There are nevertheless very well-known chains in China such as Golden Gloves, a real institution for all boxers in Shanghai.

Less practiced martial arts in China

Wrestling, Judo, and Karate are also combated sports practiced in China but are currently smaller markets. Karate comes directly from Japan and is more common for children to learn at a very young age in specialized institutions.

Judo was brought to China in 1979, which is very recent in the history of martial arts in China. Even if Chinese people practice less Judo than Taekwondo or Boxing, China competes in Judo on an international level. This year, in May, Hohhot, the capital city of North China’s Inner Mongolia Autonomous Region, even hosted the grand prize of the International Judo Federation (IJF) which served as a qualification for the Tokyo 2020 Olympic Games.

However, Judo is very successful in Hong Kong. Many Judo TV shows and movies are very trendy, like the very famous Sanshiro Sugata. Judo is even more and more practiced by young Hong Kong women.

Martial arts in China, a double market: Professionals and amateurs

The professional market: champions and martial arts competitions in China

The professional side of martial arts in China has taken quite a long time to develop because of the Chinese philosophy of sport, which was to train your mind and keep a good balance between body and mind. As its name suggests, martial arts were therefore seen as an art and not as a competitive sport.

However, China’s reputation as the birthplace of martial arts makes it the perfect country to host competitions and champions from all over the world.

Since 2015, China has had its own martial arts championship called the ONE Championship. Specialized in Mixed Martial arts, MMA in China, the organization is often compared to the UFC, Ultimate Fighting Championship. Interest in martial arts competitions in China is growing, especially among younger targets. According to One Championship statistics, 80% of their audience is millennials and 70% are men.

Today ONE Championship holds at least one martial arts competition in China every month, and their online content has been seen 4 billion times in 2018, which shows a real craze for Martial arts in China.

As the martial arts market in China is booming, foreign investors are also attracted by this dynamic. Thus UFC organized its first martial arts competition in China in 2017 in Shanghai. They announced that they wanted to invest more in the market with plans for a $13 million training center.

Today, martial arts and MMA competitions are held very regularly in China and are very successful, especially on TV. This is the case of Kunlun Fight (昆仑决) which is a Chinese boxing promotion developed by Kunsun Media.

As for martial arts champions, China has more and more international champions in all categories. The category with the largest increase in the number of champions is the MMA, with about 200 MMA professional players in 2018 in China. This is due in particular to the increased salaries in this profession, on average around 100,000 RMB per match. 

These champions are becoming real influencers in China, followed by thousands of people and thus attracting investors (brands and media) from all over the world.

Here is a list of some of the greatest martial arts champions in China today, all categories combined:

• 邹市明 Zou ShiMing is maybe China’s most successful boxer of all time. He won three consecutive Olympic medals as well as three World Amateur Boxing Championships gold medals and has even been hired last year as a sports teacher by East China Normal University.

• 徐晓东 Xu Xiaodong is a fairly controversial figure in China but followed by more than 350,000 fans on Weibo (his account has recently been blocked as explained later in the article), he is a representative figure of MMA in China.

• 郑淑寅Zheng Shuyin is a 25-year-old champion of Taekwondo in China, known for her international performances and recently for her controversial defeat at the May 2019 World Taekwondo Championships where the young woman burst into tears.

• 张维力 Zhang Weili is a 29-year-old Chinese martial artist. She is the official Kunlun Fight strawweight champion and currently participates in the Ultimate Fighting Championship. She is a model of strength and wisdom for all women in martial arts in China.

• 方便 Fang Bian is a 35-year-old Chinese kickboxing champion, Sanshou, known to be one of the best kickboxing professionals in China. He enjoys a strong reputation among sports fans in China and recognition among professionals.

• 张立鹏 Zhang Lipeng is a Pro MMA Fighter of Inner Mongolia in China and the #2nd ranked Pro Mens Welterweight in China. He recently participated in the Kunlun Fight.

• 宋亚东, Song Yadong, is a 21-year-old Chinese mixed martial artist who races as a rooster weight for the ultimate fighting championship.

• 熊朝忠Xiong Chaozhong is a 36-year-old Chinese boxer, known to have been the first Chinese to win a boxing championship title, having held the WBC minimumweight title from 2012 to 2014.

The amateur market: education and gyms in China

As for the amateur market, the Chinese tend to practice martial arts in multipurpose gyms in China. These general sports facilities are more popular than in martial arts clubs. They therefore generally offer private tutoring for martial arts in China with specialized coaches but are not strictly speaking martial arts clubs.

The fitness and gyms market in China is therefore booming.

In 2001 there were barely 500 options for gyms in China, and in 2018 the number is over 37,000.

Moreover, the Chinese government has recently unveiled plans to spend around 225 billion USD by 2020 on fitness and gyms in China, as a goal to create healthier habits across the country.

According to a report from the China Business Research Academy, gym memberships reached 6.6 million in 2016, compared to around 3 million in 2008. 

MMA versus traditional Kung Fu: what is the future of martial arts in China?

Different philosophies

While traditional martial arts and wellness methods are actively practiced in China, global trends favored by many younger people are beginning to change the market dynamic.

The perfect example of this is the battle between MMA (mixed martial arts) and Kung Fu.  

In recent years, martial arts athletes in China have divided into two categories:

Those who advocate Chinese martial arts, called Kung Fu or Wushu, and those who want more modernity, especially encouraged by practices from abroad. 

These two arts are very different. Kung Fu has its origins in Buddhism and spirituality. It is seen as a state of mind, and some practitioners even claim to obtain mystical powers by training. As for MMA in China, it is a fighting sport that combines several disciplines such as boxing, wrestling, judo, or jiu-jitsu.

Today, MMA in China is a huge success. We estimate that there are 90 million Mixed Martial Arts Students and around 15,000 MMA Training Institutions in China.

MMA is also called freight and this is one of the reasons why it is seen as contradictory to traditional Kung Fu, which has much more structured rules.

However, in 2015, Shanxi Science and Technology Publishing House published the “Comprehensive Fighting Movement of the World,” the first comprehensive book on MMA in China, listing the rules and technical explanations of this fighting system to show how severe and strict this sport can be. Along the same line, the General Administration of Sports in China recently announced a change in the administrative body responsible for all MMA events and a plan to host MMA training programs for Chinese MMA judges and coaches in late 2018.

These efforts demonstrate the General Administration’s goal to better manage the market and to establish firm industry standards. The Chinese government is leading the way towards a more regulated MMA market with increased commercial value and opportunities.

The video that divided the world of martial arts in China

A perfect example of this market shift towards more modern and international martial arts is the battle between MMA fighter Xu Xiaodong and Tai Chi master Wei Lei that took place in May 2017.

Annoyed by the words of the famous Chinese master claiming to be able to control invisible force fields, Xu Xiaodong decided to show China that the MMA could be just as powerful as the famous Tai Chi. As a result, the video became viral in a few hours in China. We can see the Tai Chi master losing in a few seconds and abandoning the fight.

The positive comments were quickly overwhelmed by thousands of negative comments accusing Xu Xiaodong of devaluing Chinese culture. The MMA champion tried to explain his passion for traditional Chinese martial arts and expressed that he only wanted to restore the reputation of MMA in China. Despite everything, the Chinese government considered these 20 seconds to fight an insult to Chinese traditional culture and took legal action against Xu Xiaodong. Xu Xiaodong is now a controversial figure in China.

Thus, while the government tends to see this new era of modern martial arts as harmful to Chinese soft power, not all sportsmen in China take a negative view of it.

According to a Shanghai boxing and MMA practitioner, Chen Yuan Kai, modern martial arts are not contradictory with the culture of traditional Chinese martial arts, we can still find some common aspects:

“Bruce Lee is even the one who invented the concept of MMA. He advocated that we should not only focus on a style of martial arts but become like water, an element that adapts to all situations, formless and shapeless. He has not only spread China’s values to the world, but he is precisely a bridge between these two martial arts cultures.”

In any case, these new practices open up new opportunities for sports brands wishing to enter the Chinese market or to seize new markets. The willingness of Chinese people to lead healthier lives could be met by this revival of China’s traditional view of wellness.

Thus, while the visions on martial arts in China are beginning to change profoundly, the practice of all martial arts, traditional and more modern, remains very high in China.

As a result, there are many opportunities for development in terms of equipment, specialized clubs, and gyms or on the professional side by investing in competitions or becoming a sponsor. Foreign sports companies should now begin to take a closer look at China’s martial arts market.

Author: Steffi Noël

Make the new economic China Paradigm positive leverage for your business

If you’re interested in learning more about China’s martial arts or fitness markets, do not hesitate to reach out to our project managers at dx@daxueconsulting.com to get all answers to your questions.

This article Martial arts in China: an old market driven by new opportunities | Daxue Consulting is the first one to appear on Daxue Consulting - Market Research China.