Li Ning has been selling products at 60%-70% discounts. (Photo/Hsu Fang-cheng)
Six major Chinese sports brands are offering discounts of up to 80% off original retail pricse in a desperate attempt to unload excess inventory, reports our Chinese-language sister paper Want Daily.
The branded bargains touted on microblogs by shoppers include shoes from top brand Li Ning retailing at 339 yuan (US$55) being sold for 108 yuan (US$17) with a 10% member discount, as well as 339 yuan (US$55) Li Ning hooded jackets going at three for 360 yuan (US$58). Benevolent netizens have also reportedly been sharing the locations of stores offering the highest discounts.
The main reason for the clearance sales stems from excess inventory built up since the Beijing Olympics in 2008. In the first half of the year, 42 Chinese clothing enterprises collectively held inventory amounting to 48.3 billion yuan (US$7.8 billion), of which 3.72 billion yuan (US$597 million) comes from top domestic brands such as Li Ning, Anta, 361 Degrees, Peak Sports Products and Xtep.
To clear stock, Li Ning has held numerous sales since last July, selling products at 60%-70% off the original price for 10 days straight in first-tier Chinese cities such as Wuhan and Qingdao.
In addition to Li Ning, other sports brands have been offering discounts of 50%-80% off all goods and 30% off marked stock. Unlike former sales, the current wave of discounts includes the latest products, even from new winter fashion releases.
Industry analysts say the Beijing Olympics were expected to give a boost to domestic sports brands, but following a temporary increase in sales it has instead given locals more interest in foreign brands, which have continued to eat into the sales of the domestic market.
Peak has been the fastest builder of inventory among the major sports brands, having increased its excess stock by almost 26% to 529 million yuan (US$85 million) in the first half of the year alone.
Of the six major brands, only Xtep has maintained a profit for the first six months of 2012, with the performance of the other five brands dipping between 9% and 29%. To remain viable, Li Ning has already closed 952 stores across the country this year, with Peak not far behind with 747 store closures.
Analysts say even Nike and Adidas have faced excess inventory before, but these international brands are much more effective at controlling inventory held by retail outlets than domestic brands. An HSBC analyst estimates that Nike can control around 75% of its inventory, compared to Li Ning, which can only control around 50%.