Why is ASICS, a Japanese sports goods maker, preparing to move its main business to China?
Source: juheng net compiles ling yuhan
ASICS, a Japanese sports goods maker, is preparing to move its main business to China.
Slowing sales in Japan and the us have failed to keep pace with the rapid growth of e-commerce. China is the key to future growth, according to Asics, because there is plenty of room for growth in China's sneaker market.
In July 2016, ASICS opened a flagship store on Shanghai's shopping street. Nike (nke-us), Adidas(ads-us) and Under Armour(uaa-us) have also set up large flagship stores in the region.
The past growth of Asics has been largely driven by global sporting trends. In 2015, ASICS saw sales of 428.4 billion yen ($3.82 billion), almost double the 235.3 billion yen in 2010, as demand for jogging products in the United States and Europe spurred the market for high-performance sneakers. In 2017, however, sales fell to 401 billion yen and operating profits fell 23 percent to 19.5 billion yen.
According to Euromonitor International, a research firm based in the UK, ASICS accounts for less than 1 per cent of the running shoe market in China, far less than Nike and Adidas, which each account for 20 per cent of the market.
However, the first quarter of 2018, which was released in May, showed signs of recovery, and shares jumped more than 10 per cent the next day. The company's shares are about 15 per cent below their peak so far this year.
"We do not perform well in product development and sales activities," said chief executive Motoi Oyama.
Asics attributes its low returns to changes in the U.S. market, where demand for its high-performance products has waned as U.S. consumers have focused heavily on shoe fashion.
For its competitors, Nike has introduced a casual shoe design that USES knitted fabrics. "We are caught flat-footed by the new design and are trying to maintain our core customers," Oyama says.
The continued growth of amazon (amzn-us) and other e-commerce companies has also forced several physical stores to close, squeezing Asics's existing sales channels.
With sales in the us, Europe and other advanced economies unlikely to recover soon, China is the key to an Asics rebound.
Although it lags behind its Chinese rivals in sales, Asics's annual sales have exceeded y30bn since April 2017, up 50 per cent from 2016. The company now aims to sell more than 55 billion yen in fiscal 2020.
Asics hopes to use the momentum generated by China's "national campaign" campaign, launched in June 2016, to expand its local operations in China and plans to establish a regional headquarters by 2020. At the same time, Asics also plans to introduce new functions on shopping platform to attract customers' attention by collecting customer data on shopping website.
------------This article comes from the Internet
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