The Development Trend of the Sports Industry in China
China's sports market continues to grow. The total market size in 2019 reached RMB 2.95 trillion, and had an annual growth rate of 10.9%. Among them, the sports service market reached 1,493-billion-yuan, accounting for 50.6%, and the sports goods market reached 1,361.4-billion-yuan, accounting for 46.2%. The China sports market will continue to expand at an accelerated pace in the next few years. By 2025, the scale of China's sports market will exceed 5 trillion yuan, and through 5G, Internet of Things, big data, and artificial intelligence technologies, boring exercises will be transformed into leisure activities.
Published: Dec 22, 2021
Overview of the changes in the lives of Chinese people in the post-epidemic era
- Years of "Internet +" economic development and network layout played a key role during this epidemic. The vigorous development of e-commerce and online shopping has also allowed the normal operation of the lives of the Chinese people. At the same time, it has also produced a social model of normalization of community network supervision and intelligent city management. To maintain proper social distance and reduce going out and gathering situations, digital life has become the norm during the epidemic. Cloud office, cloud party, cloud classroom, cloud social, cloud wedding, cloud graduation, cloud recruitment, cloud defense, cloud games, cloud hospitals, innovative models such as cloud employment have extended many offline things to online.
- Consumption has begun to become fully online, and middle and high age groups have also begun to learn and get used to online shopping. People purchase all kinds of daily necessities on e-commerce platforms, and live streaming has become a new online marketing method. Online fresh food e-commerce has developed rapidly, and various online grocery shopping apps have been launched quickly. Online grocery shopping has become a common phenomenon during the epidemic. The epidemic has also given birth to the growth of online consultation and medical e-commerce, and online consultation services have been opened on multiple platforms.
- Since the outbreak of the epidemic, people have paid more attention to their health. In addition to purchasing health products and traditional Chinese medicines that enhance their resistance, they also arrange reasonable meals and strengthen physical exercise to enhance immunity. Sports, health, vacations have also become the main leisure activities nowadays. Therefore, sales of home sports such as yoga mats, armbars, skipping ropes, pull ropes, home table tennis training machines, and other products have increased, especially the "Fascia Gun" that has emerged in recent years. Online home fitness can be said to usher in explosive growth. After the epidemic is lifted and life returns to normal in the future, it is estimated that the public will remain enthusiastic about fitness and the sports market will continue to grow.
Overview of the impact of the post-epidemic era on the sports goods market in China
The impact of the sports goods manufacturing industry and the service industry
Impact on the sports consumer market
- China is an important manufacturing base for the global sporting goods industry. The sporting goods industry is mainly located in eastern coastal areas such as Fujian, Guangdong, Jiangsu, Zhejiang, Shandong, and Shanghai. The output value of sports goods manufacturing reaches more than 70% of the total output value. Sports goods manufacturing accounts for a high proportion of sports output value. Affected by COVID-19, China's sporting goods industry has been affected, including factory production, procurement, transportation, and delivery. For most of China's sports goods export-oriented enterprises, the proportion of foreign trade market and domestic demand market is close to 1:1, many enterprises predict that foreign trade orders in the next year will be relatively affected.
- Enterprises are increasingly presenting the characteristics of scale, branding, and technology, and are starting to plan and invest in intelligent production lines, product integration, and upgrade services to enhance corporate competitiveness, smart manufacturing, big data, artificial intelligence, and other emerging technologies can be widely used in the field of sports manufacturing. The recent trend of integration between China's sports industry and the Internet has been obvious, and the integration speed has accelerated again after the outbreak. During the period of China’s lockdown measures, a variety of fitness apps have been popular among the people, and gyms have turned to online live courses, which have attracted consumers’ attention again. Internet + sports such as smart yoga mats, smart weight scales, smart guidance displays, and smart dumbbells of products were born one after another. Smart wearable devices in the sports and fitness fields such as smart bracelets, smart running shoes, and smart sports watches have developed rapidly.
Detailed analysis of sports products
- The epidemic has aroused people's awareness of improving their immunity and has also promoted the trend of daily exercise and more emphasis on eating habits. Sports consumption will continue to develop despite the prevention and control of the epidemic in 2020. The time and money spent on fitness projects by residents in first-tier cities have continued to increase, and residents in second-and third-tier cities have gradually increased their willingness to exercise.
- In the post-epidemic era, the enthusiasm of parents and young people to participate in sports exercises is high, and the development potential of the sports training industry is strong. The proportion of maintainers is 93%. In terms of exercise methods, there is even more diversity: 58% of exercisers do basic exercises that they are familiar with, 48% of exercise apps are used, 37% of exercise videos on video websites are used, and 29% of exercisers buy with the addition of fitness equipment, the proportion of emerging coaches using live sports has reached 20%. Under the influence of home exercise and space, the short-term demand for small fitness equipment has skyrocketed by 63%. Most purchased sports shoes, sportswear, balls, yoga and dance products, small fitness equipment, etc.
- Fitness equipment:
From January to September 2020, the turnover of China's fitness equipment market was 1.3 billion yuan, an increase of 59.6%. This was mainly because fitness activities have received the attention of all people and the traditional peak season for sales, and production and sales have grown substantially simultaneously. And after the epidemic was brought under control, benefiting from the reopening of schools and the reopening of sports venues, fitness clubs and other places, the major channels for sports equipment sales have changed from online to offline, and corporate offline sales accelerated, online sales slowed, as well as product inventory levels. With the rapid decline in online sales and the rapid expansion of offline market demand, the sales price remained stable or slightly declined. Therefore, although the total market size has become larger, profit margins have been compressed and profit margins have declined. The fourth quarter has entered the traditional peak season of the industry, and companies are expected to usher in a peak of sales before the end of the year.
- Sports textile:
Sporting goods are closely related to textiles. From sportswear and sports equipment to various competitive sports facilities, a large number of textile materials are used. As the world's largest exporter of textiles, China has the production advantages of a complete industrial supply chain, including rapid product development, high value-added, and shorter lead times. In November 2020, the 10 ASEAN countries formally signed the "Regional Comprehensive Economic Partnership" (RCEP), a free trade zone covering 30% of the world's population and 30% of the economy. After the RCEP takes effect, China's textile and apparel processing will continue to benefit. Southeast Asian countries have significant labor cost advantages, and their tariff advantages with the EU and North American markets have helped them take the lead. China's textile manufacturing capacity can be transferred to Southeast Asia, bringing convenience to Chinese sports goods companies in terms of suppliers, logistics, and customs clearance.
- Ball sports:
After the outbreak of the epidemic, the requirements for the venue and the number of people in ball sports have been greatly restricted. With the successful control of the epidemic in China, and during this special period, basketball, football, and other ball sports unexpectedly disappeared from the consumer’s favorite sports list. Due to the epidemic, people reduced group sports, and badminton and rackets were the first to sell. The degree exceeds that of football and basketball.
- Community Movement:
During the epidemic, many indoor sports venues, such as badminton halls, basketball halls, and swimming pools, ceased operations, further highlighting the characteristics of urban parks with suitable space and excellent air. The wide space of the park allows residents to complete a variety of healthy exercises, including outdoor badminton, a small number of square dancing, rope skipping, outdoor public fitness equipment exercise, park brisk walking and running, and other outdoor activities. All parts of China are committed to creating a good basic space such as a community park reconstruction project to attract more residents to participate in community sports
In the post-epidemic era, with the increasing demand for mass sports and changes in travel methods, bicycles have once again become the preferred choice for Chinese people to travel. Because of the advantages of good ventilation, convenient disinfection, avoidance of close contact between people, and distance from the spread of the virus, bicycles have become a means of transportation for many people in short-distance travel. After the epidemic, more and more office workers use bicycles to complete longer commute rides. In addition to consumers' spontaneous riding, the China government is also advocating and supporting riding in many aspects. The bicycle market will have broad development space and development opportunities in the post-epidemic era. It will increase the degree of bicycle intelligence and internalization and the use of electric bicycles as a development focus.
- Outdoor sports:
Including camping, field exploration, cycling, mountain climbing, skiing, self-driving cross-country, etc. In recent years, with the development of China’s economy and the growth of personalized tourism demand, emerging tourism formats such as self-driving leisure tourism, family self-service tourism, and backpacking tourism have developed rapidly. Outdoor tourism has become an emerging format of tourism development in the mainland with huge market demand potential. In 2018, the total number of major outdoor products brands reached 903, and the total retail sales of outdoor products was 24.98 billion yuan, with a growth rate of 2.1%. It is estimated that the total retail sales in 2020 will reach 27.123 billion yuan. The consumption of outdoor products in China is currently mainly concentrated in basic outdoor sportswear such as hiking, mountaineering, photography, and fishing, while the consumption of outdoor equipment such as camping and RV camping accounts for a relatively low proportion.
- Water sports:
Water sports products include sports equipment such as inflatable boats, surfing boats, sightseeing boats, snorkels, fins, underwater cameras, and other sports accessories, swimsuits, surfing suits, cold-proof clothing and other sportswear, inflatable swimming floats, water safety, and life-saving products such as life jackets and life-saving lights. Affected by the epidemic, the aquatic product manufacturing industry has been affected to a certain extent due to factors such as factory resumption of work and limited logistics. Sales are also impacted by the drastically reduced willingness of people to participate in water activities.
- Winter sports:
Winter sports have been greatly impacted by the epidemic. The main consumption cycle of winter sports is from November to March of the following year. The most important and core consumption comes from the winter vacation and the New Year and Spring Festival. Organizing or participating in ice and snow events in the 2020 ice and snow season will also be canceled due to the epidemic.
In 2019, the size of China's golf product market reached 3.771 billion yuan, with a compound growth rate of 7.67% from 2013 to 2019. During the epidemic, the courses and events were affected and suspended, and the China Golf Tour was not allowed to rematch until August 2020. The golf market has also undergone changes with trends that are different from the past. For example, golf products are sold live, golf teaching institutions provide online teaching courses, and the Golf Association organizes online simulator challenges represented by Olympic players through Internet + and smart venues. Such innovative elements can empower the further development of golf.
Popular sporting goods in China in the post-epidemic era
- Digital sports
- Switch: During the epidemic, various fitness and dance games on Switch received high attention, focusing on the whole family to work out together.
- Smart fitness mirror: "Hardware + content + service + AI" smart fitness products, use real-life celebrity personal trainers and AI real-time guidance, to make exclusive fitness plans and rich courses to create an in-depth experience where people can enjoy a boutique gym at home.
- AI power exercise bike: It is suitable for family personal exercise and also suitable for group sports.
- Home fitness exercise
- Yoga mat: Yoga exercise is not restricted by the venue; time is free, and the entry barrier is low. Yoga exercise is suitable for individuals and families to participate in at home.
- Rowing machine: Indoor fitness equipment analogous to rowing on the water, usually called a dynamometer.
- Tensioner: a kind of equipment suitable for public fitness exercise, through which muscle endurance can be exercised.
- Community sports products
- Sportswear: The easing of the epidemic promotes people to engage in outdoor activities and also ignites the enthusiasm of community sports. Sportswear, including (sportswear, sports shoes, etc.) is indispensable for community sports.
- Outdoor sports equipment (park sports facilities): Compared with professional gym equipment, the operation is simpler and there is a variety of types, suitable for all ages to exercise on.
- Bicycles: The consumer market is still dominated by men, with female users accounting for only 4.72%, but this has increased compared to the past. The larges age group is 31-40 years old. In addition, the proportion of road bike users has increased year by year, and surpassed mountain bikes in 2018. A survey in 2020 shows that the proportion of road bikes has risen to 71.43%.
- Water sports products: Hot-selling China water sports products include kayaks, rafting boats, and inflatable boats. Due to the impact of the epidemic, outdoor water activities have been suppressed, and the recovery of the market after the epidemic is still under observation.
Opportunities and transformation suggestions for Taiwan's sports goods industry in the post-epidemic era
- Opportunities for Taiwan's sports goods industry:
Relying on deep manufacturing experience, innovative development, and brand management, Taiwan has many private brands that are popular in the China market. Taiwan can continue to launch home fitness equipment to seize business opportunities in the "home economy". Taiwan bicycle brands have enjoyed a good reputation in China, and professional sports bicycles and peripheral supporting products are abundant. They can actively handle or sponsor bicycle riding activities to increase the dependence of Chinese bicycle enthusiasts on Taiwan bicycle brands. In addition, companies should pay more attention to the extensive application and extension of fitness big data, upgrade professional sports equipment, and upgrade products from both digital simulation and data collection applications.
- Electronic game hardware simulation: Virtual racing is not only an important training method for professional drivers, it has also developed into a global e-sports event. A complete racing simulator includes a control system (steering wheel, pedals, handbrake, gear shifter), somatosensory equipment (multi-axis feedback seat, vibrator, instrument, and fan, etc.), display system (multi-screen or VR) and host software. For the sports goods industry, smart online racing systems for treadmills, exercise bikes, and rowing machines have great market development opportunities. It is recommended that Taiwanese-related companies consider seizing the opportunities.
- Somatosensory game and simulation system: Pressure sensors, gyroscopes, infrared (IR) sensors, etc. used in the popular Switch fitness ring, have been widely used in many wearable products. Ring control devices are using brand-new innovative designs. The fitness adventure game based on the deep combination of software and hardware of the controller will undoubtedly raise the control and gaming experience to a new level. Taiwan's sports goods industry can also actively research the combination of the two themes of "sports" and "digital", plus VR and AR technologies to enhance the sports experience. For example, the sports digital hall develops skiing, boxing, rowing, bicycle road racing, and equestrian experience programs. It can increase excitement through actual map rowing, or with an avatar bicycle to compete with friends. VR is widely used in sports. There is still room for improvement in the comfort of the application of VR technology. It is recommended that relevant Taiwanese companies can conduct in-depth research on this aspect and continue to optimize.
- Remote guidance and teaching: Home isolation measures for epidemic prevention and control have brought development opportunities for "living room fitness" and "online fitness". However, with online fitness products, the problem of mismatch between supply and demand has been exposed. The most obvious problem is the effectiveness and pertinence of online guidance, as well as the two-way interaction between teaching and learning feedback issues. There is still room for improvement in services.
- Suggestions for sales expansion:
- Competition cooperation: Sports event competitions will restart soon, and sporting goods companies can firmly grasp the commercial opportunities. Participating in brand development events and activities will enhance their brand recognition and influence.
- Online marketing: The epidemic has promoted diversified online marketing strategies. Related Taiwanese companies may consider opening up new channels for multi-channel expansion, speeding up the establishment of brand online channels, and striving to achieve full coverage of digital marketing channels, whether it is traditional online shopping on major e-commerce platforms. For store operations, or self-built APPs and WeChat mini-programs, brand owners should try hard to increase the freshness and at the same time strive to meet consumers directly to cater to the marketing environment of the new era. In terms of sales expansion in overseas markets, traditional exhibition activities will be greatly restricted before the epidemic is completely lifted. You can consider using cross-border and cross-domain media and other marketing methods that are in line with the development of the Internet economy to display and sell products.
- Flexible supply chain: The epidemic has affected the supply chain of sports goods in terms of raw materials and finished products. To reduce risks, sports goods brands and retailers should pay more attention to flexibility and stability in the selection of suppliers.
Published by Dec 22, 2021