Anta Sports, one of China's top sportswear makers, has rejigged its business strategy and decided to focus on the domestic market as overseas demand continues to wane.
Lai Shixian, vice president, Anta, confirmed that the company has put on hold its global expansion plans for now.
"We have postponed our overseas marketing plan, and instead will focus on the domestic market," he said.
The company has also decided to open more sales outlets on the mainland by taking advantage of falling rentals of prime commercial properties in major cities. The mainland market will account for more than 90 percent of Anta's sales this year, Lai said.
The Fujian-based Anta is considered to be in a better position than many other consumer goods manufacturers to exploit the vast potential of the domestic marketplace.
Established in 1994, the Hong Kong-listed firm started its ambitious overseas expansion program in 2003 by opening its first store outside China in Singapore. Since then, it has opened branches in many other Southeast Asian countries.
Anta Chairman Ding Shizhong had earlier said that the company would look at acquiring famous global brands to fuel its overseas expansion plans. All that has changed now.
"We expect the company to continue expanding its nationwide network and raise its store count to be around 5,800 to 5,900 by the year-end, up 5.5 to 7 percent over 2008," said Wang Haitao, analyst, SYWG Research & Consulting.
Macquarie Bank had predicted that Anta's profit this year would surpass that of its rivals as it gains from an established and extensive nationwide retail distribution network in China.
Although the overall demand is weakening, Anta's sales are expected to remain stable due to the strong demand from mid- to lower-income consumers in major cities, according to a Guotai Junan Securities report.
The company itself had indicated that it would see a healthy business this year with orders for the first and second quarters expected to rise 45 percent and over 30 percent respectively.
The Guotai Junan report also expressed optimism on Anta achieving double-digit sales growth in 2010 as it gains from the economic recovery in China and increased spending.
"We believe that with China's economy bottoming out, the future revenue growth could be maintained at mid-to-high-double digits," said Wang.
Anta was listed on the Hong Kong stock exchange in 2007. Its share price has been hovering around HKUS$3.5 in the last three months after touching a peak of HKUS$9.5 in May 2008. Its net profit in the first half of 2008 doubled over the previous year to 431 million yuan. The firm is to release its full year earnings numbers in March.
(China Daily February 13, 2009)