Chinese sportswear brands feel the heat as consumers trade up

AFTER YEARS of breakneck expansion, Chinese sportswear brands such as Li Ning and the China Dongxiang Company are grappling with shrinking margins, slowing sales growth and rising inventories of outdated products, threatening the sector. Li Ning came to international prominence with its audacious sponsorship of the Beijing Olympics where its founder, the former Olympic gymnast, put his brand centre stage at the opening ceremony by lighting the flame. Despite signing a series of kit supply deals in the US and Europe, Li Ning has so far failed to establish an international bulkhead and by far the majority of its business is in China . While the Chinese brands struggle, Nike and adidas, armed with heavy investment in research and development as well as marketing expertise, are gaining market share in the world's second-largest economy. Nike boasted a first quarter income rise of 15% on the back of growth in China and the rest of Asia.