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- China Lining, Li Ning’s premium fashion arm, saw its sales on Tmall jump 419 per cent during the Labour Day holiday period, driving the company’s share price to a record high
- Western brands including H&M and Nike faced a storm of criticism from customers and Chinese officials over their allegations of forced labour used in cotton production
A Li Ning shop in Beijing. Photo: Reuters
Shares of Chinese sportswear maker Li Ning Company hit a historic high as sales during the May day holiday soared fivefold amid a nationalistic buying frenzy following the controversy over cotton
produced in the Xinjiang region
.
China Lining, Li Ning’s premium fashion arm, saw its sales on the country’s largest e-commerce platform, Tmall, jump 419 per cent between April 27 and May 3 from the same period a year earlier, according to data from Credit Suisse. The five-day Labour Day holiday in China started on May 1.
That followed an even bigger year-on-year increase, of 815 per cent, in online sales in April, the investment bank said in a note issued on May 5.
Fuelled by the surging sales, Li Ning Company, the eponymous sportswear brand of China’s best-known Olympic gymnast, saw its share price hit a record high of HK$72.95 on Friday morning.
The shares of the Hong Kong-listed company have climbed 52 per cent since March 24, when a statement from H&M came to light in which the Swedish clothing group raised concerns over cotton allegedly
produced using forced labour
among the Uygur population in Xinjiang.
H&M had announced its decision not to use Xinjiang cotton in a statement in 2020 but it only began attracting widespread attention in China after the European Union, the United States, Canada and Britain imposed
sanctions on Chinese officials
and entities over alleged human rights violations in Xinjiang.
The company faced a storm of criticism from customers and Chinese officials over its refusal to source cotton from the region.
Sportswear giants Nike and Adidas did not escape the fallout, as they had made similar announcements previously, stating they would cease using cotton from Xinjiang for the same reason.
People’s Daily, a mouthpiece of the Chinese Communist Party, said on Weibo that companies like Adidas and Nike were just as culpable as H&M since they too had expressed concerns about forced labour.
Sales in the Adidas store on Tmall slumped by 79.3 per cent in April from a year ago, while Nike’s dropped by 57.5 per cent, according to Credit Suisse’s analysis, as Chinese consumers snubbed foreign brands in what the US called a state-led boycott.
The surge in nationalism lifted sales of China’s home-grown sportswear makers as sports enthusiasts in China switched to local brands.
A Li Ning pair of trainers named after former NBA basketball star Dwyane Wade sold for as much as 48,889 yuan (US$7,459) on an obscure e-commerce platform called Dewu, – 33 times its recommended retail price.
A pair of Anta shoes, with a special imprint of Japanese cartoon character Doraemon, fetched 3,999 yuan, a massive premium over its reference price of 499 yuan.
Li Ning is the fourth largest sportswear maker in China with a market cap of HK$171.3 billion, behind Anta Sports on HK$391.2 billion, according to market-research firm Euromonitor International. They both trail Nike and Adidas.
Analysts say the huge potential of the Chinese market will favour the home-grown sports apparel giants.
The average Chinese consumer spends US$20 to US$30 a year on trainers, tracksuit trousers and other outdoor and sports-inspired clothing, about a 10th of what a US consumer spends, Morningstar equity analyst Ivan Su said in an analysis.
“There is room for bigger growth off a lower base,” he said.
Euromonitor says sportswear sales in China will grow 21 per cent this year.
Li Ning and Anta were among the bidders in an auction of Adidas’s Reebok brand which risks being affected by a political row over the Xinjiang cotton controversy, Reuters reported on Wednesday.
Chinese sportswear maker’s shares surge as Xinjiang cotton row drives sales
Li Ning saw its sales on Tmall jump 419 per cent during the Labour Day holiday period, as Chinese consumers boycott Western brands that have raised concerns over the alleged use of forced labour.
www.scmp.com
