Top Chinese Brands Suffer From Overexpansion, Diluted Management
Six major sporting goods brands in China "have suffered dearly from over-ambitious expansion, most notably Peak Sport," which closed around 1,000 stores across the country in the first three quarters of '12, according to WANT CHINA TIMES. Peak reported that at the end of September, the company's franchised retail outlets numbered 6,739, 1,067 fewer than a year earlier. The "value of the unshifted inventory" held by Li-Ning, ANTA, 361 Degrees, Xtep, Peak and Dongxiang topped 3.72B yuan ($597M) in the first half of '12. To get rid of excess stock, "each of these companies not only offered hefty discounts but also regularly closed stores throughout the year." Industry insiders believe that the influx of closures "is a result of franchised businesses' ineffective sales channels, as inefficiencies in the procurement and selling of stock tends to cause inventory buildups, unlike directly managed stores, which can make quick adjustments" (WANT CHINA TIMES, 1/8).