Luxe.Co Annual Forum 2019 | Outdoor sports from niche to mainstream

May 15,2019

Fashion, is a universal language, that resonates everywhere in the world. The fashion industry is one of the largest "sunrise industries" in China, generating unlimited opportunities for entrepreneurship, innovation and investment.

“Luxe.Co Global Fashion Innovation and Investment Forum 2019” was successfully held on April 12, 2019 in Beijing. Front-line industry leaders, entrepreneurs, investors, managers and designers gathered together to discuss the challenges and future trends in fashion innovative entrepreneurship and investment in China and across the globe. Various real-life case studies were presented from multi-angles, outlining the development path of fashion brands’ creation, progress and evolution.

The outdoor sports lifestyle and elements have been infiltrating into the fashion industry. Some outdoor equipment, apparel and products, that originally belonged to professional athletes and outdoor enthusiasts, have gradually moved from niche to mainstream. Initially started in US and Europe, this trend has also been introduced to China. The related brands and companies have become popular targets for investors.

Outdoor sports represent the self-challenge and spiritual pursuit. Outdoor brands are endowed with a philosophy of pursuing the extreme which people yearn for. When these products are extended to the mass market, they have a natural advantage. Even if these outdoor apparel and products are not necessity, consumers are still willing to try them.

At the Luxe.Co forum, four industry experts, Gang Duan (段钢, CEO of China Open Tennis), Yan Lou (楼彦, President of PADI Greater China), Chuanlong Tang (唐传龙, Founding Partner of Jintan Capital) and Tian Xia (夏天, Executive Director of FountainVest Partners), shared their insights of outdoor sports and lifestyle, and explored the development path of outdoor sports industry from niche to commercial.

Gang Duan, Deputy Chairman and CEO of China Open Tennis

Mr. Gang Duan joined the press Beijing Youth in 1988. He has served in various editorial departments covering news in politics, society, culture, sports and finance sectors. In 2003, he changed his role to media operation and management, and served as general manager of Beijing Youth Modern Logistics Company. In 2011, Mr. Duan served as Executive Director and Executive Vice President of Beijing Youth Media, responsible for Beijing Youth Group's investment and financing business. In 2017, Mr. Duan was appointed as the Deputy Chairman and CEO of China Open Tennis, of which Beijing Youth is the shareholder. China Open Tennis has been approved by International Tennis Association to hold the annual professional tennis tournament in China since 2004.

"China Open Tennis was first held in China in 2004. We will hold the 16th tournament this year. At present, it is the eighth in the world and the 1st comprehensive tennis tournament in Asia. The total prize was 11.4 million US dollars in 2018 and this year will be even more. China Open Tennis is held during the National Day Golden Week. This year it will be held in Beijing from September 22nd to October 6th. China Open Tennis’s structure is the same as Grand Slam, including men’s, women’s and junior’s competition. We are hoping and making efforts to develop it into a Grand Slam in the future.

Tennis is a very conservative sport. From its birth to present, except accommodating to TV broadcasting, other rules have never been changed. For example, in 2013, the champion of Wimbledon, Federer was stopped by a referee because he wore orange-soled shoes, sponsored by NIKE. To meet the regulations, he had to change to white-soled shoes in order to continue the match.

However, tennis is the second largest sports in the world. In Europe, young people carrying tennis rackets are everywhere. Tennis is beyond a sport, and tennis tournament is considered a sports carnival.

In Europe, fans will come to the tennis field quite early. For the whole afternoon, they not only watch the game, but also hangout with friends, dine and even watch movies there. Their consumption is not limited to the game itself and cultivates a wider range of sports consumption industries. Therefore, I think our understanding of China Open Tennis needs further development."

Yan Lou, President of PADI (Professional Association of Diving Instructors) Greater China

As the world's largest diving training organization, PADI was established in 1966. PADI China was established in November 2018. In the past five years, the number of Chinese PADI diver certificates has increased by 50% per year. Ms. Lou Yan is the President of PADI Greater China currently. She has served as general manager of the well-known global outdoor brand Timberland (China), managing director of BCG, and managing director of Accenture. Ms. Lou is a guest lecturer at Orange Bay University.

“PADI is the world's largest diving training organization with more than 6,600 diving stores and 130,000 coaches in 183 countries. PADI offers diving training standards, diving stores and coaches. In this industry, PADI has a market share of approximately 80% and is an absolute leader.

Diving consumers are relatively high-end, because diving requires time and travels overseas. Many of our divers are freelancers or designers. They commented that they could only see the real color and scenery under the ocean.

Diving is a sport with the highest proportion of “female” participants among outdoor sports. The percentage of Chinese female divers has reached 50%, especially in the 20-30 age-group. Diving is a lifestyle. There are no specific physical requirements for diving.

PADI entered China in 2000. Diving has developed rapidly. Today, China's new generation of divers has accounted for one-tenth of the world.

Outdoor sports are both sports and lifestyle. When GDP per capita reaches a certain level, people's focus shifts from products to experience, including sports, entertainment and travel. Diving features both sports and travel.

The outdoor sports style and elements have been infiltrating into the fashion industry. For example, Arc'teryx is a professional outdoor brand. But its jackets are worn by many non-professionals in daily life in China. PADI's cross-over collaboration connect outdoor sports and lifestyles closely.

Marine environmental protection is a very important concern of PADI. 95% of marine debris comes from plastic waste produced by human beings. In both our diver guidance and peripheral products, we ensure that they use environmental-friendly materials, in order to pass on the concept of environmental protection to more people."

Chuanlong Tang, Founding Partner of Jintan Capital

Mr. Tang has 20-year experience in entrepreneurship, management and investment in medical, consumer goods and AI sectors. While he was the managing partner of Eagles Fund, he invested in outdoor sports projects including Taiwan travels (台湾自由行), Show Taiwan Bicycles (惜台湾单车), Heiniao bicycles (黑鸟单车), and Shanmai (山脉户外) . He also served as the manager of the pharmaceutical division of Beijing Hengjiweiye Company, managing director of Beijing Bomeihuaguang Pharmaceutical Packaging Company, CEO of Zhongweilaikang Technology Development Company, and chairman and general manager of Beijing Huaguang Medical Electronic Equipment Company. Mr. Tang is a guest lecturer at Orange Bay University.

"I am an investor and have invested in over 50 projects. Three of them have been public listed and many were exited successfully. At the same time, I am a skier with more than 20 years of experience. I am the first generation of skiers in China, and the first batch of helicopter skiers. I have been to the top 10 ski resorts in the world and witnessed the development of the China's ski industry. Probably I am the best skier in the investment field, and the most knowledgeable investor among skiers.

Outdoor sports are divided into the mainstream and the niche. The niche can be extreme skiing, and the mainstream is general skiing. Skiing is not only a sport to challenge yourself but also a lifestyle. We found that in Austria, Switzerland and France, about one-third of people ski. They spent their winter vacation skiing. Many ski resorts are equipped with restaurants and scenic spots. Therefore, I think that the mainstream and the niche can transform from one to the other. At the beginning, you are the mainstream, and then become the niche slowly. The niche can also become the mainstream. In the past, we saw few Chinese while skiing in Japan. Now, hotels are filled with Chinese in Japan.

I have been to a ski resort in Germany. The hotels are all above five stars. There are lots of luxury stores around. In addition to skiing, people go there to social as well."

Tian Xia, Executive Director of FountainVest Partners

Founded in 2007, FountainVest Partners is one of the world's largest private equity investment companies. Its long-term investment strategy focuses on China's consumption upgrades and growth. FountainVest Partners manages about 4.7 billion US dollars of assets currently, including IMAX China, doctor tool application Xingren Doctor (杏仁医生) and Focus Media (分众传媒). In December 2018, FountainVest Partners formed a consortium together with ANTA Sports, Lululemon’s founder Chip Wilson and Chinese Internet giant Tencent, and acquired the Finnish sports group Amer Sports. Amer Sports is the parent company of the well-known outdoor sports brands Arc'teryx, Salomon and Wilson. Mr. Xia is the executive director of FountainVest Partners currently.

"FountainVest Partners’ AUM is about 5 billion US dollars. We are not only investing in Arc'teryx, but also its parent company Amer Sports. It is a global integrated sports group based in Finland. The group has various outdoor brands, covering mainstream (tennis) and niche (skiing) sports markets.

How to transform a relatively niche outdoor industry to more popular and to enter the mainstream market? There are two key points.

The first is the macro environment. In China, we live in metropolitan cities full of steel and cement. Outdoor scenes are far away. The brand Arc'teryx is headquartered in Vancouver, Canada. Solomon is headquartered in Annecy, France, with mountains and sea. Why are many outdoor sports brands in Vancouver? Because in Vancouver, you can go skateboarding and diving in the morning, and go hiking in the afternoon. China is different, especially in the South. However, we can bring together sports enthusiasts through sports such as marathons.

Second, products are important. For example, yoga was a relatively niche sport four years ago. It is hard to imagine that yoga tights can be worn on the street. Now more and more women wear tight pants and yoga pants daily. Now, outdoor brands are considering to combine functionality and daily scenes in product design. Therefore, product innovation is becoming more and more important.

Solomon is well-known for its trail running shoes. But they also make road running shoes now. Limited to the environment, people who run marathon still dominate the road running market in China. This market may be hundreds of times larger than trail running. Therefore, Solomon would change its brand positioning. You cannot just provide products for professional athletes, because their needs are different from the general public. It is the same for Arc'teryx in this respect. For example, I am wearing the black jacket of Series 24. I can wear it to work. It is not a snow-mountain product. Moving from the niche to mainstream, these outdoor brands need to cover the mass market, target and combine city lifestyles and scenes."

Photos from Luxe.Co

Chinese Reporter | Fan Jiang

English Editor | Aviva Li

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