Targeting China’s Swimwear Market, DESCENTE Bought Back All Equity Interests of Arena’s Joint Venture in China

Recently, DESCENTE, a Japanese high-end sportswear brand announced its acquisition of a 100% stake in Arena Shanghai Industrial Co., Limited (“ASH”) and its intention to make ASH a consolidated subsidiary to promote Arena’s brand awareness and business growth in China.

ASH was formed in October 2016 upon the execution of a joint venture between Shanghai Descente Commercial Co, Ltd. (“SHD”) and Tian Feng Shanghai Apparel and Accessory Trading Co, Ltd. (“TFS”), with a 30% and 70% ownership ratio respectively. This time, SHD entered an agreement to purchase TFS’ 70% of interests at 425 million yen (about CNY 23 million), and the deal is expected to be concluded in April 2022.

SHD is a wholly-owned subsidiary by the Japanese company Descente Ltd. (株式会社デサント), while TFS belongs to Symphony Holdings Ltd. (“SHL”) in HK.

Due to the impact of COVID-19 pandemic, up till the fiscal year ended December 2020, ASH’s sales dropped to 1.45 billion yen, down 36.8% year-on-year, with an operating loss of 44 million yen. However, its operating profit of fiscal year 2019 was 110 million yen. According to its official press release, ASH is expected to become profitable again from the fiscal year ended December 2021.

According to the latest report from ResearchAndMarkets.com, despite the influence of the pandemic, global swimwear market still manages to achieve continuous growth. CAGR from 2021 to 2026 is expected to reach around 6.3%. Meanwhile, as a country with a large population base, China’s swimwear market also witnesses business increase.

The Arena brand was created in 1973 by Horst Dassler, son of Adidas’ founder and President of Adidas France, and acquired by DESCENTE Ltd. in 1990.

Formed by Takeo Ishimoto in Osaka in 1935, DESCENTE provides a wide range of sportwear for skiing, cycling, combined training and running. The Company owns a brand portfolio that includes 16 self-owned, purchased and licensed brands including Munsingwear, Descente, Umbro, Shiseist, Arena, Marmot, Srixon, just to name a few.

DESCENTE brand’s business in Chinese market is run and managed by a joint venture Descente China Holding Limited (“DCH”) created by DESCENTE Ltd. and ANTA Sports Products Ltd. In 2020, DESCENTE Ltd. increased its stake in DCH to 40%.

According to the 2021 interim report of ANTA Sports Products Ltd., up till June 30^th 2021, the combined revenue of DESCENTE brand and KOLON SPORT reached 1.407 billion yuan, up 90.1% year-on-year, accounting for 6.1% of the total revenue of the Group, a 106.0% increase compared to the same period of 2019.

| Image Credit: Arena

| Writer: Lemeng Sun