{"text":[[{"start":7.64,"text":"In the race for supremacy in China’s sportswear market, foreign brands are suddenly finding new footing after years of falling behind. Or at least newer brands are doing quite well, while older stalwarts like Nike and Adidas are suffering alongside homegrown Chinese names like Anta and Xtep."}],[{"start":24.16,"text":"That’s one of the biggest takeaways from the latest quarterly update from Xtep International Holdings Ltd. (1368.HK), which is placing increasing bets on its foreign brands, most notably its Saucony running shoes. The bigger picture is that Xtep, along with domestic peers like Anta (2020.HK) and Li Ning (2331.HK) are grappling with a major slowdown at home as China’s economy loses momentum after years of strong growth."}],[{"start":51.88,"text":"As business slows, including a rare sales contraction for Xtep in the first half of this year, newer foreign brands are some of the few that continue to find growth in China, though even that growth is losing steam. That’s also pushing Xtep and its peers to look for new markets overseas – a common theme among Chinese retailers these days."}],[{"start":70.56,"text":"The latest government data nicely summarizes the increasingly chilly climate many of these companies face. The broader sector for clothing, footwear and textiles in China started off 2026 with relatively brisk 6.7% growth in the first half of the year. But things have slowed steadily since then. The sector barely grew in September, logging just 1.2% growth for the month, meaning it could well slip into contraction by the end of this year."}],[{"start":97.92,"text":"Xtep’s update for the three months to September is already pockmarked with that contraction, with the exception of its foreign brands. Retail sell-through volume for its core Xtep brand, which accounts for more than 80% of the company’s revenue, declined by a mid-single-digit amount in the third quarter, according to the update. While that doesn’t look great, it was unchanged from the previous quarter, though it was significantly worse than the low single-digit growth the company recorded in the third quarter of 2025."}],[{"start":98.42,"text":"Slowing Saucony"}],[{"start":123.54,"text":"The Saucony brand’s retail sell-through looked better with mid-single-digit percentage growth during the third quarter. But even that represented a sharp slowdown from the growth of more than 20% the brand recorded in the third quarter of 2025."}],[{"start":139.12,"text":"Other data from the latest update wasn’t too encouraging either, though at least the figures have remained steady over the last year. Retail discount levels ranged from 25% to 30% in the third quarter, unchanged from the second quarter and the third quarter of 2025; and channel inventory turnover also held steady over that period at 4.5 to five months. So the company isn’t resorting to steep discounts to move merchandise and clear out inventory – at least not yet."}],[{"start":166.88,"text":"Anta released its own quarterly update a day before Xtep, showing similar trends. That included a mid-single-digit decline in retail sales for its core Anta brand in the third quarter, while its Fila brand recorded a low single-digit decline. The only bright spot was Anta’s other brands, which includes the foreign Descente and Kolon Sport names, which recorded 25% to 30% growth in the third quarter."}],[{"start":191.84,"text":"Investors have become used to bad news from Xtep and its peers, and seemed to welcome the stability reflected in the latest report rather than focus on Saucony’s worsening situation. The stock was up around 4% in late morning trade on Friday after the report’s release, though it’s still down about 30% this year. Anta’s stock is down by a milder 6.2% this year, reflecting its industry-leading status and also its more global footprint."}],[{"start":218.6,"text":"That premium is also reflected in Anta’s valuation, with the company commanding a price-to-earnings (P/E) ratio of 12, ahead of Xtep’s 7.3 and 9.9 for Li Ning. But all those figures are well behind the 18 for global leader Nike (NIKE.US) and 20 for Adidas (ADS.DE), which have also struggled in China lately."}],[{"start":219.1,"text":"Overseas expansion"}],[{"start":239.6,"text":"All that said, the rise of new foreign brands in China, and search for new opportunities abroad, are two major themes likely to dominate among domestic sportswear companies over the next few years."}],[{"start":248.84,"text":"While Xtep is finding success in its home market with Saucony, and Anta with Descente and Kolon Sport, an equally notable example of how Chinese consumers are welcoming these newer foreign brands comes from Amer Sport (AS.US), which counts Anta as its largest shareholder with about a 40% stake. Amer, which sells the Arc'teryx, Salomon and Wilson brands in China, reported its Greater China sales jumped 35.5% year-on-year in the second quarter to $556 million from $410 million a year earlier, making it the company’s largest region globally in terms of sales."}],[{"start":289.18,"text":"By comparison, more established foreign brands like Nike and Adidas, which are represented in China by Topsports (6110.HK), and Anta’s older Fila brand aren’t doing so well in China these days."}],[{"start":303.12,"text":"Then there’s the globalization story, which has been led by Anta among the Chinese names. In addition to its Amer ownership, Anta most recently made headlines when it completed its purchase of 29% of German sports brand Puma earlier this month for $1.7 billion."}],[{"start":319.76,"text":"Xtep is pursuing its own overseas story through a recent expansion in Southeast Asia, including its entry to Malaysia, Singapore and Indonesia over the last year. The company has said it’s aiming to grow its overseas revenue by 50% annually over the next three years, which would far exceed its overall performance, including a 0.6% year-on-year revenue decline in the first half of this year to 6.8 billion yuan ($1 billion)."}],[{"start":329.2,"text":"But foreign revenue is still a relatively small piece of Xtep’s business. The company has said it’s aiming to grow its overseas revenue by 50% annually over the next three years, and reported the segment more than doubled in the first half of the year, without giving a figure. But its overseas revenue reportedly stood at just 200 million in 2025, or less than 2% of its revenue that year, meaning the international business is probably still just a small contributor."}],[{"start":379.16,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1792755593_3305.mp3"}