Amphenol's listing: Globalization in progress for "ANTA SPORTS-R" of the world

On February 1st, Beijing time, the Nasdaq bell rang, and the largest IPO of the year - Amphenol Sports (AS.US) officially debuted on the US stock market. The listing of Amphenol signifies that the ANTA SPORTS-R Group now has two listed companies, ANTA SPORTS (02020) and Amphenol, trading on the international capital market. It also marks an important milestone in the global journey of the ANTA SPORTS-R Group, as "ANTA SPORTS-R of the world" emerges.

ANTA SPORTS-R Group is going global to "win the battle"

Perhaps in the eyes of the outside world, ANTA SPORTS-R has been "winning" in the past 10 years. In the domestic market, the performance of the ANTA SPORTS-R Group has shown high compound growth, constantly surpassing itself and its competitors, ultimately leading to the formation of a "dual leading" pattern in the Chinese sports goods market with ANTA SPORTS-R and Nike. In 2019, after Amphenol joined the group, it became a strong driver for the group's expansion into the international market.

Today, the ANTA SPORTS-R Group has over 70,000 employees worldwide, with operational offices in the Asia-Pacific, Europe, and North America. It spans three major sports goods market segments: professional sports, fashion sports, and outdoor sports. Its research and development, brand, supply chain, and sales network cover developed and emerging economies, reaching over 3 billion consumers in more than 100 countries.

Does this mean that the ANTA SPORTS-R Group has achieved victory on the global stage? Perhaps there is no definitive answer. The global sports goods market is vast, with diverse demands and numerous strong brands. So far, no company has emerged as an absolute leader in the global market. Based on this, the victories ANTA SPORTS-R has achieved in the past 10 years are still partial victories, and achieving "total victory" is a future goal that will take a considerable amount of time. However, the pursuit of "total victory" has always been an ongoing effort.

On January 19, 2024, Ding Shizhong, Chairman of the ANTA SPORTS-R Group, delivered a keynote speech titled "Winning the Battle is an Unchanging Belief" at the group's annual summary meeting, once again sounding the "assembly call" for the ANTA SPORTS-R Group. In order to win the global battle, Ding Shizhong has a clear understanding. He believes that ANTA SPORTS-R Group has been able to win because of its winning team, strategy, and determination in the past. How can they continue to win in the future? They need to establish the belief, ideology, and capability to win.

Strengthening "capability building" to solidify three core competencies

As the saying goes, "The superior general wins without fighting." In the more complex and diverse "battlefield" of globalization, to achieve complete victory, one must have belief, methodology, and the ability to execute strategic plans. From the perspective of ANTA SPORTS-R Group, it is not enough to only focus on the "superiority of the leader and the ability of the general," referring to the vision and business capabilities of the company's leaders. The group must also focus on the "effectiveness of laws and regulations," which refers to the completeness of the company's rules and regulations; the "strength of the troops," which refers to the completeness of hardware facilities; and the "training of soldiers," which refers to the maturity reflected in employee training, and so on.

ANTA SPORTS-R Group's methodology can be summarized as the "1-3-3" methodology, which consists of "one model + three capabilities + three cultural values." This methodology explores the path of globalization for Chinese enterprises and has created a unique example of Chinese companies going global. Specifically, the "1-3-3" methodology is based on brand retail that directly faces consumers as the unified business model. It includes three core capabilities: "synergistic management of multiple brands," "retail operations of multiple brands," and "integration of global resources," which meet the diverse needs of the entire track, all scenarios, and all demographics. It also includes three core cultural values: "consumer-oriented," "benchmarking against high standards," and "leadership as an example," which cross-culturally consolidate organizational consensus.

ANTA SPORTS-R Group has identified its three core capabilities, which are unique competitive advantages and important foundations for achieving globalization. It is evident that "multiple brands" is the key phrase for the three core capabilities of ANTA SPORTS-R Group. The group attaches great importance to the "multiple brands" strategy as an "evolutionary" choice to adapt to changes in market demand.

From the perspective of changes in industry demand, the consumption of sports shoes and apparel has shown four trends: consumer segmentation, scene specialization, functional expertise, and personalized expression. New opportunities are emerging in new scenes and tracks, such as outdoor, children's, and women's markets, which are growing rapidly.

According to Euromonitor data, the growth rate of the outdoor sports market reached 19.4% during the pandemic, and it is expected to grow at a rate of 14.2% in the next five years. The size of the children's footwear and apparel market has reached 300 billion yuan, and from 2019 to 2022, the compound growth rate of children's sports brands reached 12%, far exceeding the compound growth rate of children's leisure brands during the same period, which was -4%. In terms of the women's sports market, data shows that women spend 15-20% more time on fitness than men on average, and during the 618 shopping festival in 2023, the growth rate of women's outdoor equipment on JD.com was four times that of men. Women's participation in emerging sports such as camping has reached 60%, and about 2/3 of new golf players are women.

In this context, niche brands with distinct positioning have become an emerging force that outperforms mainstream brands and reshapes the market competition landscape. If ANTA SPORTS-R Group wants to win in the future, it needs to pay attention to the current trends, establish a leading position for multiple brands in various niche fields, and adapt its business model to the development trends of the current market demand, covering all scenarios. ANTA SPORTS-R Group has built a solid foundation for long-term growth by possessing the ability to withstand risks throughout the business cycle and cater to the needs of the entire population and market.

According to observations from Zhitong App, the three core capabilities developed by ANTA SPORTS-R Group align perfectly with industry trends. Specifically, the multi-brand collaborative management capability consists of three levels. The first level is multi-brand layout and value creation. The group's three major brand clusters, including professional sports, fashion sports, and outdoor sports, cover the three core tracks of the industry, corresponding to three growth curves. Each brand cluster focuses on brand positioning and marketing, product planning and design, channel expansion and operations, with the aim of maximizing value creation for consumers. The second level is multi-brand resource synergy and sharing. Innovation, digitalization, supply chain, and logistics are the four core resources that are shared at the group level. The third level is multi-brand management and service support. Strategic management, financial risk control, human resources, IT systems, and other control and service functions are empowered by years of management mechanisms and standards, enabling efficient multi-brand operations at the front end.

In terms of multi-brand retail operations, ANTA SPORTS-R Group has over 30 years of experience in channel management and terminal operations in the Chinese retail market. Its main brands have already achieved industry-leading retail operational efficiency in their respective battlefields. In the future, the group will continue to maintain and expand this advantage, and help newly acquired brands quickly establish competitiveness in their respective niche markets.

In terms of global operations and resource integration capabilities, ANTA SPORTS-R Group's brand footprint, retail channels, research and development network, supply chain, and production bases are spread across the globe. It has over 75,000 sales outlets in North America, Europe, and the Asia-Pacific region. It has established five research and design studios in the United States, Europe, Japan, South Korea, and other places. It has also collaborated with over 60 top research institutions, more than 700 experts, and over 3,000 upstream and downstream suppliers for joint innovation, covering various fundamental areas of sports footwear and apparel, including functionality, design, and materials.

Amazfit: The "Touchstone" of ANTA SPORTS-R's Globalization

From the perspective of Zhitong App, the "1-3-3" methodology centered around ANTA SPORTS-R Group's three core capabilities will determine whether the group can achieve victory in the global market. Two key points deserve attention: first, whether the group's international brands can enter a strong growth cycle in the new development stage, and second, whether international brands can succeed in the Chinese market. Therefore, Amazfit Sports, the "beachhead" for the group's international market expansion, serves as the "touchstone" to test the effectiveness of ANTA SPORTS-R Group's three core capabilities.

In terms of results, from 2020 to 2022, Amazfit's revenue increased from USD 2.4 billion to USD 3.5 billion, achieving a compound annual growth rate of 20.4%. Gross profit margin increased from 47.0% to 49.7%; adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) increased from USD 311.4 million to USD 453 million, with a compound annual growth rate of 20.6%.

ANTA SPORTS-R Group acquired Amer Sports in 2019 and was subsequently impacted by the pandemic. Despite this, Amer Sports has been able to maintain a compound annual growth rate of over 20%. Behind this success is the crucial role played by ANTA SPORTS-R Group in empowering Amer Sports' core capabilities.

Take the "multi-brand synergistic management capability" as an example. ANTA SPORTS-R Group helped Amer Sports restructure and simplify its company structure, dividing its business into three major segments: functional apparel, mountain outdoor, and ball and racket sports, led by the Anta, Salomon, and Wilson brands respectively. Each segment operates under a brand-led model, focusing on specific areas of expertise and implementing differentiated brand strategies. From product design and development to expanding sales channels, each brand has full decision-making autonomy at the brand level and achieves end-to-end execution throughout the value chain. This brand-led operating model, which strengthens the market positioning of each brand, ensures that each brand provides tailored experiences for its core consumers, creating a growth engine through differentiation.

In terms of empowering Amer Sports' "multi-brand retail operation capability," ANTA SPORTS-R Group has helped establish a vertically integrated DTC (direct-to-consumer) mindset. As of June 30, 2023, Amer Sports has 200 self-owned retail stores in 24 countries worldwide, and this number continues to grow. The expansion of offline retail channels has also contributed to the development of online business, with a revenue growth of 88% in e-commerce from 2020 to 2022.

In terms of "global resource integration capability" empowerment, the "global middle platform" created by ANTA SPORTS-R Group, which has been replicated in Amer Sports, effectively supports key areas of the value chain for Amer Sports' various brands, such as digital infrastructure, network security, basic innovation research and development, raw material procurement, and sustainable development.

Another key focus worth mentioning is ANTA SPORTS-R Group's empowerment of Amer Sports through "local market insights." Leveraging a deeper understanding of local consumers, ANTA SPORTS-R Group fully utilizes its advantage of having deep roots in the Chinese market to empower all brands under Amer Sports in terms of store location selection, in-store display design, and membership operations, thereby enhancing their brand visibility and sales performance in the Chinese market. According to Zhitong App, the revenue contribution of Amer Sports in the Greater China region has increased from 8.3% in 2020 to 14.8% in 2022, with a compound annual growth rate of 60.9%. The operating profit margin has also exceeded the overall level of the group. As of June 30, 2023, the number of members of Salomon in the Greater China region has increased from 14,000 in 2018 to over 1.5 million.

In October 2023, ANTA SPORTS-R Group held a global investor conference with the theme of "Multi-brand synergy and value". At the conference, the group announced its development plan for the next three years (2024-2026). Specifically, in the next three years, the revenue of ANTA SPORTS-R brand will maintain double-digit growth; the FILA brand will achieve the goal of 40-50 billion in revenue; the Descente brand and KOLON Sports will strive to create the group's third billion-dollar brand. In the next three years, Amer Sports Group will continue to strengthen the "Three Major Markets" of China, North America, and Europe, promote the five "1 billion euros" strategies, and establish a global leading position in their respective segments.

Based on this, the long-term development trajectory of ANTA SPORTS-R Group is very clear. The company closely follows market and consumer demand changes, consolidates core capabilities, and lays a solid foundation for the "dual-driven" global strategic layout of the group. While consolidating its leading market position, ANTA SPORTS-R Group will continue to lead the future development of the entire sports goods market. In the market environment of "fierce competition", ANTA SPORTS-R Group will have broad "suction" space and embark on a new stage of global layout transformation.