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Attention Nike, a Chinese rival is on your heels as the problem of forced labor divides the brands

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While Western sportswear companies, including Adidas AG

ADDYY -0.75%

and Puma SE PUM 0.93%

losing sales in China due to a consumer boycott, a local rival is quickly gaining ground.

Anta sports products Ltd.

2020 -2.22%

was already the first national sportswear brand in China. It has benefited from control of its factories and stores, a sponsorship deal with American basketball star Klay Thompson, and sponsorships for the upcoming Beijing Winter Olympics, where he will dress staff at the Beijing Winter Olympics. event and Chinese athletes.

In March, he received another boost. Chinese media and social media users have called for a boycott of Western brands in an industry group that has exposed allegations of forced labor among minorities in China’s cotton-rich Xinjiang region. Group members Adidas and Puma each reported a third-quarter sales decline of around 15% in their Chinese markets, citing policy challenges and other issues. Nike Member Inc.

said its sales there fell 20% in its most recent quarter, although it reported supply chain disruptions.

After the backlash, most Western fashion brands stopped talking about Xinjiang. Anta has done the opposite to align with Beijing, which calls the allegations of forced labor a lie. Anta resigned from the group that raised human rights concerns, saying he would continue to use cotton from Xinjiang.

Anta, who declined to comment for this article, said her income rose 56% in the first half of 2021 compared to the same period a year earlier. In his latest financial report, he said that “guochao,” a Chinese term meaning “national tide,” makes domestic brands more popular.

Companies doing business in China distinguish between responding to human rights concerns and acquiescing in Beijing, which can stifle access to the world’s second-largest economy. H&M Hennes and Mauritz AB disappeared from Chinese e-commerce sites and map apps last year after raising concerns about Xinjiang. Walmart Inc.

and Intel Corp.

recently faced backlash from Chinese social media about their trading relationship in Xinjiang.

A Nike spokesperson declined to comment. Adidas did not respond to a request for comment.

In sectors such as sportswear, Chinese buyers now have comparable local alternatives, such as Anta, which faces its own geopolitical challenges.

A human rights group this week criticized the International Olympic Committee for its links to Anta, the IOC’s official supplier of uniforms and other clothing for the Beijing Winter Games next month. The IOC said a recent third-party audit of its uniforms supplied by Anta did not reveal any issues related to forced labor.

And while Anta’s commitment to Xinjiang cotton helps in China, it darkens prospects abroad as Washington and other governments take steps to restrict imports of products from Xinjiang. Just as people in China and Western countries use different internet services and infrastructure, they could increasingly wear different sportswear from different supply chains.

Third in market share behind Nike and Adidas in China, Anta has narrowed the gap in recent years, according to research firm Euromonitor. Due to the size of the Chinese sportswear market, valued at $ 50 billion per year and growing with the country’s prosperity, Anta has become the fourth largest sportswear company in the world by market capitalization.

Global reach

Brands in which Anta is a majority shareholder via Amer Sports

  • Arc’teryx
  • Armada skis
  • Atomic
  • DeMarini
  • Enve Composites
  • Louisville Slugger
  • Peak performance
  • Solomon
  • Sports tracker
  • Suunto
  • Wilson

Source: Amer Sports

He used his fortune to grow globally in 2019, leading a consortium that bought Amer Sports, a Finnish conglomerate that owns Wilson Sporting Goods, Louisville Slugger and other brands.

Based in the beach-lined city of Xiamen, Anta was founded in 1994 by Ding Shizhong, who sold shoes his father made at home. He went on to run factories that made shoes for other companies before focusing on Anta’s own brand. Anta also bought the Chinese activity of the Italian company Fila, which now represents half of its turnover.

In 2015, Anta took away a Nike sponsorship deal from Mr. Thompson, then a promising National Basketball Association player, offering him more money and pledges, said David Bond, who headed the US office of Anta. from 2015 to 2018. Mr. Thompson has since teamed up with Stephen Curry on the Golden State Warriors to lead the NBA’s most successful team and, in so doing, bolster Anta’s image in Mad China. of basketball.

“They would be much less successful without Klay,” Mr. Bond said.

On trips to headquarters, Mr Bond has seen colleagues covering windows with foam panels at product meetings to protect secrets of a rival across the street. He also saw Anta’s effectiveness firsthand.

Mr Bond, who has also worked at Nike and Adidas, said Western companies are negotiating with factories and third-party retailers to prioritize the production and presentation of their products. “There’s a lot of time dealing with Foot Locker when you’re at Nike,” he said.

Beijing is pushing back international criticism over its treatment of Uyghurs in Xinjiang with a propaganda campaign on Facebook, Twitter and the big screen. This is how China’s campaign against Western brands speaks to domestic and international audiences. Photo: Thomas Peter / Reuters

Anta controls factories and around 10,000 stores. “If they have any idea how super-huge pink shoes are all the rage,” Mr. Bond said, “it would take Anta six to nine months” to make them and put them in store – half the timeframe of her Western rivals. . Factories and internal stores also mean more profits, he said.

Mr Bond said Anta had the same talent as the Western companies he worked for, but without the bureaucracy. Six or seven executives made decisions in Anta, he said.

Its challenges are greater outside of China. Anta wanted to open a mainstream business in the United States, but Mr Bond said he abandoned plans around 2017, in part because of a dispute with Brooks Sports Inc. over similar shapes in their logos.

Politics would complicate a new effort today. President Biden recently signed a bill banning imports of goods from Xinjiang unless companies demonstrate that they were manufactured without forced labor. European Union lawmakers are considering similar legislation.

In June, leaders of the Congressional Executive Committee on China wrote to the NBA Players Union, urging the players to sever ties with Anta. “The NBA and NBA players should not even implicitly endorse such horrific human rights violations,” wrote Sen. Jeff Merkley (D., Oregon) and Representative Jim McGovern (D., Mass.).

Union president Michele Roberts responded by saying that the group “does not endorse, implicitly or otherwise, the ‘commission of genocide or crimes against humanity’.”

Mr. Thompson’s sports agency declined to comment.

Anta has continued to grow with the NBA, signing more athletes to deals and through Wilson Sporting Goods, which recently replaced Spalding as the league’s ball supplier. While Wilson is a subsidiary of Amer, which is part of the Anta consortium, Amer told the Nikkei newspaper last year that he follows his own policies and does not tolerate forced labor. A spokesperson for Amer declined to answer questions.

Write to Stu Woo at [email protected]

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