Chairman's Message

Dear Shareholders,

On behalf of the Board, I am pleased to present our interim results for the six months ended 30 June 2019.

Maintaining the Strategy of “Synergistic Incubation to Achieve Value Retailing and Internationalization”

In the first half of 2019, the trade dispute between China and the United States has brought uncertainty to prospects, impacting the world’s economy. However, China’s sportswear industry has shown resilience under the volatile market, maintaining healthy and stable development. Although the sportswear industry has huge opportunities, the competition has also become increasingly fierce. Chinese enterprises need to take action in order to break out of the dilemma by constantly building up its own strengths through innovation and growth. After years of development, ANTA Sports endured four stages based on its innovation and upgrading, that is – stage 1.0: manufacturing and production; stage 2.0: brand building; stage 3.0: retail transformation; and stage 4.0: multi-brand development. Every single transformation meant an overturn of our past.

In the first half of 2019, we kicked off the “Year of Synergy and Value”, in which we implemented reorganization in order to integrate the Company’s resources and improve the management effectiveness for synergistic incubation. We divided our brands into three categories for centralized management: Professional Sports, Fashion Sports, and Outdoor Sports. Each brand group cooperate closely with each functional department. Each brand group has dedicated team for design, branding, and sales and distribution, and each group implement “Category System”. Meanwhile, the Group set up organization team for retail, sourcing, production and ecommerce function to achieve the best synergistic effects. In addition, ANTA Sports, together with other investors, set up an investor consortium to acquire Finland’s Amer Sports, with the brands of Salomon, Arc’teryx, Peak Performance, Atomic, Suunto, Wilson and Precor etc. Total sum of EUR5.6 billion was involved in the overall transaction. This marks one of our successful steps towards internationalization.

During the period, our online and offline businesses attained satisfactory results. In addition to the impressive results achieved by the Group’s brands, revenue has increased 40.3% to RMB14.8 billion (20181H: 10.6 billion), profit from operations and profit attributable to equity shareholders have increased 58.4% to RMB4.3 billion (20181H: RMB2.7 billion) and increased 27.7% to RMB2.5 billion (20181H: RMB1.9 billion) respectively. Not only have all three financial indicators hit record highs, but it is also the fifth consecutive year of approximately 20% growth.

Taking “Consumer-centric” to Benchmark with High Standards

In the process of growing into a respected world-class multi-brand sportswear group, we need higher standards to demand ourselves for improvement. A high level of concentration and value-for-mission is required in order to instigate growth drive and implement our growth strategy. During the period, ANTA Sports and its subsidiary brands implemented the philosophy of “Taking a consumer-centric approach to promote value retailing”. We focused on the upgrade of products, retail channels, branding under the synergistic platform to enhance the competitiveness of our brand and products. Leverage our capability of technology innovation, we strive to lead the market by maximizing product value and providing innovative experience to each customer. During the period, we launched differentiated marketing campaigns based on the position of each of the brand. Meanwhile, we attached great importance to design, R&D. We introduced various cross-over products that were highly recognized. We realize that the essence of consumption upgrade is transforming from a “pricing era” to a “engagement era”. The key success factor for a company is how it can change the focus from “price” to “experience”. For ANTA Sports, we believe that it is not just how good the products are, but also how to connect with our consumers, by granting them a good shopping experience. Thus, we began to apply this concept to our ninth-generation stores during the period, which emphasized the selling points of digitalization, youth and professionalism, making them the core concepts of ANTA’s new stores.

In addition, we continue to leverage digital technology to promote the Group’s development of branding and retailing. We used a face recognition system for collecting statistics, including customer flow data and hot spot area data. Big data analysis has shown positive effects in store allocation, optimization of display management, and collecting user feedback.

At the same time, we will continue to focus on promoting brand equity, and gradually realize value retailing. We will keep a close watch on consumers and the market, and continue to build up international capability in order to fully implement the Company’s goal of “innovation enabling the full development for multi-brands”.

Integrating resources for globalization, helping the Group to grow bigger, stronger, and more sustainable

Benefiting from opportunities brought by the reform and opening-up of China, ANTA Sports stayed on track and made steady improvement. ANTA Sports recognized that the country’s strength provides a strong foundation for a company. Therefore, we are committed to becoming a great Chinese company with ambition and confidence, as well as a strong sense of purpose and responsibility.

Our determination and sense of responsibility will support the growth of ANTA Sports and turn us into a globally brand to compete on the international platform. The evolution of Chinese brands from “Made in China” to “Created in China” is a milestone in winning recognition from global consumers.

We realized that in order to take Chinese brands to a global level, product quality, value and branding are far more important than low prices. Moving from competing in prices to competing in value and innovation, is the way for Chinese brands to go global. Just as “It takes a good blacksmith to make steel”, Chinese brands need to strengthen their arsenal with quality products in order to enter bigger markets. In order for ANTA Sports to become a true “Great Brand”, we need to have a capacity for innovation that is able to compete on a global scale, and to become a brand that dare to create. By providing more professional, high-value and internationalized products to customers, the Company can then transform from “an affordable brand” to “a desirable brand”.

We have been moving along the path towards globalization during the past few years. The new Board of Directors of Amer Sports was established during the period, marking another step towards the international market. The diverse array of sports brands under Amer Sports will benefit our continuous product development and create synergy. In addition, we will continue to improve our multi-brand strategy, aiding us in opening up spaces in the global market in terms of distribution channels and global brand operations.

On behalf of the Board of Directors, I would like to express my sincere gratitude to all shareholders for their support, and to express our gratitude to the staff who have contributed to the company. Going forward, we will strive to ensure that we, our supply chain partners, brand partners, distributors and franchisees will continue to grow steadily while creating greater value for our shareholders.