In China, Ding Shizhong is a household name. And the origin story of the $50 billion sportswear company he founded is legendary.
In 1986, Ding, a high school dropout from a small town in the southern province of Fujian, borrowed 10,000 yuan ($1,500 at current exchange rates) from his father and purchased 600 pairs of shoes from a relative’s factory. He took his inventory north to Beijing and sold the lot. When he returned to his hometown, he invested the profits to set up his own factory.
But Ding wasn’t content to simply make shoes with other company’s logos on them — or the low margins associated with that business model. In 1991, he made what at the time was an unusual move, setting out to build his own brand. Anta Sports is now the world’s third-largest sportswear company by market capitalisation, ranking behind only Adidas and Nike.
The company has expanded to a stable of 25 labels, including Fila China, Kolon Sport and Descente. In 2019, it acquired Amer Sports, the owner of brands including Salomon, Arc’teryx and Wilson, for $5.2 billion, its largest acquisition to date.
Ding has frequently said he doesn’t want to build “the Nike of China,” but rather create “the Anta of the world.”
Demand for Domestic Brands
That ambition got a boost this year, as a growing sense of nationalism and political tensions encouraged Chinese shoppers to focus more on domestic brands. Many of Anta’s Western rivals, including Nike and Adidas, saw business in China suffer over the last year amid a row over the use of cotton sourced from the Chinese region of Xinjiang, where forced labour is allegedly being used on farms and in factories. The controversy boosted an ongoing shift towards domestic brands in the country.
“It’s been a great year for domestic brands, as you can imagine after the Xinjiang cotton incident, their popularity has surged,” said Walter Woo, a research analyst and vice president at CMB International.
Anta Sports’ income jumped more than 50 percent in the first half of the year to hit 22.8 billion yuan ($3.52 billion). Ding now ranks number 66 on the Hurun China Rich List, a ranking of China’s wealthiest individuals similar to the Forbes Rich List, released earlier this month. This year, Ding rose more than 30 places with a fortune estimated at $12 billion. His older brother, Ding Shijia, another major shareholder in Anta, and the group’s executive director and vice chairman of the board, ranks number 67.
It’s been a great year for domestic brands… their popularity has surged.
Fellow sportswear brand founder Li Ning’s namesake brand has perhaps benefitted from the trend towards domestic brands even more than Anta, Woo says. Li’s company’s share price was up almost 70 percent year-to-date at the time of writing, putting the former Olympic gymnast’s total wealth at around $2.4 billion, according to Hurun.
Billionaire brand owners aren’t the only ones with fashion to thank for a portion of their fortunes. But there are also mounting headwinds for the country’s wealthiest individuals.
Tech Wealth Hit, Except for Those With Global Vision
Many of China’s tech billionaires owe a part of their wealth to Chinese consumer’s embrace of e-commerce. But an aggressive regulatory crackdown on the country’s free-wheeling “platform economy” has made it a tough year, despite strong domestic demand.
Alibaba founder Jack Ma and Tencent founder Pony Ma have often vied for the top spot on Hurun’s Rich List. This year, both men have tumbled in the rankings, as Beijing’s tech crackdown wiped billions from their companies’ valuations (though both remain in the country’s top ten).
On the other hand, a new generation of tech companies with a more global vision have brought their founders an explosion of wealth this year.
Zhang Yiming, the founder of TikTok owner Bytedance, ranked number two on Hurun’s list this year, behind only bottled water mogul Zhong Shanshan. TikTok and its Chinese equivalent, Douyin, have surged in popularity this year, and Bytedance has so far largely side-stepped Beijing’s regulatory swipes (though Zhang stepped back from his post as chief executive in May and stood down as chairman of the board two weeks ago without explanation).
As soon as they started, they started thinking global, and that’s a really big sea change in thinking.
Another fast riser on the list is Xu Yangtian, the founder of ultra-fast fashion player Shein. Last year, Xu didn’t appear on Hurun’s list at all; this year he counts among China’s 150 richest people with an estimated net worth of $6.2 billion, the report found. Shein, which manufactures products in China that are shipped to Gen-Z consumers around the world, is now the world’s largest online-only fashion company, according to Euromonitor.
Zhang and Xu’s rise point to emerging power players in China’s digital realm.
“What they have in common is that, as soon as they started, they started thinking global, and that’s a really big sea change in thinking,” said Rupert Hoogewerf, Hurun Report’s chairman and chief researcher.
Manufacturers Make Their Mark
Some of the wealthiest fashion-related billionaires on Hurun’s list don’t sell fashion at all, they make it — or components of it.
While China’s role manufacturing apparel and footwear has declined in recent years (the result of a trade war in the US and rising labour costs), it’s increased its hold over the market for textile production. China’s textile exports jumped nearly 30 percent last year to $154.1 billion, according to the World Trade Organisation’s World Trade Statistical Review published in August.
That trend is likely to get a further boost thanks to a major trade deal between large economies in the Asia-Pacific region that comes into effect in January. It will reduce tariff rates to zero for most textile and apparel traded between signatories representing the world’s largest trading bloc.
Meanwhile, a surge in demand as the pandemic eased in major consumer markets this year has added fuel to the sector, while Covid-19 outbreaks in manufacturing hubs like Vietnam have driven some garment manufacturing back to China.
That’s added to the fortunes of individuals like Li Shuirong, whose Zhejiang-based company Rongsheng is one of the world’s largest producers of polyester. His wealth grow 58 percent this year to $16 billion, making him China’s 46th richest person, according to Hurun. Ma Jianrong, who started his career as a 13-year-old apprentice in a textiles factory, saw his wealth rise 17 percent to $12.7 billion this year. The founder of Shenzhou International Group Holdings, which has made textiles for international fashion clients including Uniqlo, Nike, Adidas and Puma, ranked as China’s 63rd wealthiest person.
Navigating a Changing Market
This year’s ups and downs point to rapid changes reshaping the Chinese market that are unlikely to abate. Beijing has signalled it has no intention of reducing its scrutiny of the country’s tech giants, while manufacturers are likely to face new pressures as competitors in countries like Vietnam get back to business.
On the other hand, new players are likely to emerge to take advantage of market gaps; half of the current rich list only appeared over the past five years, Hoogewerf said.
“You have a new wave of industries, wealth creation, business models,” he said. “The sense I have is that this is the beginning of a completely new dynamic.”
FASHION & BEAUTY
Louis Vuitton Brings Spring/Summer Show to Shanghai
Around 1,000 people attended the show on the banks of the Huangpu River, which included 19 new looks. Newly appointed ambassador Zhou Dongyu joined celebrities including Dilraba Dilmurat, Zhang Ziyi and Ouyang Nana for the event, which garnered 158 million views on platforms like Weibo, WeChat and Tencent Video, the brand said. (BoF)
Chen Man Photo at Dior’s Shanghai Exhibit Sparks Online Debate
The photograph from one of China’s most famous fashion photographers drew the ire of state media last week when an editorial appeared in the Beijing Daily with the headline: “Is This the Asian Woman in Dior’s Eyes?” The article provoked a heated debate on Chinese social media. While some netizens on the Twitter-like Weibo platform criticised the image for pandering to Western stereotypes of Chinese women, others praised Chen Man’s work for more inclusive beauty standards than those usually seen in China, where pale skin and large eyes are traditionally prized. (BoF)
TECH & INNOVATION
China Fines Alibaba, Tencent in Latest Antitrust Investigation
China’s competition watchdog ordered companies including Alibaba Group, Tencent and Baidu to pay a total of 21.5 million yuan ($3.4 million) in fines, the latest round of penalties in an ongoing crackdown on the country’s tech giants. (Bloomberg)
JD.com Reports 25% Jump in Quarterly Revenue
Sales at the Chinese e-commerce firm were boosted by continued demand for online shopping. The revenue boost comes as China’s tech giants are under pressure from a government crackdown that has hit sectors including e-commerce, ride-hailing and gaming. The company swung to a loss in the quarter. (Reuters)
CONSUMER & RETAIL
L’Oréal Offers Vouchers to End Spat With China’s “Lipstick Brother”
The French cosmetics giant is offering shopping vouchers to some Chinese customers after it faced criticism from two of the country’s biggest livestreaming sales stars. Top influencers Li Jiaqi (better known as “lipstick brother”) and Viya suspended their collaborations with L’Oréal last week, after some followers said they had found products the pair promoted as having the best price of the year during Alibaba Group’s Singles Day, selling for steeper discounts days later on L’Oréal’s own platform. (Reuters)
Burberry Joins Exodus of Brands from Hong Kong’s Russell Street
The British luxury brand has had a presence on the exclusive shopping street since 2001. The location in Hong Kong’s Causeway Bay shopping district was once known as the most expensive strip of retail real estate in the world. In recent years, however, political unrest and then the pandemic have struck Hong Kong’s retail and luxury businesses particularly hard, leading to an exodus of brands, including Prada and La Perla from their Russell Street flagship locations. (South China Morning Post)
POLITICS, ECONOMY, SOCIETY
China Won’t Bully Its Smaller Neighbours, President Xi Tells Summit
In a speech delivered virtually to the leaders of the ten-country Association of Southeast Asian Nations (ASEAN) summit, President Xi Jinping said his country would not use its size to “bully” its smaller regional neighbours, according to Chinese state media reports. The summit, and Xi’s speech, come as China and the US jockey for influence in the region. (CNBC)
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