China's Sportswear Leader Feels the Trade War Heat as It Goes Global
Anta Sports is feeling the impact ‘on all fronts,’ CFO says
Anta bought Amer in a $5.2 billion deal to expand globally
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The bigger Anta Sports Products Ltd. becomes, the more vulnerable it feels. That’s the tight rope China’s largest athletic-apparel producer is walking as it expands beyond the Asian nation amid the trade war.
“In the past, Anta only focused on the China market and felt little impact,” Lai Shixian, Anta’s chief financial officer, told Bloomberg in Hong Kong. But now with its product sales and supply chain spread all across the globe, “the trade war is having a massive impact on all fronts.”
Anta’s global ambitions come at a tricky time, as an intensifying tit-for-tat tariff war is making it more expensive to manufacture in China -- long considered the world’s workshop. The sportswear maker struck a $5.2 billion deal to acquire Finland’s Amer Sports Oyj in December to boost its overseas business.
The Fujian-based firm already has suppliers in Southeast Asia, according to Lai. If Anta keeps improving its operations, the impact of the trade war could “still be controlled at this point,” he said.
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While the trade war has reduced orders for Chinese factories, it has given local brands including Anta more sourcing choices. But Anta’s choice for sourcing partner will not be a simple function of cost, Lai said. Other parameters such as quality and delivery period will also be considered.
Investors have so far cheered Anta’s acquisition of Amer, the maker of Salomon ski boots and Wilson tennis rackets. The company’s shares soared the most since November in Hong Kong trading Tuesday, after Anta reported first-half revenue of 14.8 billion yuan ($2.1 billion) that beat analyst estimates. The stock rose as much as 8.1% to an all-time high, bringing its gain for the year to 76%.
The sportswear maker decided to disclose the breakdown of Anta and FILA’s financials in this interim report after two short sellers attacked its accounting and corporate governance earlier this year. Anta will make more efforts to increase transparency in financial reporting, Lai said.
Slowing Chinese consumption, global brands entering China and being able to engage the younger generation are the biggest challenges for Anta.
Lai is confident that the company can achieve the retail sales target of 100 billion yuan by 2025.
Courtesy : Bloomberg