The Chinese fitness industry is just starting to explode
Commercial fitness gyms started to open across Mainland China in the early 1980s. Since then, the phenomenal growth of its national economy has helped to drive industry growth in all sectors. Chinese are exercising more and their overall fitness status has improved slightly over the past five years, according to a survey by the General Administration of Sport of China. The survey also showed that the increase in obesity among Chinese, which had been rising since 2005, peaked in 2011 and has since started to slow down. Currently there are 19 million of fitness gym members in China, this counts for less than one percent of the population of mainland China compared to 15 percent of Americans that do.
However, this is changing very rapidly. A nice figure has become a fundamental need for more and more Chinese women in big cities. It’s not hard to feel the ‘fitness fever’ by counting how many people share their gym pictures on WeChat lately. The number of people who holds gym memberships is expected to reach 28 million by 2018, and China’s State Council has projected that the fitness industry would reach 5 trillion RMB by 2025.
Health, wellness, and sportswear as luxury competitors
China’s gym market has reached the point where consumers are willing to pay good prices for good services. CrossFit Slash a gym that opened last year in Sanlitun, Beijing, drew nearly 700 members in just four weeks, more than half of them women. Members pay 1600 RMB a month for unlimited entries or 1400 RMB for 12 classes.
This spending shift doesn’t just include gym memberships (and hot new outfits for requisite gym selfies).In 2016 middle-class and affluent Chinese consumers plan to up their spending on “health and wellness” items. Products like foreign nutritional supplements, organic or ‘fresh’ fruits, meats and vegetables, baby-related products, air purifiers, and pollution masks as awareness of food safety and pollution issues grow. And this doesn’t include the huge amounts that travelers are willing to spend on medical tourism for everything from plastic surgery to maternity. The growth of the health and wellness industry is a global phenomenon, with some luxury experts worried that it will pose greater competition to traditional luxury goods, especially among health-conscious millennials. While a high-end handbag or watch remains a potent status symbol in China, a growing contingent of Chinese consumers is starting to prioritize spending on their health.
Uppercut Studio MMA gym
From Kappa to Adidas to Under Armor
One time a Chinese friend of mine who teaches design in Tsinghua University told me an interesting story about the Italian sport brand Kappa. Not really successful in Europe, Kappa entered China in 2002 but sustained a couple of years of serious trouble. Dongxiang, a sportswear company, originally a franchisee of Italian sportswear brand Kappa in China, acquired in 2006 ownership rights to the brand in China and Japan. The new Kappa then started, officially, targeting “young consumers who are enthusiastic about pop culture, discerning about the quality of life, eager to explore new ideas and happy to show off their personalities”. In fact the company was, in my friend’s words, targeting “those people who wanted to feel sporty without actually having ever done any sport”. This strategy, similar to other Chinese brands like Lining or Anta etc., has been very successful and was expected to drive the brand to a boom in 2008 with the Beijing Olympic games. Kappa started to raise and in 2007 when I arrived in Beijing everyone was wearing Kappa sweaters (to my surprise). But this plan revealed all its unfeasibility and dumbness when, after the Olympics in 2008 more and more Chinese people, didn’t simply want to feel sporty but actually wanted to do sport. This was the moment international brand like Nike and Adidas started to flood the market and literally erased Kappa, Lining, Anta from the map, making them look like brands for posers.
Well, I don’t know how much of this story can be proved true, but the dynamic is certainly interesting. It explains the shift in the branding values that is happening within the Chinese market. But while all major international sport brands have been stil growing in 2015, what should really reveal the next direction that Chinese customers are taking, is the impressive growth of Under Armour in China in the past year. Between September and October the company added roughly one store per day, rising their store numbers in China up to 125.
The brand essence revolves around being the underdog, being hungry. Its tagline “I will” its attitude. Like many underdog brands, it has an attitude, it is not about delivering functional benefits: it’s the “sweatiest player on the field”. Under Armour has already made a name for itself in Chinese gyms and enjoys a good reputation with those serious about exercise, because they cultivated very good relationships with fitness trainers, or KOL (key opinion leaders) in gyms.Under Armour strategically featured a few under-the-radar athletes in order to compete with Nike. These athletes exemplified authenticity and personality without being budget-busting.The authenticity of the ‘sweaty’ image of Under Armour revealed particularly successful in targeting the attentions of Chinese affluent middle class, with their more sophisticated requirement to get ‘the real deal’. Despite Nike and Adidas still being by far the biggest players in the game, Under Armour is certainly set to become one of the major players in the near future.
Raise of combat sports in China
As much as Nike and Adidas are still eating the biggest part of the cake, Football, Basketball etc. are still by far the most popular sports in China. But when at least half a dozen Victoria’s Secret models go to former champion boxer Michael Olajide Jr.’s Aerospace studio to get in shape for the lingerie house’s annual runway show. And even the spirited Cara Delevingne, has credited the sport with keeping her fit for her upcoming film roles. It’s easy to understand why (also) in China fight sports are growing as the next ‘Big Thing’, where post-90s generations are even more subject to the influence of Key Opinion Leaders than in the West. And I’m not talking about professional fighting, I’m talking about boxing, muay thai and MMA gyms that target white collars. In fact pro boxing is growing too and the UFC is becoming quite a thing, with LeTV showing it and streaming it for free online. But the recent box office failure of ONE FC fight night in Beijing, when most of the tickets where given for free in order to pack up the arena, shows that the success in these events is more related to the title of “Fighter” ascending culturally to the level of a “Celebrity”. Successful are those events that are able to deliver stories and therefore create celebrities, rather than those that simply put the focus on the sport itself. The sport itself hasn’t catch yet, but more and more Chinese are willing to skip rope, punch bags and generally feeling more like a Victoria’s Secret model than a pro-fighter. All good.
I personally designed two fight gyms in Beijing, Tiger King MMA and Uppercut MMA (and I was asked to design a third one in Taiyuan, Shanxi province) only in the last year. The sport is growing fast, with many successful event deliberately targeting white collars in town, like the White Collar Boxing, a corporate boxing event where most contestantswork in leading companies, or the Shuangjing Showdown, a platform for amateur fighters and gyms across Beijing. Despite this incredible growth, it’s difficult to profit from it as someone would expect. Most of gyms revenue goes to pay the unbelievably high rent that most commercial spaces in Beijing require. It’s difficult to operate a fight gym 24 hours a day, and even the most successful gyms are still empty during office hours and get crowded only on evenings.
The new ‘organic’ eco-system
Any visitor to Beijing’s more affluent areas will see no shortage of restaurants like Element Fresh, Tribe Organic and Moka Bros, catering to an organically minded (affluent) clientele. The numerous food safety scandals of the Hu Jintao era and the Airpoclypse of the Xi Jinping era triggered and accelerated the transformation. Chinese consumers have become acutely aware of the importance of health, and shown a willingness to pay a premium for products they see as beneficial or safe. A new eco-system of healthy(-ish) brands, products and services has born, and its community is growing bigger day by day.
For brands and agencies the challenge is to keep up with the fast-changing consumers in China and stay relevant with the ever changing requirements of the more and more sophisticated urban citizens.