Li Ning Shares Hit New High as Sales Surge Amid Chinese Boycott of Western Sports Brands over Xinjiang Cotton Row
By David Miller
Fuelled by the surging sales, Li Ning Company, the eponymous sportswear brand of China’s best-known Olympic gymnast, saw its share price hit a record high of HK$72.95 on Friday morning. They closed at HK$68.50 on Friday.
The company faced a storm of criticism from customers and Chinese officials over its refusal to source cotton from the region.
Sportswear giants Nike and Adidas did not escape the fallout, as they had made similar announcements previously, stating they would cease using cotton from Xinjiang for the same reason.
People’s Daily, a mouthpiece of the Chinese Communist Party, said on Weibo that companies like Adidas and Nike were just as culpable as H&M since they too had expressed concerns about forced labour.
Sales in the Adidas store on Tmall slumped by 79.3 per cent in April from a year ago, while Nike’s dropped by 57.5 per cent, according to Credit Suisse’s analysis, as Chinese consumers snubbed foreign brands in what the US called a state-led boycott.
The surge in nationalism lifted sales of China’s home-grown sportswear makers as sports enthusiasts in China switched to local brands.
A Li Ning pair of trainers named after former NBA basketball star Dwyane Wade sold for as much as 48,889 yuan (US$7,459) on an obscure e-commerce platform called Dewu, – 33 times its recommended retail price.
A pair of Anta shoes, with a special imprint of Japanese cartoon character Doraemon, fetched 3,999 yuan, a massive premium over its reference price of 499 yuan.
Li Ning is the fourth largest sportswear maker in China with a market cap of HK$171.3 billion, behind Anta Sports on HK$391.2 billion, according to market-research firm Euromonitor International. They both trail Nike and Adidas.
Analysts say the huge potential of the Chinese market will favour the home-grown sports apparel giants.
The average Chinese consumer spends US$20 to US$30 a year on trainers, tracksuit trousers and other outdoor and sports-inspired clothing, about a 10th of what a US consumer spends, Morningstar equity analyst Ivan Su said in an analysis.
“There is room for bigger growth off a lower base,” he said.
Euromonitor says sportswear sales in China will grow 21 per cent this year.
Li Ning and Anta were among the bidders in an auction of Adidas’s Reebok brand which risks being affected by a political row over the Xinjiang cotton controversy, Reuters reported on Wednesday.
This article appeared in the South China Morning Post print edition as: Xinjiang cotton row lifts shares in Li Ning
David Miller brings 15 years of experience in global economics, personal finance strategy, and market dynamics. He specializes in turning complex economic trends into actionable insights for everyday readers.
