2024-08-18
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“All strategic goals are implemented into specific details, all businesses have management models, all projects have time nodes, and all matters have clear responsibilities.”
Text｜Liang Xiao, reporter of "Chinese Entrepreneurs"
Editor: Mina
Head photo by Deng Pan
On February 1, 2024, it was already deep winter in Manhattan, New York, but the cold air did not dampen the city's surging enthusiasm for wealth.
Investor Charlie Munger once said, "In Manhattan, it is easy to be tainted by the atmosphere of glitz and bustle." I wonder if Ding Shizhong, founder of Anta Group, has heard this sentence. At this moment, he is in the 60-story Manhattan Building, opposite the New York Stock Exchange, where he just ledAnta has reached another milestone - its acquired Amer Sports (Arc'teryx's parent company) officially entered the global capital market with an IPO market value of US$6.3 billion.
Ding Shizhong (center) and Lai Shixian (second from right) took a group photo with other senior executives. Source: Interviewee
Cheers rang out in the room, and Ding Shizhong's next words seemed a little out of place. After expressing many thanks, he said: "I'll give you a few instructions. There are several key points to pay attention to in the future sporting goods market..."
Anta's old employees are too familiar with this scene. "He seldom praises people, but criticizes and questions more often" - when reaping victory, Ding Shizhong is calmer than anyone else, because "he has a bigger goal", just like Anta's slogan "Never Stop": Climb up a hill, and set your eyes on the next higher one; after fighting a tough battle, declare war on a bigger opponent - when setting combat goals, he will be more radical than anyone else.
Lai Shixian, Ding Shizhong's old comrade and current co-CEO of Anta Group, recalled to China Entrepreneur that in 2015, when Anta's revenue just exceeded 10 billion, it proposed "10 billion milestone, 100 billion goal". He has a background in finance and is naturally sensitive to numbers. Many of Anta's goals seemed "quite big" to him, but the results often exceeded the expectations of this rational person."Before we knew it, we had actually accomplished what we boasted about." In his opinion, winning a battle is a kind of leadership."No matter how high your goals are in the future, the team will follow you and work together."
Over the past 33 years, Anta has emerged from a group of more than 3,000 Jinjiang footwear and apparel "wolves" and competed with the then-prosperous Li Ning Company; it has emerged from the "inventory crisis" that swept the entire industry, and took advantage of this to overtake its competitors and become the largest sporting goods company in China; it has emerged from the shackles of a single brand, made strategic acquisitions along the way, and become a footwear and apparel corps commanding 15 major global brands; it has risen from one billion to another, and by 2023, Anta's revenue will exceed 62 billion yuan, surpassing Nike China for two consecutive years and becoming the king of the Chinese domestic market.
Source: Respondents
For Anta, there are five questions worth exploring:
First of all, how did it develop the ability to win battles and win battles continuously?
Furthermore, how did it build its core capabilities of “brand + retail” along the way to where it is today?
Third, it was originally a family business and explored a new governance path between family-based and professionalism. How was this step accomplished?
Fourth, multi-brand management is a trap for enterprises. What efforts has it made to avoid this trap?
Fifth, how did it become one of China's most internationally competitive brands through a series of mergers and acquisitions in just over a decade?
Lai Shixian, who joined the company in 2003, has experienced almost all major battles in Anta's history and witnessed Anta's transformation in capabilities: when they acquired FILA's China business, they thought it was not difficult, but the actual process was very tortuous, and the time to get out of the loss was longer than originally planned; and when they acquired Amer Sports' global business in 2019, they planned to have the "most difficult" and "highest risk" expedition, but the progress was smoother than expected: the five "billion euro" goals have been basically achieved, the relisting has also been completed, and "during the three years of the epidemic, most of the work was done through video conferencing."
The story of Anta is not a myth of soaring into the sky, but a long march of careful preparation, which is also the inevitable path for survivors to evolve.Good to Great mentions that in this process, there is no single clear action, no once-and-for-all innovation, and absolutely no lucky mutation or miracle that falls from the sky. It is just an action after an action, a decision after a decision, just like pushing a heavy giant flywheel in one direction, round and round, and their sum will produce a lasting and spectacular effect.
In 2024, Ding Shizhong said in his annual meeting speech: "I have been thinking: How can Anta Group move from 'excellent' to 'great'?" His answer is: make the "right" products, run a "good" company, and do a "loving" career.
"Our goal is to become a company with excellent multi-brand management and retail operations. These two capabilities are the most difficult to build." When he said this, Lai Shixian, who is always calm and reserved, unconsciously emphasized his tone.
In February 2023, Anta Group launched the co-CEO system.
Lai Shixian was 49 years old at the time and had previously served as the group's CFO.After being appointed to the new position, he will be the head of the "Management Committee", the highest body for the group's business decision-making.He is in charge of the two major brand groups of professional sports and outdoor sports, and is in charge of key mid- and back-end functions such as human resources, finance, and supply chain.
Lai Shixian Photography: Deng Pan
Lai Shixian doesn't look like a typical "battlefield warrior". He is tall and thin, with a refined temperament. He is recognized as a "very gentle" manager by everyone in Anta.As soon as the new CEO took office, he faced the huge challenge of upgrading and transforming Anta's main brand.
At the same time as the handover of the group CEO, the Anta brand also announced the appointment of a new CEO. The successor, Xu Yang, joined Anta as brand director in 2006. He served as general manager of the basketball division and general manager of Arc'teryx Greater China. He is a typical "Anta man". The so-called typical, in the words of an Anta executive, is "executive, dreamy, daring to brag, able to achieve, hardworking, and daring to win" - in addition to these characteristics, he is also well-known for his love of "making tough remarks" within the company.
A calm boss and a passionate subordinate, a very unique combination.
Just after the 2023 Spring Festival, Xu Yang flew to the United States before he officially returned to the Anta brand. Not long ago, Nike suddenly announced the termination of its contract with NBA star Irving. In Xu Yang's view, this was a once-in-a-lifetime opportunity for Anta. He immediately negotiated the terms with Irving and made plans. As a result, the board of directors did not pass it once, so he submitted it a second time, and the situation was still not optimistic. Two of the six directors present did not express their opinions.
Two people, one of them is Ding Shizhong, and the other is Lai Shixian. As the chairman of the board of directors, the former often does not easily express his views, but once he speaks out, it may become a foregone conclusion.He has always hoped to build a more diversified decision-making and governance mechanism. From the listing in 2007 to the current co-CEO system, it is based on this idea. Lai Shixian said that Anta's culture is very open, and the directors often argue over a certain topic, and sometimes they even "quarrel".
The acquisition of Amer Sports was like this. Some of Anta's directors saw the opportunity, some saw the risk, and there was a middle ground - doing it conditionally. Lai Shixian, then CFO of Anta Group, was a third party. His opinion was: if a consortium could be formed to jointly acquire, Anta would do it, otherwise it would not do it because the amount of money involved was too large and the risk was too high. "President Ding (Ding Shizhong) was definitely inclined to do it, thinking that this opportunity was rare, but he would also look at it very carefully, thinking that if it was not too dangerous, we should try our best to get it done." Lai Shixian recalled.
Later, Anta also followed the "middle road" to promote the acquisition plan. It formed a consortium with Tencent, FountainVest Partners, and Anamered Investments owned by Lululemon founder Chip Wilson, and acquired the company at a premium of 4.66 billion euros (approximately 36 billion yuan). This is also the largest cross-border acquisition in the history of China's sporting goods industry.
According to an Anta executive, when everyone is rushing forward, someone has to hold the line, and Lai is that person. "He is more cautious."
But back to the board decision-making scene of Irving's signing, it was this "cautious" new CEO who voted in favor at the last minute, making the final decision. For Xu Yang, it was like grabbing a piece of driftwood when he was about to sink underwater. "President Lai (Lai Shixian) said, 'Don't worry about what others do, we should sign ours.'" Xu Yang recalled, "That was a pretty harsh sentence, it was really not easy."
Recalling the initial decision-making risks, Lai Shixian said, "It's not that bad. Aren't those the things that everyone is worried about? But judging from the reactions of relevant parties, the risks are not great, and from the market perspective, there are opportunities. So it's not difficult to make a judgment."
He is used to saying "it's okay", as if many things, good or bad, big or small, stable or dramatic, can be easily covered by this sentence. In fact, before these three words came out of his mouth, Lai Shixian had already made rigorous reasoning and prudent comparison in his mind.
Xu Yang said that often, when he proposed a new idea, Lai Shixian would say, "Think about it," and then a few days later, he would reply to Xu Yang, "I've thought about it and I think you can do it."
"He is a relatively cautious decision maker, unlike those decisive front-line business executives, but he has very firm judgment and is very tolerant. He can stand behind the reformers at critical moments and promote effective change," said Li Ling, vice president of Anta Group.
As we enter 2024, China's consumer market is moving from an "incremental era" to an "era of equal emphasis on incremental and existing sales." In Anta's view, for the sporting goods industry, the opportunities for a single brand to have annual sales of more than US$10 billion will become increasingly rare. In this case, Anta needs to deepen its multi-brand differentiation to gain more future opportunities and must continue to strengthen its three core capabilities: multi-brand collaborative management capabilities, multi-brand retail operation capabilities, and global operation and resource layout capabilities.
"We have already reached a strategic consensus, and the company is not at a stage where it needs to undergo surgery or make major changes," said Lai Shixian.In the past two years, their key work has basically been carried out in three directions: a more systematic management model, a clearer management mechanism, and a more detailed management model.
In the movie "Inception", it is said that in order to make a dream seem real, every detail must be correct. Therefore, in order to achieve the purpose of the "dream", not only a dream maker with clear goals is needed, but also a meticulous dream builder.At Anta, Ding Shizhong describes the framework of the dream, while Lai Shixian plays the role of dream builder.
In 2006, Anta proposed to go public. At that time, the sporting goods group was still in its "start-up" stage - there was no mature development strategy, no matching organizational structure, and no performance appraisal and corporate culture. Lai led his team to start from scratch, and "it took a long time just to make a three-year profit forecast." Even so, Anta still broke the double record of China's sporting goods companies in terms of price-earnings ratio and financing amount.
Faced with the sudden and huge victory, everyone was calmer than excited. “How can we justify this 20 billion market value?” The board of directors reached a consensus, “If we want to continue to achieve growth, we must have more brands.”
"We are now proposing a multi-brand strategy, but in the early days, it was not so mature and clear. It was just a very simple idea," said Lai Shixian.ANTA's style has always been like this, "Not thinking everything out before taking a step, but watching and adjusting as you go."
The direction was roughly determined. The brand to be found needed to be international and high-end, so as to complement Anta's mass positioning. Another important point was that the brand could be unknown in the Chinese market, but it must not have a "bad reputation." Following this standard, Lai Shixian searched the international market and finally found FILA by accident. At that time, the Greater China business of this Italian brand had become a pawn of the Belle Group, with only 50 stores in the Chinese market and tens of millions of losses.
They thought: "In three years, we can turn losses into profits"; but the process was later extended to five years, and the losses expanded to 200 to 300 million. In those years, FILA has been adjusting its positioning and fell into a cycle of testing, demolition, correction, and restarting. Finally, it established the product positioning and store format, and then quickly opened stores. According to data from 2015, the number of FILA stores in Greater China reached 591, but the losses were still there.
FILA Beijing Taikoo Li flagship store. Source: Interviewee
Yao Weixiong, who took over as president of FILA Greater China in 2010, recalled that during those two years, he often had to go to the board of directors to apply for a budget, "Boss, I need funds for turnover", sometimes 30 million yuan, sometimes 50 million yuan, "It was really embarrassing, but it was approved smoothly every time, at least there was no worry." Yao Weixiong said, "Now it's a bit hindsight. At that time, Fila was bought back for several hundred million yuan, and many people thought it was expensive, but if there had been no investment, the story of FILA's revival in China would not have happened."
During those two years, Anta Group itself was in dire straits. From 2011 to 2012, all sports brands in the Chinese market experienced an unprecedented inventory crisis, and Anta also experienced the only two years of negative growth since its establishment. Even in this situation, "we never thought of giving up (FILA), and the board of directors never discussed this topic." Lai Shixian said that the board of directors' decision was based on several aspects, including the choice of path, insight into the industry, and the grasp of risks. The investment in FILA was valid in all these aspects, and there was no reason not to persist.
The persistence in FILA's brand positioning and direct retail model was responded to in 2014, when FILA began to get rid of losses. In 2019, Anta's financial report disclosed FILA's performance for the first time: a year-on-year increase of 74%, and its turnover has grown to half of Anta Group's. Together with Anta's main brand, it has entered the top five sports brands in the Chinese market.
FILA's successful breakthrough not only broadened the track for Anta, but also unlocked a new development model for it that was different from simple scale expansion:
First, it proves Anta's ability to operate high-end brands;
Second, a profile of future acquired brands was established, that is, new brands could not compete head-on with existing brands and differentiation must be ensured;
Third, a methodology for operating new brands has been formed. Products and stores are constantly tested in the early stages, and the speed of opening stores is not emphasized. Stores are opened quickly after successful testing.
Fourth, most of FILA's 2,000 stores are directly operated, paving the way for Anta's large-scale DTC (Direct-to-Consumer) reform. "Anta has 10,000 stores. Why do we have the confidence to make the DTC transformation? Without FILA's foundation, how could it be possible? The risk is too great," Lai Shixian emphasized.
Starting with FILA, Anta Group has firmly adhered to the development strategy of "single focus, multiple brands", and its multi-brand matrix has continued to grow: Spandex in 2015, Descente in 2016, Kolon in 2017, and Amer Sports in 2019. By 2023, Anta turned its attention to new domestic consumer brands and acquired MAIA ACTIVE, a yoga apparel brand focusing on women's sports, eventually expanding the number of its major brands to 15.
Source: Respondents
Like FILA,These brands not only complement ANTA's puzzle in the market segments, but also become levers for ANTA's ability to leapfrog. Just like ANTA followed FILA to adopt the DTC model, ANTA also entered the international market through Amer Sports."It used to be very difficult to talk to overseas retailers because they didn't know much about Anta. Now that we know Anta is a major shareholder of Amer Sports, they are at least willing to talk to you," said Lai Shixian.
In 2021, Anta Group released its new ten-year development strategy, which is a step forward compared to the "single focus, multiple brands, and omni-channel" proposed six years ago - single focus, multiple brands, and globalization. This change of only two words requires Anta to pay more long-term determination and endurance.
In 2023, Lai Shixian and Xu Yang visited European retailers with many ANTA-branded shoes. On March 6 of this year, the basketball shoes co-developed by ANTA and Irving were officially launched in the US market, triggering many fans to buy them.
"Globalization has become a battle that ANTA must win. This year is a very important year for globalization,"Lai Shixian said, "We are currently discussing it. We estimate that by the end of the year, we will have a more detailed plan for the five-year strategic goals and team arrangements, including different strategies for the major markets in Europe, America, Southeast Asia, the Middle East and Africa."
Source: Respondents (Note: The Asia-Pacific data in the above figure does not include China)
Why is it that these targets, which have never been revitalized in the hands of other companies and have been constantly changing hands, can regain new competitiveness within Anta's system?
Let's look at a negative example. Lai Shixian recalled that before Anta acquired it, Amer Group implemented platform management for brands, such as a unified sales platform, so Arc'teryx's previous exposure in the Chinese market was nothing more than a few clothes in a multi-category store. Under this management model, before the acquisition, Amer Group's decision-making model can be simplified to "the group has the final say" and "the platform has the final say", which led to the lack of enthusiasm of each brand manager, "some very potential brands were buried."
The difference is,In Anta's multi-brand army, each brand is an independent combat unit, fighting with all its might in each segment, while also being able to gather strength under the leadership of the group to win a more comprehensive victory.
"There are many companies in the market that have multiple brands under their umbrella, but instead of being united in their attacks on the outside, they are killing each other internally, and in the end the entire group is shrinking more and more," said Chen Ke, COO of Anta Group. Before joining Anta, he was a global senior partner at Roland Berger Consulting, and has been deeply involved in the consumer and retail fields for more than 20 years. In his opinion,The most unique feature of Anta's multi-brand management is that it not only achieves strong operational control but also ensures differentiation of multiple brands.
Each of Anta's sub-brands has its own brand manager, focusing on its own strategic positioning and mental scenarios: Anta is positioned in the mass professional sports category, while FILA is based on the high-end fashion sports category; Descente and Kolon, both in the outdoor sports brand group, focus on high-quality professional sports categories such as skiing and triathlon, while the latter focuses on the "light outdoor" concept, focusing on urban outdoor scenes such as hiking and camping.
Source: Anta 2023 Annual Report
Every year, the group issues three "must-win battles" to each sub-brand. The so-called "must-win" means that they must not lose, and the targets of the "battles" must be tough nuts to crack. These "three" account for about 80% of the sub-brand assessment. In addition to the overall goals, Anta Group has established corresponding evaluation standards for each brand's core business indicators such as inventory health, store efficiency, SKU, product operation cycle, and hot product implementation. Internal people often laugh at themselves,Anta’s management is “this, this, this, and then, this, must...various indicators”.
On the one hand, there is "strong control", and on the other hand, there is full authorization. Anta's management emphasizes the main responsibility system, that is, "all matters must find a single person in charge", and the same applies to the operation of sub-brands. Each brand manager is fully responsible for its own brand positioning and marketing, product planning and design, channel development and operation, and according to the size and development maturity of different brands, Anta is also constantly refining a more differentiated authorization system. Lai Shixian revealed that he will continue to promote incentives and management authorization for each brand.
Several mid-level officials who had worked in his department recalled that "(Lai Shixian) would give guidance, support, and manage the results, but he would trust people and fully delegate authority during the process."
In this way, autonomy is guaranteed, but another layer of hidden danger will also arise. With the expansion of brand scenarios, multiple brands will inevitably overlap with each other, especially comprehensive brands like Anta and FILA with a revenue of around 30 billion. They will almost expand into every sub-category. For example, they are both involved in running shoes. FILA focuses on developing professional golf, which is also one of Descente's important businesses... How should Anta Group regulate it?
Chen Ke's answer is "not standard". "We are brothers and competitors, and strictly speaking, we are more fierce competitors.Anta’s requirement is that no matter whether they are brothers or enemies, they should compete to their heart’s content.But Chen Ke also emphasized thatThe premise is to maintain the strategic positioning."If Anta makes a jacket priced at 3,000 yuan, it will deviate from its strategic positioning of mass professionalism."
This is a risk that ANTA Group is always vigilant about. Every year at the monthly business analysis meetings, quarterly review meetings, semi-annual review meetings, and annual summary meetings, ANTA Group's Strategy Department will review strategies with each brand manager and conduct high-frequency strategic checks to avoid deviations in brand positioning and ensure brand differentiation."If the positioning is wrong, no matter how big the business is, we will pull it back," Chen Ke emphasized.
Logically speaking, Anta's multi-brand management is very simple.What is controlled are principles and standards, and what is released are actions and playing methods.This ensures both the synergy of the group-level strategy and the flexibility of the tactics of each brand. "Multi-brand management is like a team," Li Ling said, "On the one hand, each player in the team has his or her own unique skills; on the other hand, they must establish their positions under the overall coordination of the group's 'big coach', so that they can go all out and win a wonderful game together."
However, when it comes to practice, this set of management methods needs constant adjustment and refinement. For example, for brands at different stages of development, the assessment models and focus are different. In different market conditions, different brands will face different challenges, so the relevant authorizations will also be flexibly adjusted.
"These are all revised through joint communication between the group and sub-brands. There are new adjustments every year and every quarter, and they have become more and more detailed in the past two years." said Yao Weixiong, who has been the brand manager of FILA for 14 years.It's not that we are particularly good, but we are constantly polishing.That’s why we were able to develop a multi-brand strategy that’s most suitable for the current moment.”
Being in the Anta Jinjiang Logistics Park is like being in a future world dominated by machines: on the crisscrossing tracks, millions of parcels are automatically diverted to points and unloaded at stations every day; in the storage area that is 24 meters high and has 35 layers of shelves stacked on top of each other, 35 aisles are each guarded by an "Optimus Prime"-like stacker. These behemoths move back and forth at a speed of 4 meters per second, and more than 12 million pieces of goods are under their control.
This is the second phase project of Anta Logistics Park, which was approved at the end of 2020. "An investment of 1 billion yuan was finalized with a 5-page PPT report." Chen Jiancong, general manager of logistics of Anta Group, said that he had previously served as general manager of operations of Li & Fung Supply Chain Management (China) Co., Ltd. "An investment of 800,000 yuan had to be approved by the Hong Kong headquarters."
The pressure has also increased exponentially. "I have to do almost the same work in one year as I did in the past three years," said Chen Jiancong. In fact, the challenge was already there before he came to Anta. At that time, the logistics business was affiliated with Anta's sales department, and this identity determined that it was more inclined to the needs of the Anta brand. FILA therefore built its own logistics, and later the e-commerce department also built a separate system, which was equivalent to dividing the commodity flow within the system into several isolated transportation islands.
"When there were only two brands, we could explore and develop them independently, but as the number of brands increases, we should coordinate resources at the group level and define responsibilities and rights more clearly," said Lai Shixian. For many years, logistics and supply chain have been important departments under his charge. In Lai Shixian's view,Multi-brand groups must establish a coordinated and efficient sharing platform to match them.“Logistics is the main artery for the efficient flow of people, goods and venues across the group’s multiple brands; supply chain and production are also large shared platforms for efficiency and cost management.”
Photography: Liang Xiao
The integration of various business segments has been in progress. In 2011, the integration of the supply chain was promoted by Lai Shixian, the then COO. In October 2023, Anta Group included "multi-brand resource collaborative sharing" in its development plan for the next three years (2024-2026), and proposed "innovation, digitalization, supply chain and logistics, four major middle-end resources, to be shared at the group level". With the rapid expansion of the company's size, a large amount of resources and capabilities are deposited in various branches, which require systematic sorting and a change in concepts.
Take digitalization as an example. In 2021, Anta Group promoted comprehensive digital transformation. Prior to this, Anta had invested in related areas for many years, built a middle platform, set up CRM and SAP systems, and created hundreds of user tags. However, in Chen Ke's view, these are just informationization, not digitalization. He emphasized that "the purpose of digitalization is to create scenarios and truly bring business value."
This is also the direction of Anta's digital transformation in the past two years. First of all, we need to formulate plans based on the differences of each brand. For example, Anta is positioned as a mass-market brand, and the primary goal of digitalization is to achieve goods-to-market matching. For the mid-to-high-end brand FILA, the first digital project to be done is user operation. Therefore,We must first identify the different focus points of digitalization, and then break them down into monitoring indicators and KPIs for specific projects. Only in this way can we truly achieve differentiated empowerment.
The logistics system has also undergone such changes. In 2018, Anta successively imported the logistics networks of FILA and e-commerce, but a new problem immediately emerged. In 2020, Anta carried out DTC transformation, which meant that the first phase of logistics built based on the wholesale concept two years ago suddenly changed from "new infrastructure" to "backward production capacity", because under the wholesale model, the logistics system only needs to send 2 million goods to 50 customers across the country every day - simple and linear; while under the DTC model, the consignee means 12,000 offline stores, online e-commerce, and countless consumers. In addition to forward shipments, there are also reverse returns. The coming and going tracks are intertwined into a dense, criss-crossing network.
Therefore, when the second phase of the project was launched, some senior executives asked with lingering fear: "What if the model is changed again?" Chen Jiancong had considered this before, "The system design has been broken down to individual components, the smallest unit, so no matter how the model changes in the future, there will be no problem."
The integration problem was solved by the "zeroization" method, which is equivalent to reserving a universal interface for the logistics needs of all modes and all brands. Chen Jiancong said that now Anta's single warehouse can centrally handle the logistics needs of to B, to C, online and offline, forward and reverse, and multiple brands. This not only reduces costs - 70 million to 80 million yuan has been saved in 2024, but also turns network disadvantages into advantages and realizes flexible deployment in multiple regions.
"It's basically painless to integrate a new Maya system. It just connects automatically. After inventory, I follow the process and it comes in a few days. Its logistics costs have been reduced by 20% at once." Chen Jiancong said that what he is looking forward to more isThe Suzhou Logistics Center, which will be put into use in 2026, is expected to run the logistics networks of more than a dozen brands, including Amer Sports.
"For ANTA, which has multiple brands and changes, the difficulty of truly collaborative sharing between the front, middle and back offices is not to simply gather resources, but to flexibly call on them.A middle platform that can provide differentiated empowerment must be a middle platform with stronger compatibility.Lai Shixian said that the construction of the middle platform is also the focus of building a multi-brand collaboration and sharing platform.
The production department is the first department in the entire system of Anta Group to undergo digital transformation. Currently, the Tongan factory has a total of 43 production lines, which are divided into three major groups: professional sports group, fashion sports group, and Olympic event special supply. It produces nearly 10 million pieces of clothing each year. It used to take 30 to 50 days to make a piece of clothing. Now the fastest is 2 hours, and the slowest is no more than 8 hours, from fabric to finished product packaging.
"ANTA stores and products change very quickly. When a new product comes out, the factory may have just finished researching the manufacturing process, but the product may have changed again." Li Jinsheng, head of ANTA Group's Tongan Garment Factory (hereinafter referred to as "Tongan Factory"), said that this is a headache for them. "Different products, different production nodes, and different launch bands must be integrated into the production line. The scheduling ability, personnel matching ability, and production process deployment ability must keep up. Otherwise, if the situation is serious, it is very likely that the product will not be delivered and the loss will be huge."
Previously, the Tongan factory only produced professional products with relatively simple craftsmanship, but FILA is different. Fashion and artistic elements are often used in clothing, many of which are handmade, with complex craftsmanship and cumbersome processes. Li Jinsheng came up with a solution. He selected 200 workers from the more than 1,000 workers in the Tongan factory and spent two or three years training them in manual skills. He called them "special forces". Usually, they produce with the main force, but when it comes to FILA's production cycle, they become the core unit, and other people and processes have to cooperate from the side.
Tongan smart factory hanging system. Source: Interviewee
Today, the "special forces" model has also been replicated in the construction of outdoor product lines - they first learn new processes, and then embed the process modules of outdoor clothing manufacturing into the digital base. This has to some extent resolved the "panic" of new products on the production side. As Li Jinsheng said, "We have the three capabilities of professionalism, fashion, and outdoor. If the products change in the future, the production line can follow up in time."
In the past few years, various management divisions of Anta Group have been formulating "management models" and have conducted a comprehensive review of assessment and evaluation indicators at all levels."Anta has accumulated rich management experience in the past. These 'model squares' are like rulers that make the group's management more transparent, standardized and process-oriented."Lai Shixian said that while Anta is managing resources more meticulously, it is also carrying out forward-looking layout and planning, including the Shanghai Operation Management Center under construction, the Suzhou Integrated Industrial Park Carbon Neutral Demonstration Base, the Group Smart Innovation Center, and the Anta Purple Hat Academy for future talent training. "These layouts and plans represent the future of Anta."
The digital transformation of the Tongan factory in 2018 was Li Jinsheng’s first tough battle at Anta.
At that time, he had only been in the job for 8 months when he received the task from Ding Shijia, vice chairman of the Anta Group's board of directors, who was in charge of production. After taking over, he realized the difficulty: since they had to ensure the original planned production capacity while transforming, they could only carry out transformation simulations and equipment debugging after get off work and on holidays. What was even more challenging was that the integration targets were the four major workshops that had previously had independent accounting and independent production, and the transformation was bound to affect the original structure and interest structure.
Imagine how difficult it would be for an airborne cadre to break the original organization and fight for two years with more than 1,000 people? But Li Jinsheng had no way out. "As a cadre, you have to speak with performance." He also used this to "talk" to employees - "According to my approach, even if we waste a year, our salary can increase from 4,000 yuan to 8,000 yuan. Are you willing to fight, brothers?" He selected five production lines as the vanguard and explained to them that the whole process requires 10 steps. Each step will increase the salary by 500 yuan. Three months later, these people's wages increased by 1,000 yuan. Needless to say, the subsequent transformation will be fast, and the workers on other assembly lines have also been driven up - two years later, all 43 production lines in Tongan Factory have been transformed. Li Jinsheng said that now the average income of employees exceeds 8,000 yuan, and nearly 30% of employees earn more than 10,000 yuan.
In fact,Leading 60,000 Anta employees to charge forward and win battles is not fundamentally different from leading more than 1,000 employees to complete the transformation of a production line: there is an ultimate goal, action breakdown, and sufficient incentives, which are the words that Anta managers often say: high standards benchmarking, results-oriented, high efficiency and high salaries.
"At ANTA, all strategic goals must be implemented in specific details. All businesses have management models, all projects have time nodes, and all matters have clear people responsible." Lai Shixian emphasized that ANTA's high standards are not benchmarked against a single company, but against each specific point.
Yao Weixiong named this P (Benchmark Best Practice) within Fila. This is a method they often use. Every time they do something, they first compare it with their past achievements and with those within the group, and at the same time they also look for best practices outside.
This is the application strategy for the Douyin platform in 2022. FILA established a separate Douyin business unit in 2020, but it has been tepid. Two years later, this emerging channel has become unstoppable, and FILA listed it as a key target for that year. At that time, not only Anta but also other peers in the apparel industry did not have mature Douyin operation experience, so they crossed the border and found a leading enterprise to be a "teacher". "The other party provided Douyin operation experience, FILA screened and matched it to its own business, and we came up with a systematic training plan. The three parties explored and verified it, and then solidified it. It took three phases, one week each, to build a model together." Liang Jiaguang, head of Anta Academy, who participated in the Douyin training project, recalled.
In 2022, FILA's Douyin GMV (gross merchandise volume) increased by 247% year-on-year. According to Douyin's official data, in 2023, FILA became one of the two sporting goods brands that made it into the top ten of its annual sales list, the other being Nike, both at a level of more than 3 billion yuan.
Not only front-end sectors like FILA, but also training programs like Anta Academy need to be "tracked and assessed".Anta emphasizes the result-oriented approach, and any business or project must be linked to the final business.In Chen Ke's view, "this kind of culture is more conducive to large companies to maintain flexibility and efficiency, and to form a synergy across the entire value chain and all business fields."
Even the "Sports Science Laboratory" that seems to be the furthest away from business is the same. "We want to do future-oriented research and development," said Zheng Zhiyi, head of Anta Group's Innovation Laboratory, "but we must also have a goal and consider the product dimension."
Initially, the management had different ideas on this issue, but finally everyone reached a consensus on the "goal" - it does not have to be fully quantified by KPI, but can also be integrated with OKR (objectives and key results management), so the assessment dimensions of the innovation department were established as three items: technological leadership, brand leadership, and order contribution.
The logistics sector, which is closer to the business, has a more direct assessment linkage. In addition to its own business cost and profit assessment, 30% of the KPI comes from the scores of Anta and FILA sub-brands, which include dozens of quantitative indicators. "If it is lower than a certain range, it will be fined." Now, with the overall logistics network basically in place, the logistics team has begun to take the initiative to conduct store surveys to find new improvement points. Chen Jiancong also said frankly, "Before, as a cost center under sales, there was no motivation to make these adjustments."
Under the result-oriented concept,KPI is like a tangible line that connects all the nodes of Anta's front, middle and back offices. When Lai Shixian was the CFO, he led the Anta financial team to sort out that the entire group's management process had about 70 "profit points".At a CEO meeting, an executive director joked, "If we manage these 70 points well, the company will definitely make money."
Just like what Brailsford said, "the sum of marginal benefits", he has been the coach of the British professional cycling team since 2003. In the 110 years before that, the team only won one Olympic gold medal, but in the five years after he took over, the team won 60% of the gold medals in the cycling events at the 2008 Beijing Olympics, and set nine Olympic records and seven world records at the London Olympics four years later. The experience of this legendary coach is: if you break down everything you can think of about cycling, and then improve each detail by 1%, then when you put them back together, the results will improve significantly.
"Anta's core management, no matter which business segment they are in charge of, studies business figures and reports every day and perfects every process. When problems are discovered, they immediately start to solve them. Reports are made every week to implement them." Li Ling said that she has been in the company for nearly 8 years, "and I have never felt that the company has relaxed its efforts."
Su Jiaming has been with ANTA for 24 years, from when he graduated and joined the company to now serving as the group's senior director of footwear procurement innovation technology. "ANTA's culture has not changed, it is a culture of focusing on and being pragmatic." In his opinion,Sharing is a very important part of it. "Every employee, regardless of their position, can enjoy the growth dividend of the company."
Tian Tao, a management consultant at Huawei, once used the "Four Forces Cycle" to explain the dynamic mechanism of a successful organization: choose - believe - act - win. In this sense,Winning a battle is both the end of one campaign and the beginning of the next one.
"The characteristic of this company is very obvious, that is, the culture of 'winning battles'," Chen Ke said. When a company culture is clear enough, it can screen out the right people and run forward with the company. "Those who stay are those who want to do something big, and facts have proved that they can do it, so they can continue to win battles."
On February 12, 2023, at the 25th Hong Kong Marathon, Kenyan athlete Philimon Kiptoo KIPCHUMBA won the championship title with a time of 2 hours, 10 minutes and 48 seconds. He was wearing Anta C202 GT PRO.
Xu Yang had not yet officially joined the company. He was waiting for knee surgery in the hospital. He asked in the work group, "How many pairs of this pair of shoes have we ordered and how to sell them?" Someone replied, "This pair of shoes is not suitable. No one buys shoes that are too professional." He immediately became angry. "They only focus on short-term KPIs and sell whatever is easy to sell. They completely ignore the brand image."
Winning battles in succession is a stimulant, but it can also be a hallucinogen, which can lead people into the trap of success without knowing it. In the past, there are the lessons learned from Nokia and Kodak; in the recent past,Two departments within the Anta brand that had won numerous awards were successively put into the "ICU" - this is a special system of the Anta Group. Departments that fail to meet the standards for several consecutive months must undergo centralized "consultation and treatment" from all business lines of the group. In the end, they will either be discharged after recovery or be replaced or the group will be disbanded.
Although Anta Group's revenue has a clear advantage over its domestic competitors overall, the revenue growth of Anta's main brand has also slowed down in recent years. The growth rates from 2019 to 2023 are 21.8%, -9.7%, 52.5%, 15.5%, and 9.3%, respectively. Xu Yang is right to worry."When you focus on sales, the snowball will only get smaller and smaller."
No matter how popular a product is, it has a life cycle. Only by connecting different products can the brand's lifeline be extended. Anta has tried other things before, but under the inertia of "bulk goods" sales, the new business format shrank as it went on. This is also what Xu Yang is particularly vigilant about now. Last year, Anta launched a new shoe store format - SNEAKERVERS (hereinafter referred to as "SV"). Because the products were not rich enough and there were not many shoes to sell, his subordinates could not bear it and moved running shoes from Anta's bulk goods store to sell. Xu Yang stopped them flatly, "Return them to me. If you touch bulk goods, you're dead."
Over the past year or so, Xu Yang has carried out an all-round reform of Anta's main brand, including at least a few things: reshaping a champion brand, experimenting with five new types of stores, and replacing five (regional) general managers.
"It's not bad," Lai Shixian said when talking about these reforms. "We have had sufficient discussions on these. They will definitely bring some big changes, but Anta's overall strategy is relatively clear and will not cause any big shocks."
Over the past year or so, Lai Shixian has basically supported the ideas proposed by Xu Yang, and occasionally expressed his "concerns" - "I didn't manage much of the specific business before, I just gave some personal opinions," but in fact, Lai Shixian, who did not come from front-line business, just broke a kind of empiricism, so he often coincided with Xu Yang's reform ideas.
This is also what Anta needs today - not only the continuation of experience, but also the reflection on experience."No matter how powerful your company is, the only way to maintain this advantage is to continue to evolve. Group thinking and complacency may lead to disasters." The author wrote in "Strategies for Winning the War". The author's point of view is that companies can learn from the "red team strategy" in the military, that is, to jump out of inherent experience and self-examination. The purpose of the examination is not to shake the foundation, but to reduce risks.
Three years ago, Anta launched the "Champion Class" training program, with the goal of training a senior management team for the next 10 years. "Anta has been winning all the way and has a strong execution level, but future managers must not only have execution ability, but also have independent ideas and strategic vision," Liang Jiaguang explained. The "seed players" were selected by the group's management committee from the middle and grassroots employees. There are a total of 50 people, the youngest of whom is only in his twenties.The training they are going to receive is not aimed at training for rapid combat, but is more focused on the level of cognitive breakthrough. This class is led by Ding Shizhong, chairman of the group's board of directors. He raises questions and everyone discusses them together.
When FILA’s revenue exceeded 10 billion yuan that year, Ding Shizhong raised a question: where will the company go after that?
It was also from that time that FILA began to try to enter the professional sports field. At that time, the fashion sports track was in full swing, and there were naturally many voices of opposition within the company. Yao Weixiong himself was not completely sure, "Professionalism is not something that can be achieved in two or three years. It may take five, ten or even twenty years. Frankly speaking, any decision has risks, but even if I lose at some point, I can get a better business opportunity, so I will do it."
Since 2018, Fila has expanded its business into professional sports such as tennis, skiing, golf, running, and outdoor activities. In 2021, it established the FLAME shoe research and development center, investing tens of millions of yuan each year to research shoe materials and shoe technology. By 2023, sales of FILA professional sports products accounted for about 40%, and shoe revenue exceeded 10 billion yuan for the first time.
Today, the protagonist of the transformation has become the ANTA brand, and a series of transformation results are about to turn from concept into reality. According to Xu Yang, the merchandise of the Champion stores has been adjusted and they can start to open stores on a large scale. The Super ANTA (SS) stores are about to enter the test 2.0 version, and the 30 SV stores are already under renovation. In his words,From the second half of 2024 to 2025, "the Anta brand will start to take off, and there will be many unexpected changes."
Anta used to have an old saying: "What you boast about can be realized", but now it has changed to "do what you say", which is a little more elegant, but the meaning remains the same -This is what Anta requires of its cadres: they must dare to talk big and set high standards, but they must also be able to fight tough battles and accomplish big things.
Today, the Jinjiang brand that once shouted "Don't be the Nike of China, be the Anta of the world", has officially stepped onto the international stage and become a multi-brand group enterprise.In Lai Shixian's view, Anta's most unique and important competitive advantage that has brought it to where it is today is its "brand + retail" business model. "These two capabilities are the most difficult to build."
Anta's financial data for the past five years. Source: Company financial report
In 2019, ANTA Group organized its brands into three major brand groups: a professional sports brand group led by ANTA, a fashion sports brand group led by FILA, and an outdoor sports brand group consisting of Descente and Kolon. The three major brand groups have become the three growth curves of ANTA Group, complementing each other in the changing cycles: during the rest period when ANTA's brand growth slowed down, FILA continued with a strong growth of 70% to 80%, and when FILA entered the plateau period after rapid growth, new forces Descente and Kolon took advantage of the outdoor boom and achieved a breakthrough growth of 70% to 75%, just like wave after wave of tides, pushing ANTA Group towards a farther goal.
In fact, even the newly hired executives of Anta are curious about how they discovered this trend when they acquired Descente and Kolon, when there was no sign of outdoor track becoming popular. The answer is "brand sense". Chip Wilson mentioned in his autobiography how he fell in love with Arc'teryx at first sight: "With 30 years of experience in the apparel industry, I only need to observe a store for 10 minutes to estimate the annual sales and profits, with an error of no more than 5%." Anta's management also has to visit the market frequently. "Every time I go on a business trip, I go to see the business district and the brand, whether it is in the same industry or not." Lai Shixian recalled that this was how Descente was discovered.
"Anta now has a strong insight into the brand and consumers," Lai Shixian said at the Global Investor Conference in October 2023, and he does not rule out the possibility of continuing to acquire brands in segmented tracks in the future; butAt present, a more challenging task lies ahead, which is the enhancement of retail capabilities, "especially the ANTA main brand."
In 2020, Anta decided to carry out DTC reforms. In the following two years, Anta invested 2 billion yuan to quickly recover stores and inventory from distributors - 3,500 stores in 2020 and another 2,500 stores in 2021. By 2022, the total number of Anta brand DTC stores had exceeded 7,000.
In 2023, for the Anta brand, the proportion of DTC store revenue will reach 56.1%, and the overall gross profit margin will increase from 44.7% in 2020 to 54.9% in 2023. The monthly store efficiency will increase from 100,000 to 200,000 yuan in 2020 to 280,000 to 290,000 yuan in 2023.
Although there has been an improvement, the store efficiency is still far behind other brands in the Anta system. At the same time, due to the increase in management costs under the direct sales model, according to the data provided at the 2024 Anta performance exchange meeting, Anta's direct sales operating profit margin in 2023 will be lower than the wholesale model and e-commerce model.
That is to say,Stores can be taken back “quickly”, but to truly unleash the energy of DTC, systematic operations are needed and preparations for a protracted war.
Before deciding to reform, Anta's board of directors had discussed, "There is no absolute good or bad between wholesale and direct sales. Generally speaking, high-end brands have more obvious advantages in DTC because they have fewer stores and a high brand premium. However, for mass brands like Anta, DTC will be very difficult and the input-output ratio may not be that high." Lai Shixian said that the final decision to promote DTC was mainly due to two reasons: one is at the strategic level, DTC is more conducive to Anta's brand operation, and the other is at the practical level. The trend of online and offline integration has also increased the necessity of DTC.
"FILA has strong retail capabilities. Although the logic is the same, it does not mean that changes will be made by simply transferring a few people to Anta. After all, the markets and channels are different, and the detailed operations are different." Lai Shixian said that this is something that the Anta brand itself needs to continue to explore.
In Xu Yang's view,To improve store efficiency, we must first have better store types, better merchandise, and better shopping malls. "Too many inefficient stores are floating around in a half-dead state. This business model must change."Xu Yang said that the new stores opened last year, such as the Anta Arena store and the Anta Palace store, have an average monthly store sales of millions. At the Global Investor Conference, Xu Yang revealed that in the next five years, 10 and 1,000 new stores of these two types will be added respectively, but the total number of Anta stores will not change much.
Anta's new shoe store format - SV white label store. Source: Interviewee
"Anta can no longer achieve performance growth by opening stores, but needs to increase customer spending," said Xu Yang. FILA follows the same growth logic, and Yao Weixiong also said that in the next three years (2024-2026), the number of FILA channels will remain at 1,900-2,000, and growth will be driven by increasing high-quality offline channels, improving operations with new and old customers, and cultivating subdivided categories.
The transformation of the front-end growth model has led to a series of changes in the middle and back-end, including the priority of innovative research and development, the follow-up of production resources, the scheduling of logistics and transportation, and the connection of digitalization... Only when each link is connected together can the entire system release the greatest growth potential.Anta used to be always rushing forward, but now it is also spending more time looking inward.After crossing the 60 billion yuan revenue mark, Anta has shifted from large-scale expansion in the first half to high-quality development in the second half, from the familiar domestic battlefield to the unknown overseas territories, and from the immediate market competition to a larger business ecosystem.
In 2021, Anta proposed the "Five Co-existing Values" and officially promoted its ESG strategy. Lai Shixian served as the chairman of the Sustainable Development Committee. He said that Anta has turned a number of ESG management indicators into clear KPIs, "to ensure that all brands of the group are truly implemented, not just slogans."
"How can we avoid the company from making major strategic mistakes in the future?" In his speech at the annual meeting, Ding Shizhong talked about his recent thoughts. He also asked everyone to raise challenging questions to the company in four aspects: strategy, culture, multi-brand differentiation and consumers, and finally compiled the "30 Challenging Questions".
Now, these problems are facing Lai Shixian.
“For a consumer goods company like Anta, the most important asset is its brand, and the biggest risk is failing to make the right products.If you lose the connection with consumers, you will be abandoned by the market very quickly. It may not take a year, but if you don’t do well in two or three years, you will face a crisis. The crisis may not be caused by a single point, but by a series of problems such as products, innovation, and talents,” said Lai Shixian. “This is also what we think about all the time.”
On July 12, Lai Shixian led the Anta management team to conduct a comprehensive review of the group's current development strategy, and to review and calibrate the development strategy of each brand. This is also Anta's tradition. Over the past decade, the group's reflection meeting has been held twice a year without interruption.
"Anta has come this far, from Jinjiang to the whole country, and from China to the world. The culture of fighting hard, daring to win, constantly surpassing oneself, and never stopping in the bones of Anta people is the company's deepest cornerstone." Lai Shixian said,“This is a group of hardworking people who share the same ideals and achieve mutual success.”
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