In the sportswear market different retailers are 'to cut prices in the face of more transparent competition'. Does this mean that the sportswear industry is perfectly competitive?

Extract 2 China's fitness boom energises sportswear brands China is in the grip of a government-backed exercise boom, boosting local sportswear brands and the likes of Adidas and Nike, which are gaining market share on the back of consumer upgrading and an embrace of the 'athleisure' fashion trend. Analysts say that Nike, Adidas and New Balance, which command higher prices than local brands, are viewed by Chinese consumers more as fashion labels than sportswear. Global brands are still very strong in shaping fashion trends especially in the female market. Their sales growth stems from consumers upgrading as incomes rise, as well as the growing acceptance of sportswear in leisure and work settings. Local brands, still perceived as copying design innovations from overseas, are also benefiting, with their sales increasing rapidly as more Chinese take up exercise. Page 1 of 2 Sunway University Business School ECN1014/ April 2021 Mid-Term Test Gym membership in the country has doubled since 2008 to 6.6 million last year, according to the China Business Research Academy. Running has become a popular pastime, with more than 100 marathons held last year compared with 51 in 2014. Yoga practitioners are estimated to have grown from 4 million in 2009 to more than 10 million today. The ruling Communist Party has also boosted the uptake of sports. Facing an epidemic of obesity-related diabetes and other lifestyle-associated illnesses, China's government has pledged that the number of football pitches across the country will rise from roughly 50,000 to 70,000 by 2020 - by which time it aims to have increased sports venue area per capita from 1.6 to 1.8 square metres. As people themselves are getting into exercise, so government initiatives are accelerating the trend. As the market expands, margins are under pressure from the rise of e-commerce in China, a boon for consumers that has pushed brands to cut prices in the face of more transparent competition. The relative losers in this spate of upgrading and exercising will be the lowest-end Chinese brands. Annual growth is expected to be less than 3% for these groups, compared with overall market growth of 8%, over the next five years. Future momentum for Nike and Adidas sales could also be dented by competition from niche upstarts such as Under Armour. Lululemon, the Canadian yoga brand, is catching on among wealthy urbanites and has opened stores in Beijing and Shanghai. The upper end, not necessarily more expensive but more unique companies targeting millennials are the ones growing faster. Source: Adapted from Financial Times, 21 March 2017