The Swiss running shoe brand "On," which has emerged as a new strong player in the sneaker industry, has begun targeting the Chinese market. This strategy aims to expand market influence by taking advantage of Chinese consumers, who are turning to sports brands instead of luxury goods due to reduced purchasing power from the economic downturn.
On the 18th (local time), the Financial Times (FT) reported, "On is strengthening its efforts to capitalize on China's rapidly growing health and fitness industry, aiming to position the vast Asian economic market as its next growth driver."
"On" is a brand that started in 2010, conceived by retired triathlete Olivier Bernhard, who wanted to create running shoes that would allow him to run without injury. Thanks to its unique design, which features rubber hoses cut and attached to the shoe sole, the brand quickly gained popularity among runners for its reputation of making them feel like they are "running on clouds." Since going public on the New York Stock Exchange in 2021, its current market capitalization has reached approximately $20 billion (about 28 trillion won).
According to FT, On, which has rapidly grown in the U.S. through collaborations with Hollywood actor Zendaya and the luxury brand Loewe, is now looking to China and Japan as future growth drivers. Martin Hoffmann, Co-CEO of On, noted, "China will soon become one of our top three markets," adding that the goal is to raise the proportion of sales from China to about 10% of global net sales within the next 2-3 years.
On is rapidly increasing the number of its stores by targeting the booming sports and leisurewear market in China. The brand operates a store in Xintiandi, a luxury shopping street in Shanghai home to global sports brands like Lululemon and Salomon, and last month opened its largest store in China in Chengdu.
The growth potential of the Asian market is confirmed by the numbers. On's net sales in the Asia region for the first quarter of this year reached 120 million Swiss francs (about 26 billion won), a 130% increase compared to the same period last year, recording the highest growth rate among major markets. During the same period, global net sales, excluding the impact of exchange rates, increased by 40% to 726.6 million Swiss francs (about 1.21 trillion won).
On's growth stands in stark contrast to the struggles of luxury brands in the Asian market, including China. According to the U.S. consulting firm Bain & Company, sales in China's luxury goods market fell by as much as 20% last year. FT reported that "the growth of premium sports brands in China runs counter to the slowdown faced by global luxury groups like LVMH and Richemont."
CEO Hoffmann stated, "It is clear that consumers are shifting from luxury to premium products, and On is at the center of this." He also revealed that local production for the domestic market in China is included in On's roadmap.
However, the fierce competition among sports brands in China is a challenge On must overcome. Not only traditional giants like Nike and Adidas but also domestic brands like Anta Sports, Li-Ning, and Xtep are rapidly expanding their market share. Hoffmann also said, "We are still in the early stages in the Chinese market," and emphasized that the focus is on setting a new standard for consumers.