On the 29th, Peak Sporting Goods Co., Ltd. made its debut on the Hong Kong Stock Exchange. CEO and Executive Director Xu Zhihua told NetEase in an exclusive interview following the listing that the main objective of Peak's listing wasn't primarily about raising funds but gaining access to a broader international platform to support the company's consistent global strategy.
Xu Zhihua emphasized during the interview that this listing marked Peak's first step toward capital globalization. "This move allows Peak to reach a higher level and signifies the initial phase of our capital's internationalization," he said. Looking ahead, the company plans to further internationalize its talent pool and research and development efforts, setting up R&D centers for sports footwear and apparel in both the U.S. and Italy.
Peak’s strategy revolves around leveraging global resources to better serve the Chinese market. As Xu Zhihua explained, "Our approach differs from the traditional mindset of separating the Chinese market from the global market and utilizing China's resources solely for the domestic market. Instead, we aim to utilize global resources to enhance our presence in China." This strategy began in 2005, with the goal of achieving comprehensive internationalization of the brand, capital, talent, R&D, and market.
Xu Zhihua elaborated further on the company's internationalization strategy, stating that the intense competition among Fujian's 47 sports brands in 2004 pushed Peak to differentiate itself. This differentiation is evident in two key areas: focusing on specialized lines and using endorsements from professional athletes to drive the casual market, while also sponsoring international basketball events and using endorsements from global basketball stars.
He added that collaborating with international events like the NBA has helped Peak achieve significant progress in brand internationalization. Despite this focus on global expansion, Xu Zhihua reiterated that the domestic market remains the primary focus. "Although we're exploring international markets, where international sales account for 10% of our total, we don't want to give the impression that we neglect the domestic market. The Chinese market is growing rapidly and holds immense potential," he said.
Xu Zhihua acknowledged the challenges of entering global markets, emphasizing that while internationalization is the ultimate goal, it requires substantial investment and effort to build channels and brands. "To succeed internationally, we must first strengthen ourselves domestically and accumulate resources," he noted.
Regarding the stock price drop on the first day of listing, Xu Zhihua expressed confidence in the company's value, stating that Hong Kong investors underestimate the potential of the sports goods market in mainland China. He believes that as consumer lifestyles evolve, the demand for sports goods will surge, creating vast opportunities for the industry.
He pointed out that while the sports goods sector in Western countries is mature, it remains a sunrise industry in mainland China. The current market is transitioning from fragmentation to consolidation, and he predicts that within a few years, China will see the emergence of a billion-dollar sports brand.
Xu Zhihua highlighted that the sports goods sector in Hong Kong trades at a lower average P/E ratio compared to the broader market, which he finds abnormal. He believes that Hong Kong investors fail to recognize the true potential of the mainland market and plans to improve investor communication moving forward.
He also mentioned that the financial crisis has been advantageous for China's sports brands, as consumers are increasingly seeking affordable yet high-quality options. This shift has been validated by market sales, showing a rise in Chinese brand sales and a decline in foreign brands.
Peak's commitment to the professional route is unwavering. Despite expanding into new areas like tennis, football, and running, the company will maintain its focus on specialization and internationalization, using endorsements from top athletes to drive both professional and casual markets.
Lastly, regarding the family-run nature of the company, Xu Zhihua clarified that even though the core executives belong to the Hsu family, professional managers handle most of the operational roles. He noted that this structure has been endorsed by investors, allowing for swift decision-making and resource allocation in China's rapidly evolving market. However, as the company grows, it is gradually empowering professional managers with more authority.
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