Written by Lin Xiaobai
Editor|Yang Yong
Source | Produced by hydrogen consumption
ID | HQingXiaoFei
Do you still remember the wild consumption set off by Hongxing Erke three years ago?
The number of online people in the live broadcast room has repeatedly hit a new high of one million, with total sales exceeding 22 million yuan, and the sales performance has soared 52 times compared with usual, and many products have been out of stock. You must know that Hongxing Erke has actually been delisted at that time. In 2020, in its last public financial report, the total revenue was 2.843 billion yuan, but it lost 220 million yuan. Compared with Anta and Li Ning, both domestic sports brands, their annual revenues have exceeded 10 billion yuan.
Until July 2021, Hongxing Erke attracted wide attention because of the donation of 50 million yuan from the disaster area in Henan, and its sales soared that month, becoming a new star of domestic products. Its "help" has won a warm response from the market, and the wave of traffic attracted by "bankruptcy donations" is like a charcoal in the snow for Hongxing Erke, which is in a low period. However, as the popularity faded, Hongxing Erke's live broadcast room, the company's chairman and other accounts have lost a lot of fans.
On March 3, 2024, although on the day of Hongxing Erke 303 Sports Technology Day, Chairman Wu Rongzhao officially released a new brand upgrade strategy of "Born for National Sports" and launched the "National Sports Booster Plan" to comprehensively upgrade the brand, products and services. However, according to Feigua data, the current number of Douyin fans in the official flagship store of the Hongxing Erke brand is 13.144 million, more than 1.2 million fans compared with two years ago. During the current 618 promotion, there are nearly two or three hundred people online in the Hongxing Erke live broadcast room.
The excitement is still vivid, but the protagonist of the incident, the domestic sports brand Hongxing Erke, seems to have been forgotten by most spectators. After three years of popularity, looking back now, Hongxing Erke's traffic has not become "retention".
Relying on "feelings" can't support a big brand
Hongxing Erke, which was once popular for "bankruptcy donations", is almost never absent from any social issue.
Since the 2021 Henan floods, Hongxing Erke's "help" kindness caused thousands of waves on the Internet and won the support of netizens' "wild consumption", this company has skillfully combined feelings with brand marketing to form a unique promotion strategy.
Since then, Hongxing Erke has frequently appeared on the hot search in a low-key and powerful way of "donation", whether it is "silently helping the disaster area in Shanxi", "quickly responding to the needs of Quanzhou", or "sincerely inviting H&M employees to join", it has become a hot topic on social media.
On July 30, 2023, at the "Thanksgiving Growth Day" party, Hongxing Erke announced that it would donate another 100 million yuan in funds and materials, and on December 19 of the same year, Hongxing Erke donated another 20 million yuan of materials to the disaster-stricken areas in Gansu.
A similar scene reappeared again, and Hongxing Erke once again became the focus of public attention that day. Countless supporters poured into Hongxing Erke's live broadcast room like a tide, once again setting off a wave of "wild consumption". According to relevant public data, at 11 p.m. on December 19, Hongxing Erke's official Douyin live broadcast room was still brightly lit and popular. According to statistics, there were still nearly 30,000 viewers in the live broadcast room at that time, and the average number of viewers that day was as high as 6.893 million.
From the perspective of "feelings" to attract attention, Hongxing Erke seems to have found a unique path in marketing strategy: to promote sales by skillfully touching consumers' patriotic feelings. That is, whenever there is a social hotspot or public welfare event, they can keenly associate with it, enhance the brand image through good deeds, and launch new products and promotions along the way. For example, in April 2023, after the "ice cream incident" at the BMW mini booth, Hongxing Erke gave away 1,000 ice creams by lottery, and took advantage of the situation to launch a new "Zhijing 1.0" racing shoe in the live broadcast room.
Source: Weibo
Although this "feelings" marketing strategy has helped Hongxing Erke become popular again and again, the risks involved have not been avoided. Especially after a "popularity" in 2021, Hongxing Erke lost 430,000 fans in less than 30 days, almost 10,000 fans every day, and this incident aroused heated discussions among netizens. This also raises questions about whether Hongxing Erke's sales growth can be sustained.
At present, relying on "feelings" cannot support a big brand, and consumers' emotional support for Hongxing Erke has been weak. According to data from Feigua, although the number of Douyin fans in the official flagship store of Hongxing Erke brand is 13.144 million, the number of Douyin fans of Li Ning Sports is only 5.472 million. However, in the past month, in the comparison of live broadcast sales with roughly the same number of sessions, Hongxing Erke's per capita contribution was 0.88 yuan, and Li Ning's was 19.6 yuan, 22 times more.
Most of the time, the traffic brought by the explosion is just a flash in the pan. Behind the surging emotions, what cannot be concealed is the loss of power in business competition.
"There is a hot search disease, but there is no big name"?
There is no doubt that in terms of corporate responsibility, Hongxing Erke is a conscientious enterprise with strong social responsibility and family and country feelings, just like in the poker game, although the card of "conscience" is precious, it alone cannot win. This card can only be played if any of the strong skill cards are added. Only can not be single, single out is a dead card.
At present, Hongxing Erke's strategy of bundling with cause-related marketing reflects the development challenges it is facing to a certain extent. While such a strategy can quickly attract consumers' attention, relying solely on these emotional factors as a marketing tool may mask the dilemma of insufficient product innovation and brand premium ability in the long run.
Back in 2008, with the Beijing Olympic Games, Guangzhou Asian Games and other international large-scale sports events held in China, these international large-scale sports events not only ignited the sports enthusiasm of the Chinese people, but also brought unprecedented development opportunities for domestic sports brands.
In this context, domestic sports brands have caught up with the market outlet of sports consumption, and Hongxing Erke, which was founded in 2000, has also eaten the first wave of dividends, and the company has expanded rapidly. According to relevant data, its offline stores once exceeded 7,000, and even actively explored the international market, expanding its sales points to Europe, Asia, America and other regions.
However, in the boom of market expansion, domestic sports brands such as Hongxing Erke blindly expanded production, resulting in inventory backlog and damaged performance. Competitors such as Li Ning and Anta decisively adjusted their strategies, closed stores and optimized their product lines. But Hongxing Erke has chosen a completely different path from its competitors: using a low-price strategy to clear inventory. In the short term, it has brought a rebound in sales, but in the long-term cycle of low-price promotion, the brand has fallen into a low-price trap, which not only greatly compresses the profit margin, but also seriously damages the brand image and brand value.
In 2015, a catastrophic fire broke out at the factory in Erke. According to news reports at the time, two of the three factories burned down, equipment worth more than 100 million yuan was damaged, and the fire affected at least two-thirds of Hongxing Erke's production capacity. The fire also dealt a fatal blow. In the end, Hongxing Erke's market share continued to be squeezed, and profits decreased year by year: in 2007, Hongxing Erke's revenue was more than 2 billion yuan, and by 2019, the revenue was still more than 2 billion.
According to public data, from 2010 to 2019, Hongxing Erke's operating income increased from 2.438 billion yuan to 2.843 billion yuan in 10 years, an increase of 16.6%, while Anta's revenue increased by 358% in 10 years, and Li Ning and Xtep increased by 46.3% and 83.6% respectively. So far, Hongxing Erke has never returned to the top.
Sometimes, a company lags behind, not only because it is slow, but also because its peers are running too fast. In the years when Hongxing Erke was at a low point, domestic sports brands such as Anta, Li Ning, and Xtep embarked on the "road of mergers and acquisitions" with the help of capital, and rapidly expanded their market share and led sales through a series of acquisition and merger strategies.
In the "2023 Top 10 World's Most Valuable Sportswear Brands List" released by GYbrand, a brand value evaluation agency, domestic brand Antar is on the list. Looking at the current pattern of domestic sports brands, Anta, Li Ning, Xtep, and 361° do occupy a significant market share, forming a situation of the four giants. In this competitive landscape, Hongxing Erke wants to squeeze into this ranks and faces a lot of challenges.
One step is slow, one step is slow, but Hongxing Erke is not without a chance to catch up.
In addition to "donations"
Hongxing Erke needs a new story
In recent years, Hongxing Erke has also worked hard to stand together with young people, create a national trend, and do IP co-branding. In terms of product renewal, Hongxing Erke has not been without action in recent years.
For example, he took the initiative to reach out to consumers, started the "Giant Panda Guardian Program", donated bamboo to the China Green Foundation, and adopted the brown giant panda "Qizai"; After co-branding with Henan Museum, he co-branded a large number of Chinese comics such as "Under One Man", "Assassin Wu Liuqi", "That Rabbit"; United King Glory launched new products limited to the Year of the Rabbit, Wuyue series of national fashion shoes, and customization of Chang'an Fashion Week. Combined with Xiaohongshu and Douyin, it launched five major comic IP live broadcasts, limited-time stores and peripherals.
Source: Hongxing Erke
In addition to taking advantage of animation, games, IP and other aspects that penetrate all aspects that Generation Z likes, Hongxing Erke will also list "user co-creation" as an important direction of product research and development, enhance users' "sense of participation", and realize the full line upgrade of products under the national co-creation.
For example, in the market research, Hongxing Erke keenly captured that the park, as the first choice for the majority of running enthusiasts, because of its complex and changeable road conditions, not only covers the standard plastic track, but also involves cement pavement, bicycle paths, trails, stone brick roads and gravel roads and other terrains, so that many running enthusiasts also expect to enrich their exercise experience through light fitness, gymnastics, square dance, rope skipping, brisk walking and other forms of exercise.
In response to this diversified and personalized demand, Hongxing Erke pioneered park running shoes, which directly hit the pain points and opened a new era of running. On March 3, 2024, Hongxing Erke released a dragon fruit product matrix at the 303 Sports Technology Day, including professional racing running shoes Zhijing 2, professional physical examination shoes Jifeng 2, flexible running guard basketball shoes surprise generation, the first millennial jogging shoes Hongyu, speed training running shoes Shocking dust and other products, and in the field of clothing, Hongxing Erke Polar Cloud Ice Cotton won the world-class authoritative certification WRCA world certification.
From 2020 with the brand logo of "new domestic products of science and technology", Hongxing Erke has started an in-depth dialogue with consumers; Entering 2022, the brand will be upgraded again, focusing on the field of sports technology, and further improving product innovation technology; In 2024, Hongxing Erke has put forward a new slogan of "Born for the National Movement", which is also another in-depth reshaping and comprehensive upgrade of the brand.
Although Hongxing Erke does not have a torchbearer as a dazzling sports star like Li Ning, nor does it have a strong family foundation like Anta, its deep audience popularity is a strong driving force for its turnaround. As long as the game of the market is not over, Hongxing Erke will always have the opportunity to turn around.
Traffic is only short-lived, and converting this traffic into "retention" and even real sales is a must for brands.
epilogue
In the domestic sports consumer market, the competition has become extremely fierce, and every new product seems to have become a fierce battle for market share. In this capital-driven battle, many brands have occupied a dominant position in the market with strong capital strength. It seems that only Hongxing Erke relies on its persistence in "feelings" to survive in the cracks of giants such as Li Ning and Anta.
And if you want to "become popular" in the hearts of consumers, brand loyalty is indispensable. Wu Rongzhao, the founder of Hongxing Erke, also said, "Being a brand is a long-term practice." "For the current Hongxing Erke, the strategy of scientific and technological research and development and product innovation is not achieved overnight, but requires a relatively long period of investment. Improving brand value and telling new stories in the capital market is still a relatively important topic for it.