XTep forms China venture with Wolverine to sell Merrell, Saucony shoes and sports apparel
Merrell and Saucony, the two brands under Wolverine, will each target to open between 400 and 500 stores in mainland China in five years
XTep International Holdings will form a venture in China with Wolverine World Wide to sell Merrell footwear, Saucony running shoes, apparel and accessories, adopting a similar multi-brand business strategy as its bigger Fujian compatriot Anta Sports Products.
Xtep, based in Quanzhou city of Fujian province, will commit 155 million yuan (US$23 million) in initial funding toward the 50:50 venture, which aims to open between 400 and 500 stores under each of the Merrell and Saucony brands in China in five years.
“The group hopes to adopt a multi-brand strategy to meet the needs of consumers of different market segments,” said the company’s chairman and chief executive officer Ding Shui Po, during a press conference in Hong Kong.
Anta, which is 11 times bigger in market value and five times larger in revenue than Xtep, is headed by Ding Shizhong. The two billionaire entrepreneurs are not related, although both were reportedly school mates in Jinjiang, known as China’s shoe capital.
Xtep’s partnership with Wolverine, based in Rockford, Michigan, will help launch Merrell and Saucony in China, where they have been beyond the reach of outdoor hikers and runners. The venture will also enlarge the sales footprint for the two brands in Hong Kong and Macau, including sports apparel and accessories.
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These brands will sell for between 500 yuan and 1,000 yuan each when they go on market in China. A two-pronged approach will also be adopted in product offerings in the stores, including both high-end signature styles and products designed and manufactured according to the Chinese fits and tastes.
The partnership could also lead to shared research and development resources down the road, said Ding, pointing to the 136-year brand history of Wolverine and its R&D strength.
The Xtep-Wolverine venture will focus on establishing their brand in China this year, and therefore may not have many products out in 2019, Ding said.
For Wolverine, the venture offers a way into the world’s most populous consumer market, where the company said it had been “underserved,” through using Xtep’s supply chain, distribution network and strong local presence.
“The US is a mature market for running and outdoors footwear, apparel and accessories,” said Wolverine’s chairman Blake Krueger. “The Chinese market is much earlier in this growth. Therefore, we would like to seize this opportunity to capitalise on this fast-growing market.”
Xtep’s shares fell 1.3 per cent in an advancing market to HK$5.27 in Hong Kong, after the venture was announced.
