Erke’s marketing strategy in China

Erke’s 尔克 marketing strategy in China: integrating CSR and domestic sport initiatives

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Erke 尔克 is a Chinese sportswear brand, founded in June 2000 with a headquarter in Xiamen. Erke products include sports shoes, sportswear and various sports-related products: bags, caps, sports equipment, sports protective gear. Most of Erke’s stores are located in second- and third-tier Chinese cities, targeting students and athletes.  The Chinese sportswear brand has recently been put on the radar for charitable donations to the 2021 Henan Floods crisis.

At present, it has developed into a large-scale sportswear enterprise integrating R&D, production, and sales with nearly 30,000 employees in more than 100 countries. Currently, Erke has more than 7,000 stores all over the world, and its products are sold in Europe, Southeast Asia, the Middle East, North and South America and Africa. Its brand value has exceeded 21.9 billion RMB. Differentiated and innovative marketing methods have enabled Erke to become more competitive in the international and domestic market. This article looks at the key marketing strategies of Erke in China, which brought success to the brand.

Erke’s marketing strategy in China #1: sponsoring top sport events

Tennis marketing

Erke, Tennis products Erke’s marketing strategy in China
Source: Erke, Tennis products

Erke has been committed to promote the development of tennis in China for a long time. For instance, the brand has cooperated with the Shanghai ATP1000 MastersChina Tennis OpenAustralian Open, WTA year-end finals and other top domestic and foreign events. At the same time, Erke provides professional tennis equipment for international tennis stars and is in a leading position in the field of Chinese tennis apparel.

Erke sponsors Shanghai Masters Erke’s marketing strategy in China
Source: Sports qq, Erke sponsors Shanghai Masters

In 2014, during the Shanghai Masters, Erke held a brand day. On this special day, Mao Ruoqiong, a popular participant in the third season of Voice of China, appeared at the Shanghai Tennis Center and sang Erke’s 2015 new advertising jingle called “Hello, sunshine”. The whole song is a story about young urban people growing up happily in the sun. Erke decided to release this song at the Shanghai Masters to celebrate its 10th anniversary of cooperation with tennis events.

Olympic Games marketing

South African swimmer Van der Burgh in Erke’s sportswear Erke’s marketing strategy in China
Source: George Herald, South African swimmer Van der Burgh in Erke’s sportswear

On the 2012 London Olympics, Erke continued the sponsorship choosing to cooperate with South Africa, Iran, and Uzbekistan.  Erke did not invest too much in advertising before the Olympics, but many sponsored athletes in the three national Olympic delegations showed strong results. Namely, South African swimmer Van der Burgh broke the record and won a gold medal. The brand has also joined hands with the Olympic Committees of many countries in Asia and Africa to appear along with international brands on the Olympic stage. 

In 2016, Erke sponsored the Croatian Olympic delegation during the Rio Olympic Games.

Marathon sponsorships

Erke also sponsors different marathons in China. For example, in 2020 it was a strategic partner of the 2020 Shaoxing Marathon (Yuema) and was designated as the official sports equipment provider for the event.

On July 2, 2020, Erke became the strategic partner of the Hefei International Marathon from 2020 to 2022, and also became the sole sports equipment sponsor of the event. Moreover, in 2021, Erke sponsored Nanjing Pukou women half-marathon.

Erke sponsors 2020 marathon Erke’s marketing strategy in China
Source: Sohu, Erke sponsors 2020 marathon

Erke’s marketing strategy in China #2: Emphasis on technology

In the era of consumption upgrades, products must not only be attractive for consumers, but also include black technology. In the past, compared with foreign sports brands, domestic brands were behind in sports tech. To improve product strength and meet the needs of young people, Erke not only put forward the slogan “Focus on new sports technology”, but also implemented a series of black technology products.
For example, in terms of running shoes which are generally aimed at elite runners, Erke’s Strange Bullet 2.0 focuses on a wider range of entry-level runners.

Erke’s Strange Bullet 2.0 running shoes Erke’s marketing strategy in China
Source: yqqlm, Erke’s Strange Bullet 2.0 running shoes

Additionally, it introduced the “artificial muscle” material launched with the State Sports General Administration, which can help runners to evolve their muscles. It uses α-FLEX smart technology based on its own research and development. It is a translucent intelligent fluid material, soft and malleable, with numerous nano spherical particles inside, which help to ease the pressure on muscles.

Erke’s marketing strategy in China #3: focus on what young consumers like

Erke’s approach is to communicate with young people by focusing on sports culture in China. At the beginning of 2021, the company announced the launch of China’s skateboarding products, hand in hand with the China Roller Skating Association.

Another way of catering young people as a part of Erke’s marketing strategy in China was to create Youth Co-Creation Program in August 2021. Erke signs young talents who help to create new designs for shoes. The first one was Zhao Hanqing who decorated the shoes and got a lot of attention on social media. Erke invited him to work for the brand, encouraging other young talents to buy Erke’s shoes and decorate them with their own designs.

How Erke renewed its brand image through CSR and domestic initiatives

The timeline of Erke’s losses against competitors

In 2008, Erke’s revenue reached a peak of 2.8 billion yuan. That year also became a turning point for this company. In 2009, its revenue fell by more than 30% year-on-year. Since then, its revenue has been growing very slow and the company stayed behind such competitors as Anta and Li-Ning. From 2012 to 2014, there was an inventory crisis. In 2015, there was a fire in a factory and nearly half of their production facilities were burned down. According to Euromonitor data, from 2010 to 2019, the market share of Erke dropped from 2.9% to 1% in the 10 years, a decrease of 65.5%.

From 2010 to 2019, Erke’s operating income grew from 2.4 billion yuan to 2.8 billion yuan in 10 years, an increase of 16.6%. While Anta’s income has increased by 358% in 10 years, Li Ning and Xtep have increased by 46.3% and 83.6% respectively. So, after all years of loss, how the company gained sympathy from the Chinese consumers?

Erke’s revenue 2008-2020 Erke’s marketing strategy in China
Source: Erke’s financial report, designed by daxue consulting, Erke’s revenue 2008-2020

 Corporate social responsibility of the brand is getting more and more important for the Chinese consumers, which is a significant part of Erke’s marketing strategy in China.

Donations to Henan flood crisis relief

In July 2021, heavy rains in Henan caused severe flooding.  Erke donated 50 million yuan to this region and gained sympathy from Chinese consumers. It was a significant step for the company, especially considering that in 2020 it lost 220 million yuan and in the first quarter of 2021 Erke had ceased trading stocks due to financial problems. 

The netizens showed great enthusiasm and support for the brand on Weibo. The post about Henan’s donation gained more than 8.6 million likes and 217,000 comments, most of them expressing respect for the company. Customers went to buy Erke products, and even the chairman went on live broadcast to thank everyone and ask everyone to consume rationally. The company’s livestream got over 2 million viewers.

In just three days, its sales volume has exceeded the total sales volume in the first half of the year. On the 23rd of July 2021 after the live broadcast, sales were 52 times higher on a year-on-year basis, exceeding 77 million yuan. 

Search frequency for “Erke” in 2021 Erke’s marketing strategy in China
Data Source: Baidu Index, Search frequency for “Erke” in 2021

Supporting domestic production: Respond to Xinjiang cotton incident

Erke’s blog supporting Xinjiang cotton Erke’s marketing strategy in China
Source: Weibo, Erke’s blog supporting Xinjiang cotton

The 2020 Xinjiang cotton incident happened when Nike stopped using Xinjiang cotton made Chinese consumers boycott foreign brand and turn to domestic producers. Chinese sports apparel brands as Li Ning, Anta and Erke supported Xinjiang cotton and gained a lot of new customers.

Erke’s official blog #鸿星尔克 made “Made in China” topic to be on trending on Weibo. Company also included the signs on its offline stores “strongly support Xinjiang cotton”.

Erke’s main focus is e-commerce

Erke is one of the first apparel companies to open e-commerce business in China. Since the first online store opened on Taobao in 2009, it has quickly won the love of consumers by providing timely and thoughtful services and fashionable and cost-effective products. Some business indicators shows that Erke is at the forefront of the industry, and successfully entered the ranks of the Tmall 200 best merchant representatives and became a member of the Tmall think tank. It was also featured in the Top 20 Chinese Sport Shoes E-commerce Companies.

According to Feigua, in 2018, the sales of Erke in the three live broadcast rooms of Douyin, Kuaishou, and Bilibili were 90.86 million yuan, 52.82 million yuan, and 22.91 million yuan respectively. In addition, according to Xiaohulu data, sales of Erke’s official flagship store on Taobao in 2018 exceeded 40 million yuan.

Key takeaways from Erke’s China market strategy

  • Although Erke experienced some problems and lost the competition with other top sportswear brands in China, it managed to get back positions through the use of CSR.
  • Active support of Xinjiang region and Henan province during the flood attracted Chinese consumers and increased the trust to this brand.
  • Focusing on young consumers, Erke develops sports technology and supports sport events rather than having marketing campaigns

Author: Valeriia Mikhailova

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