China’s fitness boom

The gym and fitness industry in China has grown at an annualized rate of 11.8% since 2011, according to a 2016 report from IBISWorld, and is set to generate close to $6 billion in revenue this year. Although US fitness-industry revenue is significantly larger at $30 billion, the comparable US growth rate of 2.5% is puny by comparison.

Rising incomes for China’s middle class mean that consumers have more disposable income for gym memberships and fitness classes. A large and active millennial population has also fueled the trend, and Chinese women are seeking to meet evolving beauty standards that increasingly favor toned physiques over waifish figures.

China’s fitness boom is also backed by the government. In June, the country’s State Council unveiled a five-year fitness plan that aims for 1.5 trillion yuan ($225 billion) in national spending on sports and fitness by 2020. The plan focuses mainly on teenagers, who will likely carry fitness habits forward as they age. In partnership with China’s Ministry of Education, Nike also launched a 3-year initiative to expand the physical education curriculum for China’s youth.

China is already a key driver of growth for some of the biggest US fitness retailers. In fact, athletic wear is so popular in China that it could displace the luxury industry: According to a March 2016 report from Euromonitor, China’s sportswear market is predicted to surpass the luxury goods market by 2020.

“It is huge—that wellness and healthy lifestyle opportunity in the whole of China,” Colin Grant, chief executive of Hong Kong gym operators Pure Group, told Reuters. “Luxury has its challenges but activewear is a bright spot in the industry. Some people wear it to weddings in China.”

Established brands are doubling down on their presence in the region. Adidas announced a plan in March to open 3,000 new stores across China by 2020, bringing its total to 12,000. At the same time, other fitness companies plan to enter the fray. Under Armour plans to open 120 stores across Greater China during 2016, said founder and CEO Kevin Plank on an earnings call with investors. Currently, Under Armour operates a Brand House in Beijing, a retail concept that sells apparel and shows off the company’s innovations in footwear and fitness tracking.

As fitness companies prepare to make inroads into China, they are increasingly turning to unique events to capture China’s active millennials. Under Armour sent NBA MVP Steph Curry on his second tour of the country in September, signing Under Armour merchandise and playing fans at sponsored events in Guangzhou, Hong Kong and Taipei. According to Plank, Under Armour saw more revenue in China in the first quarter of 2016 than in all of 2014, much of that driven by footwear (including Curry’s sneaker line).