Explain the brilliant transformation of kappa in China

Nowadays, as long as you turn around in crowded streets in Shanghai or other cities in China, you will find that there are everywhere Kappa's “back-to-back” logo printed on clothes. However, this phenomenon is not long-standing. On the contrary, when Kappa just entered the Chinese market, it was not warmly welcomed by Chinese consumers.

Before examining how successful the Kappa brand was, we decided to review its development history in the Chinese market and see how a foreign brand changed its fate in the Chinese market through brand investment.

As early as 2002, Kappa entered the Chinese market, and it wasn’t until 2007 that the brand gained a solid foothold in the market. This brand originated in Italy in the 1970s. It has achieved success in markets in Europe, Asia, the Americas, Oceania, and Africa. However, in the first four years of its existence, it has fallen into a serious situation.

The main cause of development difficulties lies in the initial brand positioning problem of Kappa. Obviously, Kappa's management team has not yet accurately assessed the market potential and the threats. Positioned as a product with excellent quality and a sportswear brand with historical heritage, Kappa is destined to compete directly with Nike and Adidas, but the latter two have already established a firm foothold in the country.

In addition, if we learn earlier that Chinese consumers are more willing to trust authority and tradition, Kappa may also understand that new brands are not so easily accepted. In other words, in the face of two similar brands, Chinese consumers are generally willing to spend more money to buy world-renowned brands, and it would be better if the brand had already established its reputation in China. Similarly, they are reluctant to buy a brand that is widely praised in other countries, not China, in order to save some money.

When he first entered the Chinese market in 2002, Kappa positioned himself as a high-end sports brand with high quality and excellent performance. This positioning is bound to be established with consumers, and is inconsistent with brand loyalty. In this case, if you want to succeed, it will be impossible to gain market share.

In 2006, BasicNet, Kappa’s holding group, faced a financial crisis2 and the Group took the opportunity to purchase Kappa’s ownership in China and Macau.

Today, Dongxiang Group has already topped the list of “2008 China's Most Potential Companies” selected by Forbes magazine and has become one of the most well-known sports product companies in China. However, many people may not know that Dongxiang Group was formed six years ago, and its success is closely related to the growth of Kappa. Indeed, the Group's careful brand management has prompted Kappa to return to success.

In fact, in 2007 Kappa’s market share soared from less than 2.8% to 4%, Nike and Adidas fell from 16.7% to 14%, and 15.6% to 12%3.

In the words of the group, they spent a few years after the acquisition of Kappa and committed themselves to “building Kappa as the top domestic fashion sports brand”4. Today, Kappa "successfully established its position in the Chinese market and became the top three international sports brands in the Chinese market." What surprised the sports product industry is that this new giant is continuing to grow at an average speed far beyond the industry. However, how are they done?