Will Chinese's consumer's interest in camping be just a short-lived fad, or will it create a long-term trend and continue to bring opportunities?
Over the past 40 years of reform and opening-up, China has continuously promoted its opening-up policy while practicing innovation, which has created opportunities for outbound investment. After joining the World Trade Organization (WTO), China has accelerated its opening-up process and realized the historical turn from "introducing" to "going out" and from following to leading.
As China's economy enters a new phase of steady growth, overseas markets become more attractive than in the past amid intensifying domestic volatility. In addition, the national government and relevant departments have been issuing a series of favorable policies in the field of international expansion. Besides, the increase in the level of openness towards the outside world has further motivated domestic brands to enter overseas markets. Lastly, the increasing improvement of the digital economy infrastructure including supply chain, mobile social commerce, the Internet and the rise of logistics, payment, SaaS/ERP and other tools have directly reduced the cost and significantly increased the convenience of going abroad.
As we step into this New Year, EqualOcean officially kicks off the project called "Global 100: Go Global and Co-Creating the Future", in which our analysts will sit down with frontline industry practitioners and enterprise leaders to hear their opinions about Chinese brands going overseas. We hope to help brands be seen, recognized and valued through our professionalism and credibility.
The following is the third of this series, conducted by our analyst Yiran Xing after her talk with Anna, founder of Guangdong Geertop Outdoor Gear Co., Ltd (Chinese: 广东吉拓户外用品有限公司).
GeerTop is a Chinese brand engaged in the development, design, production, and sales of camping supplies. The company invented tents combining regular fabric and optical fiber. Over the past seven years, GeerTop has sold its products in more than 70 countries and regions. It has around 100,000 users in Europe and the US.
EqualOcean: How do you see the development of the camping industry in China? What are the major characteristics worth noting?
GeerTop: The camping industry in China is still in the growth stage and has not yet reached maturity. In the growth phase, companies adopt product- and marketing-driven strategies. Companies will focus on reducing costs and investing in innovation when competition in the industry becomes fierce.
There are several characteristics worth noting. Firstly, no company has established dominance in the current phase. Secondly, Chinese consumers have limited knowledge of camping products and services. When shopping for clothes, consumers are able to judge the quality of the products by the fabrics, but they have not yet developed such knowledge and standards regarding camping products.
EqualOcean: What are the major problems in the camping industry?
GeerTop: The government has shown support for the development of the camping economy, but it hasn't put forward detailed management rules and regulations. Besides, businesses in the industry focus too much on products and marketing and little on the camping culture itself. I think camping etiquette will be talked about and emphasized by the end of 2023.
EqualOcean: China's camping business became all the rage in the past few years. What do you think are the major drivers?
GeerTop: The camping industry has seen rapid growth in the past few years. In 2021, the market saw a 62.5% year-on-year growth, and the CAGR reached 18.6% in 2022. The development of the camping industry in other countries is mainly driven by consumer needs, while in China it is affected mostly by external factors.
Firstly, the strict pandemic prevention and control policies have limited consumers' outdoor activities. Cross-provincial travel was inconvenient, and suburban and urban travel was less affected. Secondly, the growing urban population in recent years is one of the main drivers of the camping demand. You could see that the camping trend emerged and was followed mostly in first-tier and new first-tier cities. Thirdly, the two-child and three-child policies have pumped up demand for outdoor parent-child activities and child education. which also contributed to a growing market for camping. Last but not least, China's young consumers pursue a sense of ritual that elevates the experience of a product, and this particular need is met in camping.
EqualOcean: As you have just mentioned, one of the reasons why camping became popular is that traveling was difficult for Chinese consumers in the past years. While cross-provincial trips and cross-border travel are now available to Chinese consumers as the restrictions are eased. Do you think the growth rate of the camping market will slow? How do you see the future of China's camping industry?
GeerTop: As the economy grows, the urban population increases, and Chinese consumers spend more on recreational and cultural products and services, I believe that the camping industry will continue to grow. Although the camping industry in China had seen explosive growth in recent years, the market size is still relatively small. It is expected to reach CNY 200 billion by 2025. The US camping market size has reached USD 100 billion, and the annual sales of one company can reach USD 10 billion. China's camping industry still has a long way to go.
The growth rate, however, will slow in the coming years, and the CAGR will also be lower. Sales of camping supplies were already declining in the second half of 2022, mainly because camping products are not consumable items and have a low repurchase frequency. Also, the overall camping product supply is increasing, and gross margins are decreasing.
Besides, the increase of market participants outspeeds the growth of the market size. From 2017 to 2019 there were only around 10,000 companies doing camping-related business in China. In 2020, around 10,000 new camping-related firms were founded, and that figure grew to 20,000 in 2021 and 40,000 in 2022. We expect that in 2023 there will still be newcomers to the camping market, but the next few years will also be the most competitive period with the highest number of companies being kicked out of the game. In particular, in 2024, half of the camping companies might have to close down.
EqualOcean: Competition in the camping market is increasingly fierce. How do camping brands survive the game and stand out from the crowd?
GeerTop: Successful positioning will be key to surviving the stiff competition. Companies will need to enhance brand power by investing in product innovation or reduce costs by improving channel management.
Besides, innovation in business models will also bring new growth opportunities. To give some examples, campgrounds could introduce membership, and hotels could join the game by including tents and campgrounds in their business.
EqualOcean: We noticed that GeerTop focuses on overseas markets. What are the differences between camping markets in China and in other countries?
GeerTop: Chinese consumers' need for social activities fueled the camping trend. In China, 64% of campers are female, and 43% were born after 1990. In overseas markets, 61% of campers are male, and more than 35% of camping product consumers are aged over 44.
In China, picnic tables and chairs are popular, because many consumers go camping without staying overnight. Socializing with families and friends is the main theme of camping in China. Whilst in other countries, sleeping bags and camping mats have higher sales. Because campers stay overnight when they go camping, and most of them do not reuse sleeping bags. Camping businesses in China and other countries have different focuses regarding product types and marketing strategies. This poses challenges to Chinese camping companies seeking global expansion.
EqualOcean: What are the strengths and weaknesses of Chinese camping brands? How do Chinese companies seize opportunities and overcome challenges in their going global?
GeerTop: The biggest advantage of Chinese camping brands in overseas markets is that their products are of good quality and low price. Their disadvantage is a lack of brand recognition and unique selling points. In addition, the volume of the overseas market is large, but the compound growth rate is only about 6%, so Chinese companies will face more fierce competition in overseas markets.
GeerTop's strategy is to hire local designers, conduct sufficient market research, set up local warehouses and after-sales teams, as well as pay attention to content marketing and cooperate with local KOLs to promote camping culture.
EqualOcean: What changes have you observed in consumer behaviors in recent years? And what will drive the future development spots of the Chinese camping industry?
GeerTop: Two years ago Chinese consumers mainly purchased basic camping equipment. Now, however, consumers' needs are more diversified and they have higher requirements in terms of product design. In overseas markets, many campers go camping alone, and in the future, we'll see increasing demand for family camping.
EqualOcean: You have mentioned that camping products have low gross margins, low repurchase frequency and slow product delivery. How does GeerTop overcome these challenges?
GeerTop: GeerTop has expanded the product matrix to increase repeat purchase rates and build customer loyalty. Tents are our main product, but they do not require frequent replacement. So we added consumable items such as picnic mats, tent accessories, cutlery and cooking utensils. In the future, GeerTop will seek new growth through business model innovation, such as providing integral tourism products and other services.
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