Japan's ASICS to boost India sportswear production to 40% amid import restrictions, executive says

ASICS plans to increase its India-based manufacturing from 30% to 40% in response to new Indian regulations requiring quality certifications for footwear imports, which have caused the company to pause imports. This strategic shift aims to ensure a steady supply chain, with ASICS also planning to open its first brand-owned store in India this year and projecting revenue growth of 35%-37% for fiscal year 2024-25, driven by a growing fitness culture and rising interest in sports among affluent Indian consumers in a market expected to double to $58 billion by 2030.

Analysis

ASICS is proactively adapting to new Indian government regulations that mandate quality certifications for footwear imports by significantly increasing its local manufacturing capacity from the current 30% to 40% over the next few years. This strategic pivot, driven by the necessity to ensure a steady supply chain after pausing imports, also enables ASICS to meet the 30% local production threshold required for foreign brands to operate their own single-brand stores in India. Consequently, the company plans to launch its first brand-owned store in 2024, targeting Delhi or Mumbai, with further expansion anticipated, alongside an aggressive rollout of three new franchise stores per month for the remainder of the year, adding to its existing base of approximately 125. Financially, ASICS projects robust revenue growth in India of 35%-37% for fiscal year 2024-25, a significant acceleration from the 26% growth achieved in the previous fiscal year which resulted in revenues of 4.28 billion rupees ($49.7 million). This optimistic outlook is underpinned by a burgeoning fitness culture, increasing interest in sports like tennis and pickleball among affluent urban consumers, and a broader Indian sporting goods and apparel market forecasted by Deloitte to double to $58 billion by 2030. While ASICS competes with global brands such as Nike, Adidas, and Skechers, its focused strategy on localization and retail expansion positions it to capitalize on these favorable market dynamics.

Key Decisions for Investors

• Investors should monitor ASICS's execution on its ambitious Indian manufacturing ramp-up and retail expansion, as its success could provide a template for other international brands adapting to localization mandates in emerging markets.
• The projected 35%-37% revenue growth for ASICS in India, if realized, signals strong potential in the rapidly expanding Indian sportswear market, warranting a closer look at competitive dynamics and market share shifts among key players like Nike, Adidas, and Skechers.
• Consider the broader implications of India's evolving regulatory landscape on global supply chains and the necessity for multinational corporations to adopt agile, localized production strategies to maintain market access and growth momentum in key emerging economies.