A report from Orient Securities posits that the rise of local brands in the high-end consumer market is underpinned by factors such as shifting consumer demographics and growing cultural confidence. Fundamentally, it also reflects an enhanced public expectation regarding national governance, including among high-net-worth individuals. The firm maintains an optimistic medium to long-term outlook for the sportswear and outdoor industry and its leading domestic companies. It continues to favor investment opportunities in the functional home textiles and sportswear and outdoor apparel sectors. The key viewpoints from Orient Securities are outlined below.
The ascendance of Chinese domestic brands within the luxury consumption sphere represents a major trend that is expected to continue. According to Bain & Company's recent "2025 China Personal Luxury Market Report," while the overall personal luxury market in China experienced a slight contraction in 2025, the upward trajectory of local brands was unmistakably clear. The penetration of domestic brands has progressively expanded from traditional categories like jewelry and beauty/personal care into apparel, footwear, and leather goods/luggage. The firm attributes this rise in the high-end segment to generational shifts in consumers and increased cultural confidence, which is essentially a result of heightened expectations for national governance among the broader consumer base, including high-net-worth individuals. Orient Securities anticipates that the market penetration and competitiveness of local brands in the high-end and even luxury consumption sectors will continue to strengthen, providing a long-term positive impetus to the performance and valuation of related companies.
A shift in apparel consumption preferences among high-net-worth individuals, moving from "high luxury" towards practical and functional items, is creating sustained growth potential for the sportswear and outdoor industry. The "2026 Hurun Best of the Best - Chinese High Net Worth Individuals Quality Life Report" indicates that for the coming year, enthusiasm for high-luxury brands as the most desired clothing type dropped significantly by 12 percentage points among this demographic. Conversely, desire for practical clothing (prioritizing comfort over brand) rose notably by 14 percentage points, while interest in functional apparel (primarily sportswear and outdoor gear) increased by 2 percentage points. The firm believes these changing preferences benefit brands in the sportswear and outdoor industry that offer both comfort and functionality, and that are increasingly bridging the gap between athletic leisure and work/business settings. Regarding preferred forms of exercise, the top three activities for high-net-worth individuals are mountaineering/hiking, running, and yoga. Many leading brands in these popular segments are already domestic leaders, including international brands acquired by local frontrunners. Consequently, Orient Securities holds an optimistic medium to long-term view for the sportswear and outdoor industry and its associated leading domestic companies.
The current relatively low satisfaction levels with sleep among high-net-worth individuals present opportunities for functional home textiles deeply linked to sleep health. The aforementioned Hurun report surveyed high-net-worth individuals on the five pillars of longevity (exercise, nutrition, sleep, mood), revealing that satisfaction with sleep is currently the lowest. This finding strongly aligns with the perspective presented in the firm's January in-depth report on the home textiles industry. Orient Securities remains bullish on the innovative growth potential over the next 2-3 years for functional home textiles that are intrinsically connected to improving sleep quality.
Based on the partial analysis of China's high-net-worth individuals and the personal luxury market above, the firm continues to favor investment opportunities in the functional home textiles and sportswear and outdoor apparel sectors. It specifically highlights Luolai Lifestyle and Mercury Home Textiles for their rapid deployment in functional home textiles. In the sportswear and outdoor domain, it favors Anta Sports for its leading global multi-brand strategy, and Li Ning for its accelerated new product and channel development following the start of a new Olympic cooperation cycle, which suggests greater future growth elasticity. Investors are also advised to monitor Xtep International. Risks include potential fluctuations in the recovery of domestic discretionary consumption demand and possible shortcomings in new product expansions by the relevant companies.