Sportswear Brand Erke Gone Viral in China: What Happened?

Erke has gone viral in China in an unexpected way. With many parts of Central China's Henan province suffering from flooding after heavy rainfall, the sports brand Erke donated 50 million yuan (approximately 7.7 million dollars) worth of supplies to provide financial aid and help with the flood relief in the province. After Erke announced the news on its Weibo account, the post had gathered more than 280,000 comments as well as more than 9.45 million likes. Topics, hashtags, and trends related to Erke and its kindness also generated millions of views across various social media platforms. Sales for Erke's products also skyrocketed. According to the statistics provided by JD.com, one of China's largest eCommerce platforms, Erke's sales alone on Friday, July 23rd, 2021, witnessed a 52-fold increase. In offline stores, shoppers were so enthusiastic about Erke's products that the company said it was experiencing a serious lack of inventory due to a surge of demand. A clip was also trending in China, where a shopper at an Erke offline store ran out of the store immediately after paying the cashier 1,000 yuan for a product that costs only 500 yuan. It was truly a wild scene. But the sudden popularity of Erke also raised many questions from the netizens. Some questioned why only Erke became so popular out of all the Chinese enterprises that donated to help with flood relief in Henan. Some suspected that Erke was utilizing this natural disaster as part of its marketing strategy. And some tried to figure out the implications about the Chinese market and brands behind the sudden popularity of Erke. To answer these questions, we will have to take a deeper look at Erke's history and the logic behind its sudden popularity.

Erke's offline store in China. 

Image Source: Getty Images

Erke's History

Part of the reason that Erke was able to go viral in China has to do with its history. The company's full name is Hongxing Erke and is a sportswear company founded in June 2000. The company headquarter is located in the city of Xiamen, Fujian province. After deciding to start its own sports brand, Erke created its slogan of "To Be No.1." The brand was off to a great start. In 2001, Erke reached an endorsement deal with Chan Siu-Chun, a popular Hong-Kong actor at the time, and he became the first brand ambassador for Erke. The deal was proven successful as Erke's popularity grew tremendously in China, especially among the younger generations. In 2005, Erke was already listed on Singapore Exchange, becoming the first-ever Chinese sportswear brand to be listed overseas. 

Chan Siu-Chun was the first brand ambassador for Erke. 

Image Source: NetEase

In the years followed, Erke continued to expand as more stores are built and opened. But that was when everything started to go downhill for Erke. In 2008, Erke expanded their inventory drastically as they had high expectations for the sportswear market in China following that year's Beijing Summer Olympics. In fact, almost every Chinese sportswear brand was excited. But the market was not as profitable as Erke thought, causing a severe overstock. And in 2010, Erke was exposed to misreporting its bank deposit. Having only 263 million yuan cash and bank deposit, Erke reported having 1.154 billion yuan. Since then, Erke had gradually disappeared from the public eyes. But the tragedy of Erke didn't end there. In 2015, an unexpected fire burnt down nearly half of Erke's production equipment, resulting in the inability to deliver products, production stagnation, and capital chain rupture. Although Erke was able to get through the crisis, they were never the same before. They had lost their capability to compete with other top-tier domestic sportswear brands such as Anta and Li-Ning. So they chose to remain low-profile, targeting the lower-tier markets and consumers. However, the brand continued to remain in a financial slump. In 2020, Erke earned a total revenue of 2.84 billion yuan, with a net loss of 220 million yuan. And just not long ago, in the first quarter of 2021, Erke had a net loss of 60 million yuan.

Erke's offline store in a Chinese shopping mall. 

Image Source: MINNEWS

But the difficult conditions did not stop Erke from helping out those in need. In 2008, Erke donated 6 million yuan to help with earthquake relief after the 2008 Sichuan Earthquake. In 2013, Erke, together with Fujian Disabled Persons' Federation, donated 30 million yuan of supplies to help the disabled people in China. In 2015, Erke donated 3.2 million yuan worth of supplies to support the earthquake relief after the 2015 Nepal Earthquake. In 2018, Erke donated 60 million yuan worth of supplies to the Fujian Provincial Foundation for Disabled Person. In 2019, Erke donated 100 million yuan to China Disabled Persons Federation. In 2020, Erke donated 10 million yuan worth of supplies to help Wuhan cope with the COVID-19 pandemic. Just a while ago, in 2021, Erke donated another 100 million yuan to the China Disabled Persons Federation to help the poor and disabled people in China (马拉松跑步). What was more impressive and generous about these donations was that Erke kept all of them at a low profile. The brand didn't attempt to market any of its donations. In fact, you rarely see the brand on any news. It was not until the recent 50 million yuan worth of donation to Henan province that people noticed how much Erke had contributed to charity in the past years. Now, Erke is finally getting the recognition it deserves as more and more Chinese consumers are showing their gratitude and respect toward Erke in various ways. Both Erke's online channels and offline stores are swarmed with Chinese consumers eager to buy its products. It can be said that Erke has won the hearts of Chinese consumers.

Chinese consumers flocked to Erke's offline stores to buy its products. 

Image Source: Chan Yu / Reuters Pictures

The Logic and Implication Behind Erke's Sudden Popularity

Voltaire used to say that, "There is no such thing as an accident. What we call by that name is the effect of some cause which we do not see." Erke's sudden popularity seems to be a fluke, but it is the result of the young Chinese generations' consumption characteristics. Nowadays, Chinese consumers are very divided in their buying styles. Those born in the 70s focus on purchasing products that perform above their price tag or what seemed to be a "steal" for its price. Those born in the 80s prefer brands that are famous or well-known. But those born in the 90s or 00s are more driven by their emotions during purchases; they are the emotional buyers. They make purchasing decisions based on their values and what would provide them with the most pleasure. In the case of Erke, it is the pride in domestic sportswear and patriotism that allow Erke to establish an emotional connection with the Chinese consumers, powering more and more young Chinese consumers to make purchases of its products. It is a great demonstration of how the younger Chinese consumer can quickly turn their emotions into actions. 

Chinese consumers are rushing to buy Erke's products. 

Image Source: NIKKEI Asia

However, a big concern that is still floating in the air for Erke is that these emotional purchases will very likely result in a lack of brand loyalty, the reason that countless brands fell off only after a short period of popularity. So it will be interesting to see how Wu Rongzhao, the CEO of Erke, manages this sudden popularity that Erke is receiving. Can Erke utilize this opportunity to turn itself into a sportswear powerhouse? Only time can tell us the answer.