Nowadays, if you have a walk along the crowded street of Shanghai, or any another Chinese city, you cannot help but notice that the distinctive "omini" logo that Kappa prints on its apparel are all over the place. Yet, it has not always been like this. On the contrary, when Kappa first entered the Chinese market, it met no warm welcome from local consumers. 

Looking at how successful the brand is today, we decided to look at its development in the country in order to bring forward a practical example of a foreign brand that overturned its fortune in China by investing in branding. 

Kappa entered China in 2002, but it wasn’t until 2007 that the brand started grasping a good position in the market. Born in Italy in the seventies, the sport brand had been successfully tapping foreign markets across Europe, Asia, America, Oceania and Africa until it arrived in China. Since then, Kappa sustained 4 years of serious trouble here. 

The key to understanding these years of market flopping is in the initial brand-positioning Kappa adopted in the market. Apparently, the brand management team had not evaluated the market potentialities and threats correctly. By positioning themselves as a high performance, strong heritage sport apparel brand, Kappa doomed itself to be in direct competition with brands such as Nike and Adidas, which, at the time, already had a stable and strong position in the country. 

Moreover, if Kappa had considered that Chinese consumers are prone to trust authority and tradition. 1

it would have probably also comprehended that new entrants here were not going to be accepted very easily. That is to say, when presented with two similar offerings, Chinese consumers are usually willing to spend a little more on a worldwide famous brand, or better, one that is already famous in China, rather than saving a small sum on a brand that might be well recognized abroad but not yet in China. 

Therefore, in 2002, when Kappa aimed at building its brand as a high quality, high-end, high-performance sports goods brand, it clashed against consumers’ long-term brand loyalty and trust towards each of the competitors, which gave it few chances for succeeding and winning a market share. 

In 2006, BasicNet – the group holding Kappa, among other brands – found itself facing a serious financial crisis.2

which offered DongXiang Group the opportunity to buy all the rights to Kappa in mainland China and Macao.

We know DongXiang Group as the No.1 on the “2008 Potential Enterprises of China” list issued by Forbes Magazine and one of the most famous sport companies in the country. But perhaps not everyone knows that the group was formed as recently as 6 years ago and that its success has accumulated along with Kappa’s growth. It was DongXiang careful brand management that brought Kappa into its renaissance stage. 

In fact, by 2007, Kappa’s market shares had risen to 4% from a mere 2.8%, while Nike and Adidas dropped from 16.7% to 14% and 15.6% to 12%, respectively.3

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To use DongXiang Group’s own statements, they have spent the years following the acquisition “in building KAPPA into a top brand of sports and fashion in China”4 and they succeeded in doing so since today Kappa “has successfully established its market position in China, ranking top three of international sports brands. More shocking to the sporting goods industry, this new giant is expanding at a speed much higher than the average industry level”5.
But how did they do it?
The stunning growth Kappa has gone through in the last few years depends entirely on the trend research DongXiang Group undertook that eventually help them uncover brand differentiation opportunities and exploit unsatisfied market needs.
With the phenomenon of the so-called Chinese post-80s generation taking momentum in the late nineties – in the beginning of this century, DongXiang Group understood that Kappa urgently needed to change in order to cater for emerging needs. The generation that has born after the 80s disregard tradition, don’t like wearing basic colors such as black, white and grey6, love fashion, clubs, hip-hop, fast food and want to live with excitement and passion. In order to uncover young people thoughts, Dongxiang Group’s CEO Qin Dazhong also experienced their way of life by keeping long blond hair and mixing, together with its management team, with the young crowd in major night clubs in Beijing’s Sanlitun and Houhai pub districts, aiming to get inspiration in the popular culture.
By putting qualitative fieldwork research side by side with in-depth quantitative analysis, Kappa’s brand management team understood the foundation of the brand’s new positioning. In fact, they found out that young people perceived a fracture among fashion and sport. That’s to say, sports goods were generally seen by young people as functional but lacking of fashionable elements7. This gap averted potential buyers, as young people love sport but also want to feel fashionable while wearing casual clothes.
Thus, Kappa repositioned itself in sharp differentiation from its competitors. Just like Nike aims for excellence in athletic performance, how Hermes embeds the aristocratic way of life and as Armani conveys the relaxed elegance of Italian style8, Kappa became synonymous with “Sportsmanship, Fashion, Sexiness and Taste”9 which soon began to reap fruits in the Chinese market. Having found its opportunity, Kappa invested a lot to strengthen its brand image and broaden brand awareness in the market.
The first fundamental act Kappa accomplished was to redesign the brand’s visual identity in order to distinguish itself from any other potential competitors. Even though the brand did not change its logo - the famous back to back “omini” - new flagship stores took on a fresh look to better convey what the brand stands for: the bright red color to indicate fashion, youth, passion, energy, bravery and pleasurable lifestyle replaced the former dark blue color.
Secondly, Kappa’s product design also experienced tremendous changes. Famous Italian, Korean and Japanese designers devoted concerted efforts to create a new, fashion oriented style. Slim wrist-lines, trimmed body-curves, and sparkling colors replaced the previously loose figures and relatively more serious designs. In this way, Kappa really catered for the young Chinese generation’s double need for sports and fashion. Kappa gradually won over its major competitors thanks to this unique brand proposition.
Thirdly, Kappa stood out for its unique approach to branding implementation strategies. From 1998 to 2006, Kappa had spent huge sums to sponsor 420 events and several athletes worldwide in order to gain more visibility among sport fans10. Starting from 2006, Kappa decided to differentiate itself from competitors in this sense by investing in co-branded events that integrated entertainment, fashion and sport in a single experience. Many celebrities, including rock and movie stars, models and famous hosts were invited to join these events. The “Kappa Bowling For Soup Beijing Concert" “It’s Ming” Huang Xiaoming’s debut concert as a pop star in mainland China, and “CCTV’s Model Competition” are just a few examples. The shows had a tremendous impact on Kappa’s brand image: as we all know, stars have a big influence on young people and Kappa’s chosen celebrities exerted their own on young followers. In fact, they held a vital role in increasing Kappa’s brand recognition and awareness as a young and fashionable sport brand.
More recently, Kappa has sponsored the Beijing Olympics by launching “The Olympics Helmsmen Selection” at the end of last year. About 15,000 applicants signed up for the competition, which ended with the selection of 20 helmsmen to become members of the National Rowing Team and attend the Beijing Olympics. The competition engaged brand followers in a unique way. By directly benefiting from the brand, Kappa managed to strongly bond consumers to itself and to send at the same time a powerful message: ordinary people (who use Kappa) can become extraordinary, realize their Olympic dream and win medals for the country.
In conclusion, we might say that Kappa’s brilliant renaissance has been realized throughout a full branding cycle: research to understand the market and uncover opportunities for brand development; strategy to formulate the brand’s roadmap to success and engage consumers to believe in the brand promise; and creativity to show audiences what the brand stands for. Kappa’s CFO Wang Zhiqiang stated that by the end of 2007, Kappa has opened 1900 stores – 800 more than in 2006.
Still, though the brand’s brilliant renaissance has proved to be difficult, maintaining its prosperity will require even more efforts. A few questions should be addressed by the DongXiang group before deciding the direction for future brand development: is the brand positioning sustainable? What are the risks in drawing from the popular culture that might hinder the brand in the future?
By moving too far away from what the brand represents, the message it sends might be ultimately diluted and the brand image might lose part of its power.
The road for building a brand’s sustainable success is indeed a long one, but, if using the right tools, the brand management team might become a “fortune teller” and ultimately walk the road to success.

1. Dou Weilin, 2006, Intercultural Business Communication. University of Economics and Foreign Trade Press
2. Wang Yongqiang, The Transformation of Lining Group, http://finance1.jrj.com.cn/news/2007-11-24/000002969120.html
3. Jack Xu, 2008, http://www.mkter.org/ShowPost.asp?ThreadID=274
4. http://www.dxsport.com/en/company/company.html
5. As before
6. http://www.100.sh/qi/20080604/2991.html
7. Wang Huanming, 2008, Kappa: Sports can also be Fashionable, http://www.haoefu.com/data/2008/0719/article_13975.htm
8. Michel Chevalier , Gerald Mazzalovo. 2008.P96. Luxury Brand Management, A World of Priviledge. John Wiley& Sons(Asia) Pte.Ltd.
9. http://www.kappa.com.cn/
10.http://www.kappa.com.cn/