Sportswear giant Adidas' recent financial report for the second quarter of 2021 showed that its revenue during the period had picked up everywhere except Greater China, which was down by 16% year-on-year.

According to media reports, Adidas' CEO Kasper Rorsted said, "We do see that the current market demand has been biased towards Chinese local brands rather than global brands."

"Because of geopolitical tensions, we did see an impact particularly in our online business in the second quarter in China, and we think that will over time normalize," Rorsted said.

In late March, the company – together with some other international brands such as H&M, Nike and Uniqlo – involved itself in groundless claims of forced labor in northwest China's Xinjiang Uygur autonomous region. In response, Chinese consumers called for a wide-ranging boycott. 

Meanwhile, Chinese brands such as Anta quit the Better Cotton Initiative, a Geneva-based group seen as a key voice propping up the unfounded accusations of forced labor.

According to an analysis by Morningstar in April, sales of Adidas, Nike and Uniqlo on Alibaba's Tmall, China's largest business-to-consumer e-commerce platform, dropped by 78%, 59% and 20% respectively, while Chinese brands experienced a sales boom. 

For instance, in April, Li-Ning's online sales grew 815% year-over-year, and its fashion arm, China Li-Ning, saw Tmall sales jump 419% between April 27 and May 3, compared to the same period in 2020.

Furthermore, on Aug. 13, Li-Ning issued its interim results announcement for 2021. In the first half of the year, Li-Ning's revenue rose 65% year-on-year to 10.2 billion yuan ($1.57 billion), while its net profits were up 187% to 1.96 billion yuan ($302.43 million).

In its report, the company attributed the significant increase to two main points. First, it benefited from "various sales improvement initiatives…that were designed for COVID-19" as the Chinese government adopted effective pandemic prevention and control measures. Second, the numbers reflected a growing trend towards "the pursuit of a healthier lifestyle and the high recognition and vigorous support towards domestic sports brands among Chinese consumers."

Another leading Chinese sportswear company, Anta Sports, announced in early July that the retail sales of Anta branded products for the first half of 2021 recorded a 35-40% positive growth compared to the same period last year.

Patriotic sentiment aside, Guochao (Chinese fad), a trend incorporating elements of Chinese culture and nostalgia into product design, may also explain why some domestic brands have enjoyed greater popularity in recent years. 

During 2018's New York Fashion Week, Li-Ning showcased a collection of shirts and sweatshirts, featuring bold Chinese characters reading "China Li-Ning" with the country's signature color combination of red and yellow, and the show was wildly successful.

Anta has also integrated elements from both traditional Chinese culture and popular culture into their products, including a series of running shoes based on the legendary Chinese poet Li Bai. More recently, Anta produced China's podium uniform for the Tokyo Olympics, dubbed "Champion Dragon Clothes."

According to a report jointly released by the search engine Baidu and the Research Institute of People.cn. on May 10, the Chinese public's attention to Guochao has increased by 528% in the past decade, and the percentage of keyword searches for Chinese brands has increased from 45% to 75% in the past five years, three times that of overseas brands in 2021.

Pan Helin, executive dean and professor at the Digital Economy Research Institute of Zhongnan University of Economics and Law, said that Chinese customers have shifted their attention from foreign brands to domestic brands and Chinese elements, resulting in Chinese brands becoming increasingly valued by the fashion industry.

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