SHANGHAI, June 11 (Reuters) - Premium sportswear brands

are enjoying robust growth in China as they take to directly

courting their main customers, posing yet another setback to

megabrands Nike ( NKE ) and Adidas as they grapple with local

competitors in the $55 billion sportswear market.

Sportswear is a rare bright spot in China's sluggish

consumer market, as health and wellness have become a priority

for aspirational, middle class consumers post-pandemic, with

many people getting into activities such as yoga, hiking and

running for the first time.

The market, the world's biggest after the United States, is

seen growing 7% this year to $59 billion, outpacing the 0.8%

forecast growth in non-sportswear apparel and footwear,

according to data from Euromonitor.

While this should be good news for market leaders Nike ( NKE )

, Adidas, Anta and Li Ning ( LNNGF )

, it's even better news for pricier brands such as

Lululemon and niche sneakers makers On and

Hoka, all who have favoured using social media influencers and

community-targeted marketing over the celebrity-led campaigns

that bigger brands have traditionally relied on.

"A lot of Chinese women are new to sport, they feel a bit

intimidated," said Ning Zheng, 33, a fitness model with several

thousand followers on the Instagram-like platform Xiaohongshu

who said she has partnered with the majority of international

sports brands operating in China in some capacity.

"But if other people from their yoga studio or running

groups, or someone they relate to online, is wearing a brand,

they believe it can be good for them too," she added.

On and Hoka are relative newcomers to the market, which

means their growth will naturally exceed that of more

established rivals. But the more share they take out of the

market, the less there is left for everyone else.

On doesn't break out China numbers but its Asia Pacific

sales growth jumped 69% in the first quarter and accounted for

over 10% of global revenue for the first time. Its co-CEO said

on a recent earnings call the company expects China alone to

account for 10% of overall revenue before long.

By comparison, Nike's ( NKE ) sales in the Greater China market rose

4.5% in its most recent quarter, though off a much higher base

than smaller rivals. It reported selling around $7 billion

across footwear and apparel in Greater China in its 2023 fiscal

year. Adidas grew its China business by 8% in its first quarter.

"As the market matures, growth will increasingly favour

niche categories and niche brands," said HSBC consumer analyst

Lina Yan.

Compared to other premium brands, Lululemon is a veteran

with a decade-old presence in China. It took a slow-and-steady

approach to expansion, opening its 100th store last year to

coincide with its 10th anniversary, but has since ramped up its

strategy, saying it intends to have 220 stores by 2026.

The Canadian yoga wear maker, which relies largely on

targeted marketing, reported a 45% growth in China, its

second-largest globally, in the first quarter, countering a

slackening demand in the United States where sales grow just 2%.

Its net sales in China reached almost $1 billion last year.

'SOUL SEARCHING'

Chinese consumers, particularly millenials and the even

younger Gen Z, appear to be finally jumping on the global health

and fitness trend that has been popular for years, using sport

as a way to find themselves, analysts say.

Aspirational brands Amer Sports' ( AS ) outdoor wear label

Arc'teryx and Lululemon - dubbed by many Chinese consumers as

the "Hermes of yoga" are benefitting, because many first-time

sports enthusiasts believe they are the most suitable brand for

the specific activity they are looking to pursue.

"I think young people in China are finding themselves

through consumption, through sports and hobbies, by trying

frisbee, cycling or yoga and making that part of their

identity," said Yaling Jiang, founder of research and strategy

consultancy ApertureChina.

"There's a lot of soul searching going on for these

consumers, but it explains why they will pay a premium for

brands they feel are a good fit."

Premium yoga brand Vuori opened its first store in Shanghai

last month. Authentic Brands Group, which recently

opened a flagship for Reebok in Shanghai, is also looking to

expand the presence of brands specialising in more niche sports,

from surfing and hiking to snow sports.

"We really believe the sky is the limit for these brands,"

said Josh Perlman, Authentic Brands Group's executive vice

president for lifestyle in Greater China.