Imagine a consumer base roughly the size of the U.S. adult population. That’s about the size of China’s “premium” consumer base, which represents a “huge” opportunity for foreign companies in high-end sportswear, Bernstein said. “Given its massive profitability, the premium segment is more vulnerable to near-term headwinds such as job losses and macro concerns affecting both mainstream and lower-end consumers,” analyst Aneesha Sherman and his team wrote in a note Tuesday. It doesn’t take much to be considered a premium product in China by US standards. Bernstein’s analysis covered two categories: the top group of consumers, 93 million, with an average annual gross income of $95,000; and the other 170 million consumers, with an average annual income of $26,000. In total there are 263 million people. The market, which accounts for about one-fifth of China’s 1.4 billion population, is expected to grow several times larger than the mainstream market, the report said. According to the US Census Bureau, there are approximately 258 million people in the United States aged 18 and over. Income and living costs vary widely in China. But many still earn relatively little. In the first quarter, the median official disposable income of city dwellers was equivalent to $1,739. The middle-end consumer population is expected to grow more slowly, the Bernstein report said. Analysts point out that competition from emerging Chinese brands is fierce for international companies in the field. Li Ning and Anta Sports, two leading domestic companies, were listed in Hong Kong. Li Ning said its revenue, mainly from footwear and apparel, would rise 14.3% to 25.8 billion yuan ($3.61 billion) in 2022 despite the impact of the pandemic. Similarly, Anta Sports said that its Anta brand sales will increase by 15.5% to 27.72 billion yuan in 2022. Anta also announced on Wednesday that Kyrie Irving will become chief creative officer of the company’s basketball line and plans to launch branded shoes in the first quarter of 2024. Miao Kun, a 30-year-old young man who works in sports media in Beijing, said that since the end of the epidemic, more Chinese people are interested in going out to exercise. He agrees that in China, there are similarities in the local impressions of sportswear brands and car brand rankings. Adidas and Nike are like Mercedes, BMW, top end, and other brands are like Audi or Toyota, he said. This creates different market segments – by price. For Nike and Adidas, even their lowest prices are twice as high as their local rivals, Bernstein analysts said. They point out that a pair of Nike sneakers starts at $50 in China, while a pair from Anta sells for as little as $25. “The growth potential of China’s high-end market is a key factor in our outperform ratings on Nike and Adidas, which account for nearly 20% of their business in China,” the report said. Analysts set a target price of Nike at 134 The dollar, up more than 20 percent from Thursday’s close. They expect Adidas’ U.S.-traded shares to rise nearly 15 percent from Thursday’s closing price of $112.32 a share. Bernstein set a target price of 190 euros on Adidas shares in Germany. Hoka, the high-end footwear brand owned by Deckers, which had net sales of $1.4 billion in the 12 months ended March, is considering a China expansion strategy with several brick-and-mortar retail stores in major cities and an e-commerce business. Management said on an earnings call in May that Hoka was “seeing solid success” in China and acknowledged that the company could “accelerate much faster.” However, focusing only on the high-end growth segment may overlook the fact that many Chinese consumers still reside in smaller cities. The less developed regions outside the big cities like Shanghai and Chengdu have about 1.2 billion people and 17 trillion yuan of consumer spending. This is according to data shared by a local entrepreneur and cited by Beijing-based BigOne Lab. BigOne Lab is an alternative data company whose backers include S&P Global. BigOne’s analysis noted that, in addition to China’s big cities, e-commerce site Pinduoduo and upstart chain Cotti Coffee are also making forays into the underdeveloped market. — CNBC’s Michael Bloom contributed to this report.