Sustainability

Product Responsibility

It is the Group's goal to provide consumers with high quality professional sportswear products, enabling them to pursue their ideal lifestyle. Therefore it is of utmost importance that we ensure the quality and safety of our products and services meet the high expectations of consumers.

To maintain high quality product offerings to our customers, our effort can be categorised into the three aspects of (i) product quality management; (ii) consumer relationship management; and (iii) product innovations.

Product Quality Management

We take pride in the quality of our products, and has established and applied in all production lines a set of standardised operation procedures since 2003 based on ISO9001 quality management standards to ensure product quality. We require our outsourced suppliers to follow the same standardised procedures as well as quality checks conducted by the Group. All raw materials used by suppliers are collectively procured by the Group to ensure quality consistency.

Assurance of product quality

A well-trained quality assurance team, led by the chief quality officer, is responsible for the constant monitoring of manufacturing processes and internal quality control of our products. The team's assurance procedures strictly comply with the Group's quality control system that is reviewed and updated annually.

The quality assurance team is responsible for monitoring both the quality of our own production and the quality of our outsource suppliers. Regular inspections are performed on our major third party suppliers' compliance to the Group's standards on product quality and safety. In 2018, the quality assurance team worked with the continuous improvement department to assess the quality management system of our tier-one footwear and apparel suppliers. Based on the assessment results, suppliers are required to undertake remedial actions with follow-up assessments scheduled in 2019, so as to continuously improve the quality management capability of our suppliers.

Advanced manufacturing equipment and laboratories testing

As one of the leading sportswear brands in China, we continuously introduce latest technology and equipment to improve our manufacturing processes and product quality. In 2018, we have introduced a demonstration production line with new machineries including full-automatic non-die-cut cutting machine, computer sewing machine for full-automatic template operation, computer self-powered control module assembly line with miniaturized design, and full-automatic hot and cold (hot glue) lamination (head). The automated production line improves the accuracy and precision of our production processes, further improving the quality of our products. Based on the results of the demonstration production line, we will gradually upgrade our other production lines to become a benchmarking factory.

Other than high-tech equipment, our in-house nationally certified laboratories also contribute to our success. The laboratories conduct tests on raw materials provided by suppliers, ensuring product safety and compliance to the relevant product laws, and before any finished goods are shipped, sample testing would also be carried out where the procedure strictly follows the testing and management system in place. During the Year, we provided ISO9001 training to our adult sportswear suppliers and launched the quality assurance accreditation programme to our tier-one suppliers. Currently, 26 tier-one suppliers are accredited to perform self-inspections on their products. In 2019, we will continue build the quality assurance capability of our supply chain by focusing on our tier-one and tier-two suppliers.

Leading industry standards in China

At the frontline of the Chinese sportswear industry, we are a pioneer in advancing industry standards. By using our influence as an industry leader, we have been endeavouring to gradually improve the industry's production quality and product safety through participating in different industry coalitions and drafting of industry standards.

For example, we have participated in the drafting of the footwear product standard of the National Rubber Standardization Committee and the apparel product standard of the National Apparel Standardization Technical Committee. We have also been a regular chair member of the “Quality and Credibility Alliance” since 2016, in which we work with the China National Institution of Standardization, China Association for Quality and AQSIQ to get updates on the latest trends in product-related laws, and contribute to policies drafting by sharing our in-depth industry experiences and knowledge.

Consumer Relationship Management

Standardized consumer service procedures and training

To provide our consumers not only with quality products but also the same high standard of shopping experience consistently in every retail store, we have established and implemented a set of standardized training modules. Trainings and class room seminars are provided to all staff in retail stores.

In order to deliver impactful customer experience, we proactively support the ongoing training and development programmes particularly for our retail staff so that consistency and excellence in customer experience and services can be reinforced and embedded in daily retail operations. Since 2014, we started to offer universal training to our retail staff via our “Xtep Retail Learning Center” which provides various courses including store manager training, product display instruction and store efficiency improvement workshop. We have also made these courses available online, which achieved over 1.3 million hits in 2018.

We also introduced our retail management application “Super Shopping Guide”, which has been rolled out to over 90% of our stores covering around 23,000 staff. The application provides training videos and articles which are frequently updated to complement new sales campaigns and new product launches. For example, we have offered six learning series with a total of 71 courses on building the abilities like customer services and leadership skills of our retail staff. Employees would be evaluated through the App, which would serve as an integral part of their annual performance assessment. Surprise channel checks are regularly conducted by our retail management team, with retail stores and retail staff rewarded with their delivery of excellent and impressive services.

Product recall and consumer complaint process

Customer satisfaction, among other relevant indicators, has been regarded as one of the important areas of our business performance. To ensure timely handling of customer dissatisfaction and complaints, a dedicated “customer service” division affiliated with the Group's quality management centre is responsible for responding and handling of any customer complaints and product return and recalls due to quality irregularity, according to relevant operational policy established by the Group.

Depending on the estimated amount of losses, the Group categorized the severity of product recalls into three different levels. For a major product recall, a comprehensive incident investigations have to be completed by the quality management centre within 15 working days and a “responsibility attribution report” have to be submitted to the senior management and human resources department. Once the persons responsible for respective incident are identified, they need to provide reasonable corrective measures for future prevention and improvement within 10 working days.

Consumer feedback and market survey

To better understand market trends and the expectations of consumers, we actively seek for the feedback of our customers through different channels. By understanding consumer preferences, we can develop products that best fit their needs and be able to improve their living quality.

For our e-commerce business, we have set up interactive online groups to conduct questionnaires with our members. We also organize online and offline activities, gratitude and surprise events from time to time to better communicate with customers and discover their potential needs in a timely manner.

Product Innovation

Adhering to our brand positioning, we benchmark our product technology against international running specialty brands to provide value-for-money professional products to the mass market. During the Year, we continued to work closely with our partners to co-develop new products and materials, leading to not only improvements in athletic performances for users, but also minimizing negative impacts to the environment caused by our product chain.

Innovative design and technologies

As a local pioneer in producing professional sports product, the Group always aim high in product innovation. We set up a dedicated designer team based in Xiamen. The team consists of international design talents and combines solid expertise in global sportswear brands with design and technology knowledge, to offer creative sportswear products for both performance and comfort. We also established our first and the only dedicated running research laboratory in China led by more than 40 international scientists and engineers. We have been collaborating with leading international fibre material developers such as 3M, the Dow Chemical Company and INVISTA, and will continue to work on new proprietary technologies for improving footwear. In 2018, the laboratory have designed and manufactured our first-place winning marathon shoes as seen in various international class marathons in China.

Applications of environmentally friendly raw materials

Besides functional features, we also seek to adopt environmental friendly materials in our product to reduce their environmental impact. For example, we introduced the X-Organic cotton and DupontTM Sorona® material to our products. Made in part with renewable plant-based ingredients, Sorona® is a lightweight, soft and elastic material with lower environmental impact compared to conventional functional materials. We will continue to work with our partners to explore the possibility to further incorporating environmentally friendly materials in our products.

Regulatory Compliance

During the Year, we were not aware of any material non-compliance with laws and regulations relating to product responsibility.

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