Burton China Readies to Reach New Heights

Working from a Vermont barn in 1977, Jake Burton Carpenter combined elements of skateboarding, surfing, and skiing to found what would become one of the snowboarding industry’s leading brands, Burton. Both Jake Burton Carpenter and the brand he founded, have played a central role in establishing snowboarding as the global sensation that it is today. Now, 45 years later, ahead of the 2022 Beijing Winter Olympics, Craig Smith, Burton’s China CEO, has once again set the company’s sights on introducing the sport to a new audience.

China Development 

Craig Smith has been with Burton for 23 years, with much of that time spent in Asia. He initially joined the company as the Asia Sales Director and went on to manage Burton’s operations in Canada, China, and the Southern Hemisphere. By 2010, Smith had taken over the role of General Manager of Burton’s Japan business, which post 1998 Nagano Winer Games, was the most profitable arm of the company. He eventually went on to oversee the entirety of Burton’s international operations. In 2018, Smith remembers, an opportunity to return to China presented itself with a call from founder Jake Burton Carpenter, “Jake called me up and told me ‘Craig, China is really f****king important. I hope I can find someone I trust to take over there.’ And those were my marching orders, his way of saying, pack your bags.”

Smith, who was himself in Japan during the 1998 Games, saw firsthand the post-Olympic impact on the country’s snowboarding and winter sport industry. Today, he says he perceives many similarities in the China market. As in Japan in the late 1990’s, snowboarding is still in a nascent stage in China. Young as it may be, the growing popularity of snowboarding in China has been impressive. “There is a lifestyle attached to it. Snowboarding has a culture surrounding it, whereas skiing is very regimented. Snowboarding allows for more components and room for personal expression,” Smith explains the allure of the sport. Educating new consumers about both snowboarding and the lifestyle attached to have been integral to Burton’s strategy in China. 

Asked about the biggest difference he sees between the Japanese and Chinese markets, Smith doesn’t hesitate, “Scale, the size of the market here is phenomenal.” And, just as the Nagano games ignited the snowboarding craze in Japan 20 years ago, Burton plans to ride China’s post-Olympic boom to new heights. 

Burton has been selling products in China since 2002, but they were officially established as a Whole Foreign Owned Enterprise (WFOE) in 2013. Smith says a significant part of Burton’s larger China strategy has been patience. “We’ve focused on longer term investments like building key relationships,” he says. One example of this is the partnership Burton established with the Chinese National Snowboard Team in 2006. Today, Burton has the distinction of being the longest running sponsor of the national team. As these long-term strategies begin to pay dividends, Burton is well positioned to scale their operations for the inevitable market boom. “In 2013 things started to warm up with investment at resorts. Finally, in 2015, with the announcement of the 2022 Beijing Winter Olympics, that’s when we knew the fuse was lit,” says Smith. Since then, Burton has invested more heavily in China, for example, the company added 12 additional staff members to their China office.  Smith says that Burton also increasingly shifted focus toward market research and education, “We learned about the Chinese consumer, the touch points that are important to them, and we could do as a company to connect with them in different ways.”  

Market Opportunities 

Within five years, Smith predicts that China will be the largest snow industry in the world. He points to two factors which determine industry size. The first is skier visits. A skier visit is counted every time a skiing or snowboarding guest visits a ski area or resort. Comparing Chinese and North American skier visits in the past year, Smith observes that, “Last year in North America there were 51 million visits, in China last year (2019) there were almost 21 million.” On average, the number of skier visits in China has been growing by 20-30% each year, and Smith is confident this trend will continue saying, “The skier visits [in China] will grow to be twice what they are in the Americas.” The second fact that determines industry size is the participation element. This is the number of people who consider themselves skiers or snowboarders.

So, why is Smith so confident that China has the potential to surpass the world’s current largest snow industry within the next five years? Apart from the post-Olympic boom, Smith believes there are a few factors at play. The first is the Chinese government. “In 2015 President Xi said that he wanted to create 300 million winter sports enthusiasts. That’s something I still hear repeated often when I go to resorts or when I meet with local government officials. They really have taken that commitment seriously,” he says. Smith observes that the initiative is also in line with the central government’s wider aim to improve people’s health by encouraging more physical activity. In conjunction with those efforts, there is the enormous amount of infrastructure investment over the past few years. And it’s not just private investment fueling the growth, Smith says government investment has been crucial to supporting expansion of the industry, “The bullet train from Beijing to Zhangjiakou, turned what used to be four to 11-hour car ride into a 60-minute trip.”  

Joint Venture Benefits

After years of building up the company’s China operations, Burton initiated a search for a joint venture (JV) partner in China. Smith stresses the importance of identifying the right JV partner as instrumental to the company’s success going forward. The company was looking for a partner that could support them in areas where they lacked, Smith explains, “It’s the government relations, the localization of supply chains, those are the areas where it’s very important to have a partner to support us.” The search process took years of attention and effort. Smith recalls that before Burton entered into a joint venture with their local partner Hillhouse Capital Management, they talked to between 15 and 20 different organizations. 

Burton’s interests in China lie beyond financial success for the company, they are also out to cultivate snowboarding culture as they did years ago in the US. Given this mission, Smith says the foremost criteria for a partner was to identify a company that understood and embraced the culture of snowboarding. Smith is adamant, “We are a privately held company, and we did not necessarily have to find a JV partner. At the risk of sounding arrogant, we are the industry leader in snowboarding and we could have been financially successful in China, but that’s not what our brand is about. Our brand is about sharing the love of snowboarding and all that it encompasses.” 

Enter Zhang Lei, Founder, Chairman, and Chief Investment Officer of Hillhouse Capital Management. Smith calls Zhang, “one of the most passionate snowboarders I know,” and says that he truly understands Burton’s mission. Besides the significant financial investment from Hillhouse Capital, Smith knows each side brings invaluable strengths to the partnership. “We know what we’re good at, and we also know our weaknesses,” he says. For Burton, Smith adds, “The partnership with Hillhouse Capital has allowed us to excel in our strengths. It’s given us the freedom to do what is right for the brand, the sport, and the related culture of snowboarding.”

Product Localization for Global Consumers

Although their operations span the globe, it hasn’t been challenging for Burton to stay true to their brand DNA. Smith explains, “Our founder Jake was always very clear who we are and what we stand for.” Smith calls Burton a “value driven company” and says they focus heavily on sustainability and inclusiveness. Of course, opportunely for Burton their focus on green initiatives is very much in line with the Chinese government’s current environmental priorities. However, Smith insists that Burton is unwavering on their core values, “We are not going to change our identity for any market, because that wouldn’t be legitimate.” All of this said, he still appreciates the need for local modifications, “We have a saying, we say that the Corporation bakes the cake and the local offices put the frosting on it.” 

Part of Burton’s localization effort in China included establishing a soft goods license to create products tailored for the local market. Notably, outside of the company’s Vermont headquarters, Burton China is the only international arm of the company with a licensing agreement. Smith notes three main reasons for this: “First and foremost, it’s the Chinese consumers. The trends in the China market are a little bit different than the direction of our global line. Whether that’s color stories, fit, or details. We know from our market research that we need to create products specifically for China.” While it is unusual for Burton to create market specific products, it’s not unprecedented. Smith recalls a line Burton previously tailored for female consumers in Japan, explaining that the global line didn’t fit Japanese women so they created a local line adjusted for fit and style. Next, Smith says “speed to market” is an important component. He points out that Burton’s license agreement is another benefit from their partnership with Hillhouse Capital as it enables them to efficiently operate outside of the corporate supply chain. “We can make the right product, that right fit, the right color stories. It’s very efficient for us to get to market right now,” he says “for example, what we’re going to sell in stores next October, we already have the samples in our office now.” Smith says Burton wants to be even more proactive in China, and he is counting on this efficient supply chain to be a huge asset to the brand going forward. 

The final motivation for the soft-good license is year-round business. Currently, Burton is exclusively associated with the snow industry. Smith explains, “I will meet people who will say I love Burton, but I’m not a snowboarder so it’s not a brand for me. So, while we’ve positioned ourselves as the snowboarding industry leader around the world, that also limits some of our business capabilities.” China, as a new market, represents a unique opportunity to build Burton beyond the winter season into a year-round brand. However, Smith realizes that in order to capitalize on that opportunity, Burton needs to focus more on apparel, accessories, and China specific products, and that he says, is what is made possible by the licensing agreement.