Riding the Dragon: How One Family Built an OEM Shoe Factory Into Li-Ning and adidas's Supply Chain

Long Shuchu, Long Jinchu, and Chen Tongju are the actual controllers of Guangdong Longxing Tianxia Technology Co., Ltd., jointly controlling 92.4826% of the company's voting rights. This shareholding structure is on the highly concentrated end among companies planning to list, but if one looks at the company's customer list over the past decade—Li-Ning, adidas, Under Armour, Decathlon, and Anta—behind this highly concentrated equity is a family business that has sunk deep roots in the athletic footwear contract manufacturing track.

Longxing Tianxia's predecessor, Guangdong Zhancheng Yanchuang Technology Co., Ltd., was established in July 2015, and in December 2024 it was converted in its entirety into a joint-stock company. Its legal representative is Long Shuchu, and its controlling shareholder is Jiangxi Longxing Tianxia Enterprise Investment Co., Ltd. The company is mainly engaged in contract manufacturing of athletic footwear, providing ODM/OEM services to brands such as Li-Ning, adidas, Under Armour, Decathlon, and Anta. In 2025, athletic footwear revenue accounted for 91.05%, of which running shoes accounted for 35.67%, making it the company's largest single category.

This customer list itself is proof of the company's core competitiveness. Being able to simultaneously enter the supply chain systems of leading domestic sports brands (Li-Ning, Anta) and international sports brands (adidas, Under Armour, Decathlon) shows that the company's production processes and quality control standards have been recognized under different market standards.

The company's revenue scale has remained at a relatively high level over the past three years: RMB 4,210,562,900 in 2023, RMB 5,587,715,100 in 2024, RMB 5,834,094,900 in 2025, and RMB 3,176,776,800 in the first half of 2026. Its revenue base is solid. Net profit attributable to the parent company over the same periods was RMB 208,563,800, RMB 282,078,500, RMB 257,510,100, and RMB 170,939,000, respectively.

Weighted average ROE has remained at a double-digit level, at 16.62%, 18.32%, and 13.11% from 2023 to 2025, respectively. Behind these figures is the manifestation of economies of scale by a contract manufacturer with annual revenue exceeding RMB 5 billion.

Supporting this scale is the company's long-term investment in overseas production capacity layout. The IPO fundraising plan shows that Longxing Tianxia intends to invest RMB 310 million to build the Phase I automated production base of Indonesia Plant II, and RMB 210 million to build the Vietnam Yule shoe sole automated production base. Together, these two investments account for nearly half of the total fundraising amount. The increase in the proportion of overseas production capacity, together with the fact that the proportion of overseas revenue has remained in the 37% to 48% range year after year, indicates that the company completed the globalization of its production capacity layout very early and can flexibly adjust production bases in line with the supply chain relocation pace of brand customers. This is a capability possessed by only a few companies in the athletic footwear contract manufacturing industry.

In addition, the company also plans to invest RMB 160 million in the Hunan Zhanfeng athletic shoe sole automated production line project and RMB 131 million in the Dongguan Zhancheng footwear relocation, expansion, and automation upgrade project. The overall focus of the fundraising is on automation upgrades, meaning the company is transitioning from the traditional labor-intensive contract manufacturing model to automated production.

The distribution of the company's production bases is also worth elaborating on. In addition to domestic bases in Dongguan and Hunan, Longxing Tianxia has also established production bases in Indonesia and Vietnam. This multi-country production capacity layout gives the company the ability to flexibly allocate orders among different countries, especially when responding to changes in the international trade environment, enabling it to respond more quickly to brand customers' requirements for supply chain diversification. The timing of its overseas production capacity layout was earlier than the industry average, which is also one of the important reasons the company has been able to continuously secure orders from international brand customers.

In terms of patents and standardized production capabilities, as of June 30, 2026, the company had obtained a total of 436 patents, including 24 invention patents and 392 utility model patents, as well as 1 overseas patent. The scale of 393 utility model patents reflects the company's continuous accumulation of incremental innovation in footwear structural design and production processes. In contract manufacturing, this kind of accumulation is often the key to determining yield and delivery efficiency.

Customer concentration is an industry characteristic that such contract manufacturers cannot avoid. The revenue proportion of Longxing Tianxia's top five customers has remained in the 86% to 89% range year after year. In 2023, the specific composition was Li-Ning 32.89%, Under Armour 28.84%, adidas 10.24%, Decathlon 9.41%, and Anta 5.36%.

The prospectus explains that the global athletic footwear brand market being highly concentrated among a few leading brand owners is a common industry phenomenon. The customer concentration of peers such as Yue Yuen Group, Huali Group, and Feng Tay Enterprises is also at a similar level. This is not an operating characteristic unique to Longxing Tianxia, but a structural feature of the entire athletic footwear contract manufacturing industry. By choosing to deeply bind itself to leading brand customers, the company is, to some extent, using scale and delivery capability in exchange for long-term stable order share.

The company's gross margin from 2023 to 2025 was 19.10%, 17.61%, and 18.48%, respectively, and rebounded to 19.33% in the first half of 2026, which is within a reasonable range among manufacturing contract manufacturers. R&D investment as a proportion of revenue from 2023 to the first half of 2026 was 4.10%, 3.07%, 3.09%, and 2.89%, respectively, in line with the common investment level of traditional manufacturing.

The prospectus discloses that during the reporting period, some domestic employees did not have social insurance and housing provident fund contributions paid by the company, and the company has explained its rectification plan in this regard; in addition, the proportion of tax incentives enjoyed by the company to total profit decreased from 14.76% in 2023 to 6.79% in the first half of 2026, showing a declining trend in reliance on incentives.

In terms of corporate governance structure, the three actual controllers, Long Shuchu, Long Jinchu, and Chen Tongju, jointly control 92.4826% of the voting rights, which is on the higher end of governance concentration among companies planning to list. The risk factors section of the prospectus lists this as a specific risk warning, namely the risk of control by actual controllers. How the company responds to this is something that regulatory inquiries and the quality of information disclosure will need to continuously verify going forward.

Longxing Tianxia's response to the first round of inquiries was disclosed on September 3, 2026. The inquiry letter involved 14 questions, including main board positioning, horizontal competition, and sales customer structure, and the company is currently in the inquiry stage. Whether a family business tightly controlled by three founders and deeply engaged in athletic footwear contract manufacturing for more than twenty years can use the automation upgrade funded by this listing to preserve its existing customer structure and gross margin level in an industry environment of continuously rising labor costs is a question worth tracking next.