Sportswear maker Win Hanverky Holdings, which derives nearly half of its revenues from sales to Adidas, said it would attempt to expand its higher-margin retail business by negotiating a contract to distribute the international brand in China. Hong Kong-listed Win Hanverky will also seek to acquire mainland distribution rights from other international clients including Nike and Diadora, said chairman Roy Li Kwok-tung. Like other mainland manufacturers such as shoemaker Yue Yuen Industrial (Holdings), Win Hanverky is widening its exposure to retailing as profit margins on manufacturing shrink due to higher labour costs. Mr Li said his company would introduce its FutbolTrend outlets, which sell some sportswear brands, to tier-one cities including Beijing and Shanghai later this year. Win Hanverky might also open single-brand stores in the mainland for some of its manufacturing clients, said chief financial officer Wilson Cheung Chi. Its mainland retail business consists of an exclusive licence to distribute Umbro soccer products. It had 800 franchised Umbro outlets at the end of last month and aims to increase the number to 1,200 this year and 1,500 next year. The company hopes to boost retail contribution to 25 per cent of sales next year. In the six months ended last June retail had gross margins of 37 per cent and accounted for 13.6 per cent of sales. Sportswear manufacturing had gross margins of only 30.8 per cent during the same period but accounted for 69.2 per cent of sales. Mr Cheung said though its gross margins had fallen slightly, manufacturing would account for at least half of total sales next year. Win Hanverky derived 17.2 per cent of its revenue from apparel manufacturing and wholesaling for the N.Y.L. brand and sourcing for Sears Canada. This segment of the business had gross margins of 45.5 per cent. The company's latest half-year net profit rose 34.7 per cent to HK$134.2 million. Sales increased 26.8 per cent to HK$1.195 billion. Win Hanverky recently opened its first FutbolTrend outlet in Langham Place, Mong Kok. Average spending per customer at the store was HK$800, according to Mr Li. He said mainlanders might not be as passionate about foreign soccer teams' gear as Hong Kong consumers but the growth potential was great because foreign league matches were shown on free TV in China. According to investment bank Merrill Lynch, Nike is the leader in China's sportswear market with a 30 per cent share, followed by Adidas and the homegrown brand Li Ning, both at 13 per cent.