Li Ning - What to save you, the decline of the Oriental Pride

Li Ning, a sportswear brand that had once made the Chinese proud, is now in constant trouble.

Li Ning’s 2011 financial report showed that the company’s gross profit declined by 8 percentage points to 46.1%. Although gross profit still ranks among the top five sporting goods suppliers, its net profit is only 386 million yuan, which is less than the net profit of the top five sports brands with a net profit of 780 million. Half of the yuan. In the past two years, the company's stock price has dropped from the highest of about 30 Hong Kong dollars to the current 5.1 Hong Kong dollars.

Li Ning Company was once a well-deserved big brother of China Sporting Goods Company. It was founded by former famous Chinese gymnast Li Ning in the late 1980s. After listing in Hong Kong, China in June 2004, it continued to maintain high growth until 2010.

The Li Ning brand's cognition in the eyes of consumers was closely linked with the image of “the athlete who gloryed for the country”. Especially during the 2008 Beijing Olympics, when Li Ning ignited the Beijing Olympic torch, Li Ning’s products followed suit. Began selling.

However, the good times did not last long. With the loyalty of a group of loyal customers, the word “Li Ning” has not helped the brand building. In the past two years, “Li Ning” has been even more troublesome: After the stockpiling of stocks, falling profits, and the departure of senior executives, after many years of smooth development, “Li Ning” seems to be a patient waiting for salvation.

Li Ning takes the lead in the industry

"Any enterprise can not live without the environment, the so-called time to build a hero." Key Road Sports Consulting Co., Ltd. CEO Zhang Qing told reporters. Li Ning is riding on this trend from the previous one billion yuan quickly rushed to the level of 9 billion in turnover.

However, the turning point is here. In the past five years, the average growth rate of domestic sporting goods brand stores is about 10%, while the sales growth rate is about 20%. Since 2011, the growth rate of the domestic sporting goods industry has slowed down. The 2011 annual report of the domestic listed sports brands shows that due to factors such as high inventory and rising costs, the growth of the industry slowed down.

Among them, issues such as excess inventory have become bottlenecks for the development of various companies. "It was very difficult to do last year. This year may be a little better because it is the Olympic Games." A sporting goods agent told reporters.

According to Li Ning’s 2011 performance report, Li Ning’s 2011 sales fell 5.8% to 8.929 billion yuan, while net profit dropped sharply by 65.16% to 386 million yuan. For the sharp decline in performance, Li Ning said in the financial report, mainly due to the sharp increase in inventory, the data show that Li Ning's inventory amounted to 1.133 billion yuan last year, an increase of 40.57% over the same period last year's 806 million yuan.

Although Li Ning also increased wholesale discounts for distributors, adopted measures for inventory repurchasing, and actively expanded the construction of factory stores and discount stores, and strengthened sales of online platforms, Li Ning’s inventory was still over one billion yuan. The effect of the measure is not obvious.

At the same time, some distributors have resented the fact that the discounts have been too great.

"Last year, I saw a number of small distributors withdraw Li Ning. Li Ning used badminton equipment as a fast-moving consumer goods to sell. After a season, they would be cleared for clearance. They would often clear the goods at a much lower price than futures. The purchase of futures dealers is not without exception, but it is said that Li Ning began to correct this mistake this year. As for the effect, it needs time to verify.” The above distributor said to the “Investor Daily” reporter.

Of course, high inventory is not Li Ning family. Anta, 361 Degrees, Peak and other sporting goods companies have experienced different degrees of decline in growth, high inventory.

According to the 361 degree announcement, the inventory of 361 degrees in 2011 was as high as 4.512 billion yuan, 81.8% higher than the 2.482 billion yuan in 2010. Anta's previously published annual report also showed that as of December 31, 2011, ANTA's inventory amounted to 618 million yuan, compared with 454 million yuan in the same period of last year, an increase of 36.1%.

In March of this year, Peak CEO Xu Zhihua once stated that retail terminal inventory is about 1 month, distributors inventory is from 5 months to 6 months, and the total is about 6 months. At the press conference held on July 5, Li Ning also said that in the next 6-12 months, it will mainly solve the inventory problem.

Rebranding "Li Ning" Lost Self

Li Ning, once a glorious sight, why trouble?

In 2008, Li Ning showed his style over the Bird's Nest, and his company's performance was outstanding. However, the extreme objection will be reversed. In 2009, they immediately showed weakness. They found that their user level is gradually aging, while the sports brand consumer is young people. So in 2010, Li Ning resolutely implemented a strategic transformation marked by the change of marks, and carried out actions such as changing the mark, changing slogans, raising prices, and changing channel policies.

On June 30, 2010, Li Ning released a new LOGO in Beijing. The graphic named “Li Ning Cross Movement” became the new sign of the Li Ning brand, and the new brand slogan “Make The Change” replaced the original. The slogan "everything is possible." At the same time, Li Ning launched a series of "post-90 Li Ning" ads, but this advertisement caused trouble for himself.

"When I saw the first reaction of Li Ning's advertising after 90, Li Ning abandoned us after 80." One 80-year-old consumer told reporters. He believes that Li Ning can fashion, but also can please a new generation, but this expression, it is easy to offend people of other ages.

This reporter also interviewed a number of consumers after 90, why not choose Li Ning's products. They replied: "Is Li Ning a brand?" In fact, Li Ning did not really understand the post-90s.

Although afterwards, Li Ning stressed that Li Ning is not positioning the consumer group after 90, but that Li Ning is a post 90 company. But this effect has already been caused. As a result, after the bid change did not reach 90, it lost 70, 80, and other consumers.

“Although we admit that brand rejuvenation is an eternal proposition, like some hundred-year-old to be innovative, but also need to constantly seek the youngest, but can not lose themselves.” Key Road Sports Consulting Co., Ltd. CEO Zhang Qingren Say.

"Li Ning's post-90s positioning is not necessarily wrong. Even the position of Nike is also the junior high school campus market. But Li Ning ignored the feelings of existing old users in the process of turning. This is a failure, and the sports brand audience is younger. This is a realistic choice.” Qu Zheng, a senior sports industry practitioner, told the “Investor Daily” reporter.

A number of industry insiders stated that Li Ning’s post-90 propaganda was not wrong, but it was only too radical in terms of expression.

“There is a theory in game theory that the leader should stay ahead of the leader and should adopt the same strategy as the follower, because it can always maintain an advantage over the leader. The follower should adopt an innovative or adventurous strategy. Opportunity surpasses the leader, this strategy is common in rowing competitions.” Sun Xi, a researcher at the Public Communication Institute of Renmin University, told the “Investor” reporter. But this innovation and risk-taking strategy is entirely due to Li Ning's misjudgment of the market.

What's even worse is that Li Ning has raised prices and this time completely hurt the hearts of consumers.

“The main reason for this is that there was a price increase, the main price was 400-600 yuan. This price is actually very good, because Adidas and Nike are discounted at this price. What's more unfortunate is that the cheap shoes at that time were cut off. Can not be retained. This instead created a chance for Jinjiang garment enterprises. Li Ning is not successful, but the bottom market has not been saved." An insider who left the company's product manager position said to the "Investor" reporter. .

Zhang Zhiyong, CEO of Li Ning, once admitted that Li Ning had lost some loyal customers.

Shocking fashion sports strategy swings

Compared with the error after positioning 90, it is even more difficult for people to understand that Li Ning's strategy between sports and fashion fluctuates.

Thanks to the marketing strategy of the 2008 Beijing Olympic Games, Li Ning's performance showed a good upward trend. In 2008, sales in China exceeded Adidas for the first time. After that, Li Ning Company began to deploy multiple brands, expanding into outdoor, table tennis, badminton and sports fashion, and badminton was also identified as the core category of Li Ning.

Experts pointed out: Paying attention to fashion and focusing on sports functionality has always been the choice of two brand strategies for domestic sports brands. Li Ning, for example, started from the function of sports. In particular, seeing the Kappa as a representative of the fashion line of the brand's operation is not bad, it swayed. In fact, the operation of fashion brands and sports brands is basically not a single way. However, this strategy of riding walls has limited market space in terms of time.

However, the overly decentralized front did not bring good benefits, but increased operating costs and wasted a lot of resources. In this three-year period, among the brands that Li Ning laid out, only the outdoor brand ECO benefited from industry growth and showed signs of profit growth. Other brands such as Lotto and Double Happiness are all losing money in varying degrees.

“Overall, the Li Ning brand has a large degree of ambiguity, and the swing is also quite obvious. Li Ning originally took the Eastern colors, the eastern innovation elements and the sports spirit, and locked in the mainstream sports projects to develop. The result was a style between fashion and sports. The swing, new customers did not catch, the old ones were lost," said Zhang Qing.

The spirit of sports began to fade in Li Ning's blood. With the loyalty of a group of loyal consumers, the word "Li Ning" has not helped the brand building. It is because how many consumers will remember the gymnastics prince that year. Perhaps in a few years, even the story of the Olympic flame did not remain in the impression of young consumers.

In addition, Li Ning’s pursuit of fashion is not as good as it was. “Li Ning is a bit of a quest for fashion and something new. I feel like they want to be fashionable and look good, but it's a bit contrived. It seems to be fashion and fashion.” An 80-year-old consumer told reporters.

Today, Li Ning, who has realized the crisis, is determined to return to sports. At the company's annual meeting in 2011, he pointed out the company's problems: It must stop swinging between professional sports and sports fashion, and focus on sports. He also proposed to withdraw resources from various sub-brands and focus on the core brand Li Ning.

The "high price" sponsorship of the CBA is being seen as an important measure for this "return." In June this year, Li Ning "high price" sponsored the CBA, although this decision was considered to be a gamble. But its determination to return to sports is evident.

Blind arrogance management hidden hidden hidden troubles

In 2008, after the Li Ning Olympics ignited, the company was a bit stunned by victory. The emotion of complacency began to spread within the company.

“At the end of 2008, we saw the potential dangers of the company. People are impetuous and employees feel good about themselves. The company’s internal affairs are not proper for spending money.” Another person who had left from Li Ning Company disclosed to reporters. .

The appellant gave an example to reporters: The company actually spent a hundred million for an annual rollout event. At that time, everyone knew that the tricks were here, but management actually thought it was nothing. More importantly, Li Ning began a large-scale layoffs and exchanges of blood. Although it claims that it is consolidating expenditures to do a good job of internal control, it is all devoted to loyal employees. There are more new employees than they have taken. This is where internal control is concerned. It is clear that HR has made a political struggle. To be a company like a man, to succeed is a luxury.

As a public company that has already been listed in Hong Kong, Li Ning should raise these issues in a timely manner. Unfortunately, the upstream channel does not work.

“The executives and the middle class were all flushed by the victory of 2008. So just for their own use, they simply felt that they were not at all wrong. The company did not give employees a reasonable way to reflect on the opinions. The company has at least a middle-level or senior director who has the right to speak. Senior executives only listen to middle-level reports, so that there is no democratic atmosphere within the company and they cannot mobilize the enthusiasm of employees.If you say that, you will certainly offend some factions within the company that have vested interests, and you will be involved in factional disputes. The insider said.

The early Li Ning company actually used Chen Yihong as the core of power. Later, Chen Yihong left. Zhang Zhiyong became the core of Li Ning. Li Ning is only a major shareholder and spiritual leader in the company. "Li Ning is very good, it is easy to easily believe in others." The insider said. It is this great way of handing down that has led to problems in the management system once proud of.

Regardless of strategy, positioning, and consumers, Li Ning will face new challenges. However, in the future, will Li Ning still have the opportunity to rejuvenate? Or that the market will give Li Ning wrong time and cost?

"It depends on whether its strategic adjustment is effective. The sportswear market is not as fast as the IT or mobile phone market. I believe that Li Ning still has its system capability and reserve strength." Sun Xi said.