Nike, Adidas Stepping Forces Li Ning International Breakthrough

In the face of Nike, Adidas step by step, today's Li Ning is no longer willing to trap the local market, it can succeed?

With the easy whistle and RAP rap music, a frog on campus appeared. It stood on the table in the trapezoidal classroom, desperately raised his hand, but the teacher asked the handsome guy next to it to answer the question; then, it stuck on the path that the girl wanted, and tried to attract attention but still got disappointed; finally it jumped. Into a white fashion basketball shoes, suddenly, the frog became a brave boy, invincible on the court, the girl clapping and cheering; Finally, the focus on the screen fixed in the dazzling basketball shoes, an advertising phrase flashed: "Li Ning - everything is possible."

This is an advertisement specially created by Li Ning (2331.HK), China's most famous sporting goods manufacturer, for its new product, the TOP GUN series of basketball shoes. This easy-humorous "frog story" was just broadcast, and it attracted an applause from its target audience. But Li Ning's brand managers have more good ideas. They specially sponsored the 200 People's Congress Party of Sina "I'm Shoes Mad" forum. This is a group of SNEAKER (shoe enthusiasts), worth a thousand dollars Nike shoes they can buy two pairs, wearing a pair, a collection. When this group of SNEAKER with a knife and hacksaw Li Ning TOP GUN basketball shoes disassembled, are surprised at the technical content and professionalism of this pair of shoes - not less than the international big names such as NIKE, ADIDAS. After the gathering, the evaluation of a large number of TOP GUN basketball shoes was spontaneously released by a large number of SNEAKERs on major footwear websites.

Just a beautiful marketing campaign is not enough, and Li Ning's strength needs to be proved more. The Beijing Olympic Games has entered a 1,000-day countdown. Experts estimate that by 2008, the total footwear market in China, Hong Kong, and Taiwan will surpass Japan by US$2.5 billion, making it the second-largest in the world after the United States. Footwear market. "This will be a huge battlefield," said Tor Petersen, a ZOU marketing company of Shanghai-based sporting goods marketing company. Li Ning obviously can not tolerate Nike or Adidas stepping on the feet of his own home.

There is no doubt that Li Ning is making strides forward. After getting rid of the downturn in the late 1990s, Li Ning’s turnover reached approximately RMB 958 million in 2002, RMB 1.276 billion in 2003, and RMB 1.878 billion in 2004, a significant increase of 47.2% from the previous year, and net profit increased by 42.0%. In 2005, Li Ning is expected to break the turnover by 2 billion yuan.

However, the competition is very cruel, especially with the rich and powerful, technically competitive global opponents. In January of this year, Adidas, the world’s second-largest sporting goods manufacturer, finally won the official partner qualification for the 2008 Beijing Olympics. According to rumors, Adidas did not hesitate to add the target to 1.3 billion after learning that Li Ning's final bid was RMB 1 billion. After the signing ceremony, Adidas began roadshows in major cities such as Beijing, Shanghai, Guangzhou, Chengdu and Dalian to celebrate this cooperation.

Twenty-one years ago, the founder of Li Ning, Li Ning himself, won the title of “Prince of Gymnastics” by virtue of his outstanding performance of winning 3 gold medals at the Los Angeles Olympics. Today, the company he has built in one hand can also create miracles again in the siege of international strong players?

Reason and impulsivity

In September 2005, when Li Ning walked into the door of Umbro, a veteran British sportswear company, with his unique gymnasts, the British "The Times" could not wait to throw an explosive news: "Li Ning from China will Acquires UK Umbro."

In the previous month, Adidas had just announced the acquisition of Reebok at a price of 4 billion U.S. dollars. The joint efforts of the "second child" and the "third-oldest" have made Nike, who once had a clear advantage, become uneasy. In the two major markets in Europe and the United States, the battle for market share between Nike and Adidas is in a stalemate. The rapid growth of the Chinese market has become the biggest variable in the future. Li Ning, who occupied China's top spot in the sales of sports shoes and sportswear, was caught in the cracks between two major international brands. The outside world speculated that Li Ning will quickly throw big moves and big strategies. The acquisition of Enbao is in line with imagination.

Enbao was founded in 1924 by the British Humphreys brothers. This 81-year-old sports brand is currently the world's most famous professional football apparel and equipment supplier. In 1966, the England team wore their jerseys and claimed the World Cup. The World Cup was almost completely "submerged" in the madness of Enbao. In the final 16 teams, 15 teams wore Umbro jerseys. With the progressively stronger brands such as Nike and Adidas, Enbao's market has gradually been eroded. Its history of dominance is gradually declining, and its market performance has been deteriorating. In recent years, frequent outflows have been abandoned by a team, and its sponsors have been qualified for Nike. Adidas replaced the news.

Because of the acquisition of rumors, the foreign power described Li Ning as "the Lenovo and BenQ of China's fashion industry." This seems to be a bold adventure of Li Ning wading overseas. In terms of recent share prices, Enbao’s current market value is between 180 million and 190 million pounds (approximately 2.6 billion renminbi), while Li Ning’s market value is approximately 4 billion Hong Kong dollars or so, with approximately 700 million renminbi in cash. The risk of Li Ning swallowing Enbao’s funds is not significant. Li Ning's 28-fold P/E ratio, which is much higher than the average level of the industry, also makes the capital market hope that it will have bolder actions besides natural growth.

In June 2004, after a setback, Li Ning finally landed on the Hong Kong main board market. However, Li Ning's progress has been rather conservative since it was listed in the past year and a half. Until today, in the aspect of international cooperation, Li Ning, which has been established for 15 years, has remained at the exclusive distribution level of international brands in China, and has never been involved in acquisitions.

At the end of June 2005, Li Ning obtained the exclusive distribution rights of outdoor brand AIGLE in China, but gave up the exclusive distribution right of KAPPA in China. Li Ning of Hong Kong reached an agreement with AIGLE to set up a joint venture in Hong Kong, each holding 50% stake. The joint venture company will be authorized exclusively by AIGLE to produce, promote and sell AIGLE outdoor leisure and extreme sports products in China for 50 years. AIGLE originated in France and is an outdoor brand with more than 150 years of history. KAPPA, which was sold during the same period, was born in Italy. The product range covers most sporting events and enjoys a global reputation.

The two brands have their own priorities and are evenly matched. Why did Li Ning spend a lot of time and make a decision? Li Ning explained that they value long-term joint ventures and cooperation to bring value-added results. The cooperation with AIGLE has a duration of 50 years, while KAPPA's cooperation ends at the end of 2007. In fact, negotiating with Enbao is said to begin with distribution cooperation. In early 2005, Li Ning signed an agreement with the NBA and was officially allowed to further promote the Li Ning brand through the NBA.

"For the internationalization strategy, we are making some adjustments. Frankly, we have not done any large-scale planning in this area in the past few years," said Wu Xianyong, vice president of marketing for Li Ning, in an interview with "Chinese entrepreneurs." .

In the half-year financial report of listed companies in the first half of 2005, Li Ning’s revenue from the international market was only 1.3%, compared with 2.4% in the same period in 2004. Compared with the sales volume in the first half of 2004, the growth rate was 40.3% in the first half of 2005, but in the same period its international market contracted sharply.

Wu Xianyong disclosed that at the end of 2004, Li Ning made some adjustments to the international market strategy and decided to “create an international brand first and then expand the international market.” “This practice is different from other Chinese companies in their low-cost dumping methods. We hope that Improve the brand's added value."

However, it is said that in the summer of 2005, Li Ning himself began to communicate closely with the Umbro board of directors. Li Ning’s attitude toward the acquisition of rumors has so far been ambiguous. The company publicly stated that it is inconvenient to comment on market rumors. At present, there is no clear purchase plan, but the possibility of cooperation with any brands is not ruled out.

Comprehensive westernization

Today's Li Ning Company may be one of the most thorough local companies in the Westernization Movement. Chairman Li Ning and CEO Zhang Zhiyong are both graduates of the Peking University EMBA. Chief Financial Officer Chen Weicheng comes from Reuters Group. He is a Malaysian Chinese. Wu Xianyong, the vice president in charge of the market, is a 34-year-old very rigorous Yunnan native who previously worked for P&G for 9 years. He is also responsible for Li Ning’s international business. After he was dug up to Li Ning, his salary was 50% higher than before, and there was also a considerable amount of stock options. In fact, Li Ning still has many talents with a multinational background. For example, its vice president in charge of sales has worked at Avon, and the vice president in charge of shoes is from Nike.

In order to allow the company to enter the international track as soon as possible. Li Ning did not hesitate to pay a lot of money to IBM Consulting to provide strategic consulting. It adopted SAP's most advanced ERP and supply chain management system, and also commissioned the internationally renowned advertising company Leo Burnett to take charge of its overall image and brand positioning. In January 2003, Li Ning persuaded his family members to invest in Singapore’s TETRAD and CDH Funds, a subsidiary of China International Capital Corporation, to transfer a portion of private equity. The latter two held 19.9% ​​and 4.6% of the company’s shares, respectively, and entered the board of directors. The restructuring of Li Ning was completed on the equity structure, and on this basis, it completed its twisted listing plan.

In 2001, former Chief Financial Officer Zhang Zhiyong became the CEO and Li Ning Corporation began a three-year series of reforms. Prior to 1996, Li Ning's sales revenue was 670 million yuan, which had reached the historical peak. In the era of diversification, the company's business was once expanded from clothing to leather goods and cosmetics. However, the myth of rapid growth came to an abrupt halt in 1997. Until 2001, Li Ning’s sales had hovered around 700 million. In order to support Zhang Zhiyong, Li Ning’s most important decision is that family members will all exit.

After taking office, Zhang Zhiyong vigorously introduced new blood and initiated channel changes. In the past ten years, Li Ning has been following the channel of wholesalers. Because of the volatility of profits, wholesalers switched to other brands, and Li Ning’s market quickly shrank. In response to this malady, Zhang Zhiyong began to promote Li Ning's store strategy on a large scale. By the end of June 2005, Li Ning had owned 3012 franchised retail stores nationwide and had nearly 400 stores directly in 11 cities including Beijing and Shanghai. In addition, several flagship stores with large stores and modern furnishings have been opened in prime locations in Beijing and Shanghai. By 2005, the image of these stores had been upgraded for the fourth time to meet the new development trend. According to the plan, the number of Li Ning brand stores in 2008 will increase to 5,000, mainly concentrated in second-tier cities and third-tier cities and the rapid economic growth in the Mainland. In the future, 75% of franchised stores will be maintained, and 25% will be specialty stores.

The entry of IBM and Leo Burnett helped Li Ning find the general direction. In the 12 years before 2002, the company’s advertising subject appeal changed eight times. From the earliest "China's new generation of hope" to "best for yourself" to "I exercise my existence", "the beauty of the world of sports sharing," "excellent, from the true colors" and so on.

The core question raised by IBM is "What kind of company does Li Ning want to become?" Although Li Ning had a clear idea before this, he and senior executives still seriously pondered this proposition. Li Ning hopes that “the company’s future can become a strong brand in the field of professional sporting goods”. This vision has been defined as today’s “dedicated to the creation of professional sporting goods” and “a strong global position in the field of more than two major sports”. Wait. The goal of Li Ning is that by 2018, the company will be able to enter the top five global sports products and become one of the most influential brands in the global arena.

After clear targets, Li Ning gradually withdrew from some of the diversified fields that had previously entered the market, and its product lines shrank in sports and leisure and professional sports. In the field of professional products, Li Ning did not hesitate to invest heavily and tried to make breakthroughs and establish himself as the threshold of the first domestic brand. In August 2004, Li Ning Co., Ltd. cooperated with Exeter R&D in the United States to begin research and development of the core technology of sports shoes and cooperated with the Department of Human Sports Science of the Chinese University of Hong Kong to perform sports biomechanics tests on the mechanical characteristics of sports shoes and establish the feet of professional athletes. Database to collect and analyze professional sports features to further improve the product's professionalism and comfort. And after the launch of the "gold iron" series of professional football shoes.

In 2004, a few days before Li Ning’s listing, the “Wall Street Journal” criticized Li Ning for swinging between sports and leisure. However, Li Ning executives do not agree with this, "only the consumption of professional sports products, will completely deviate from today's main sports market in China." Li Ning, a company executives commented. "In your shoe, there will be a pair of basketball shoes, a pair of soccer shoes, a pair of running shoes, a pair of tennis shoes, a pair of hiking shoes, and even a pair of jogging shoes?" “Most people wear sportswear today may not be because of sports, but may be because of comfort, leisure or fashion.” And this is a huge market that any sports brand company based in the Chinese market will not ignore.

Although Li Ning has been quite large in professional sporting goods for three years, Li Ning still insists on a multi-level strategy in product structure. "We have the most expensive iron series of professional football shoes, priced at 1080 yuan, which can enhance the brand image." Wuxian Yong said, "We also have a price of about 700 yuan of professional basketball shoes, can curb the growth of Nike and Adidas in the country, However, our main product is still 200 to 450 yuan, with a certain amount of expertise and affordable prices."

Breakthroughs and expansion in the professional field have caused Li Ning to quickly distance itself from a series of domestic second-tier brands that have been entangled. This has established the threshold for entry as a first-line brand, and has also shortened the gap with giants such as Nike and Adidas. In the process of gradual transition from sports and leisure to professional sports products, Li Ning and his executives are extremely cautious in controlling and controlling the speed of change. Wu Xianyong said, “If we ask us what advantages Nike has, we honestly say that on the one hand we have a huge sales network in China, on the one hand because we know more about the Chinese market than they do.”

However, one of Li Ning’s assistants commented that “he doesn’t like commercial life very much.” After the company was on the right track, Li Ning began to appear in the company very rarely. He finally got his wish to temporarily get rid of those trivial and complicated concrete tasks. His assistant The evaluation said, "He is a man of no doubt, very wise. His hands never reach too long." But if the Umbro acquisition is reached, Li Ning and his entire team are facing arduous challenges in front of this huge leap. The test.