Lining CEO Zhang Zhiyong Detailed Explanation Of "Shut Shop" Storm

About two weeks.

Dare to accept media interview on the cusp of public opinion, before December 30th, no matter Li Ning Co Ltd (hereinafter referred to as "Lining") CEO

On the afternoon of December 30th, when Zhang Zhiyong sat in front of this newspaper reporter, he said frankly, "there is a problem, I must not avoid it."

Zhang Zhiyong, a financial source, has been in the Li Ning Co for the last 10 years. He is very cautious about the figures and is calm in making decisions.

People familiar with him say that his personal character is strong confidence, initiative to change, and "dare to take risks" can not be underestimated.

During the interview, Zhang Zhiyong admitted that the problems Lining faced at the moment were already anticipated when he decided to reshape the brand.

He repeatedly stressed that Lining's brand remolding is an established strategy.

Zhang believes that the era of high growth of sports goods has ended, and has now been pferred to the stable development period of the industry.

Before 2008, the market grew by more than 30%, and in 2010 it was around 15%.

Against this background, sports goods enterprises have reached the ceiling through expanding the number of stores to enhance their performance. It is becoming more and more necessary to enhance the output efficiency of existing stores.

Zhang Qing, former Li Ning Co employee and President of the key sports marketing organization, said that this problem has been beset with Zhang Zhiyong's core decision-making team.

More broadly, it also plagued China's sporting goods industry.

The escalation of consumption and the obvious changes in labor costs prompted Lining to make changes.

It is not just Lining who sees these changes.

From the beginning of 2009, Nike began to "operate" on channels, eliminating poor performing dealers and concentrating its sales business on larger distributors.

Adidas seems more willing to bet on strengthening marketing and its own sales channels.

Adidas and Nike, which saw the upgrading of consumption, are also making efforts to enter the two or three line market.

Zhang Qing believes that the goal of Lining's layout in the market has been to consolidate the basic line of the two or three line and attack the front line.

He believes that at present, Lining's pformation in distribution channels is the pformation of the two or three line, which is equivalent to the adjustment of the most important "waist power", rather than "back to water," but "premeditated".

Now, the test of Zhang Zhiyong is whether we can persist.

"Completing remolding takes time, not overnight."

Zhang Qing repeatedly stressed.

For this, Zhang Zhiyong made an analogy: I had hiked in the desert, you have to have a GPS, otherwise it will not reach the end.

I compare the end point to a company's goal. GPS is equivalent to the brand positioning in the end.

In the desert there is no sense of direction, easy to bias, and then adjust.

This process is constantly revised on the left, right, left and right.

But we will find that we will reach the finish line.

In addition, the key is whether you can persist in ensuring that the whole system keeps going in that direction.

This is not easy.

Interview

Economic Observer: Why did Lining close 500-600 poor stores recently?

Zhang Zhiyong: actually, every year we have a certain percentage of adjustment.

When you have more than 7000 stores, due to the expiration of the contract and no renewal of business street, the number of shops that shut down to 5%-7% is normal.

I would also like to clarify that "closing 500-600 stores" is misleading. In fact, we are integrating low efficiency distributors.

In a short period of time, we can see the actual number of switch shops and the net number of stores in the year.

I can say for sure that we have completed all the opening goals this year.

Economic Observer: what kind of market are the distributors that are mainly distributed?

Zhang Zhiyong: according to the two dimensions of per capita income and sports population, we are mainly divided into two main categories: the more than 650 markets with three lines above the city level, the better ones are the county-level cities and the above; the more than 1640 ones are mainly the county towns, mainly the rural population.

The growth patterns of these two big markets are different.

At present, there are more than 60 tier cities and mega cities in China. The number of consumers is down, but the final sales are rising, that is to say, the unit price of goods is rising.

The more than 1640 counties are increasing in number.

{page_break}

The first tier of our distribution system has more than 1700 distributors, averaging only one store per household.

The integration of the 500-600 (distributors), which is 30% of them.

Economic Observer: at the moment, what do you think of the outcry and Li Ning Co?

Zhang Zhiyong: first, in anticipation, the practice of financial investors is not right or wrong, but a choice.

There are two types of investors. One is a large shareholder and the other is a financial investor.

For financial investors, from the global investment trend, it is more and more short term investment.

This is not right and wrong, it is choice.

This is normal.

Second, people are emotional and can not ignore them.

The key is whether we insist on what we want, as long as there is reason.

Now, I choose this way. If we feel justified, we will support and support the brand so that we can do better.

I always believe that China will produce big brands.

The rest is the comparison of capabilities.

The most difficult part of competition is not to follow others, but to have your own unique competitive strategy and implementation path.

Of course, the ratio of market share and brand value is based on the time dimension.

Economic Observer: will next year be your most difficult year?

Zhang Zhiyong: if I do well, it will be even better than 2010, but not worse. I am talking about market share.

The key to business is to see market share.

The pull of sales is achieved by opening new stores or single store growth mode. This is very important.

If the mode of shop opening is growing, the initial volume of 1:4 is usually the basic volume. Although your sales volume is large, the market share (actual sales volume) is not so large.

Our growth pattern in 2011 is very clear. First of all, we should raise efficiency.

This requires us to cooperate with suppliers and retailers. This is the most urgent thing for me to manage. The main reason is that the cost has changed dramatically.

For example, suppliers, our southeastern coastal suppliers lose much of their capacity and lose up to 30%-50% at most. Even if wages rise, they will not be able to recruit workers.

For us, we need to increase the labor cost to the supplier and increase the discount point for the retailer. How much can you solve the consumer premium for the retail end in the whole increase cost?

If you digest yourself, you will also be faced with various financial indicators.

Economic Observer: Lining's expectations for adjusting the impact on the company at the moment?

Zhang Zhiyong: the bottom line of risk that I focus on is market share.

As long as the value is stable, there is no need to worry.

We are now in second place.

For me, the key is to cooperate with the major shareholders and carry out our established goals and strategies.

This is the core.

We can not be disturbed by these rumors, and some even doubt our future investment in brands.

Even if the growth rate does not increase next year, it does not mean that I have no ability to invest more in promotion. It does not mean that I have no ability to speed up the remodeling of the brand as long as I have enough cash.

This is what we must truly adhere to.

In the end, what I want to see is whether the target market that I want will be acquired in every step.

There is no problem with this accuracy.

Economic Observer: Lining's brand changes greatly before and after the reshaping of the target consumer, will it lose the existing consumers?

Zhang Zhiyong: once it forms its own consumer group, it is very difficult to change new target customers. We hope to turn loyal customers into loyal customers.

In the past, our brand loyalty was high, the group level was high and the quantity was large. Our problems were structural.

The "structure" problem is two aspects. Our main consumer groups are older, and more are price consumers.

Price consumers value the real function of products, while value consumers value their feelings in addition to their actual functions.

The main group we want is value consumers.

In the past 35 years, China's sporting goods market will develop in two directions: the basic market is targeted at price consumers, and the brand market is targeted at value consumers.

Economic Observer: what is the specific way of Lining's "integration" of distributors?

Zhang Zhiyong: first, the direct purchase and direct operation of the original dealer.

From a long-term strategic direction, this is the best model.

The other way is to integrate distributors and choose better distributors so that they can do large-scale operations.

For distributors and distributors, we now pay more and more attention to the training of product knowledge and product function points.

Our order will normally be 5 days, and now there are three days for training.

Economic Observer: according to the expected, Lining brand remodeling need how long will it be effective?

Zhang Zhiyong: as a matter of fact, the brand remolding of Lining began in 2007.

It takes time to make a brand.

From the perspective of current execution, the easiest way to implement is advertising creativity every quarter. Relatively easy to implement is product, product development cycle is 12-18 months, of which clothing can be quicker to fit new brand positioning; the slowest is integrated retail store, more than 7000 zero sale stores, according to the speed of the past, change to more than 800 a year, even if a year changes 1000, also need 6-7 years of time, speed up some, 5 years to update all retail stores.

The essence of brand remolding is to form a consistent new impression from the performance of the brand, to the product and to the retail store, and it is a process of repeated stimulation.

Another problem for us is that we are not a new brand, but a brand that has an existing brand image and an existing consumer group.

To some extent, it is easier to create new brands than to pform brands.