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Expert Commentary: Where Is Lining And Nike?

2011/1/25 11:34:00 72

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Nike

(Nike) "not exactly.

Lining

(Li Ning) following the current development trajectory, its similarity with Nike will be limited to the trademark similar to Nike.

The sports product manufacturer of the same name, founded by gymnast Lining, is headquartered in Beijing. Between 2002 and 2009, the company's revenue increased 9 times and earnings per share increased 10 times.

However, in January last year, when Lining opened the first American retail store in Nike's base camp, Portland, Oregon, the drawbacks of this development formula began to show.

Lining created the biggest sport in China.

brand

The sales network has 7748 retail outlets, but only 474 of them are directly managed by Li Ning Co. 60% of the remaining stores are operated by about 2000 inexperienced retailers. They are unwilling to cut down the over season stocks, leaving little room for new high priced products.

In June last year, the problem of order weakness remained unresolved. Lining made minor changes to the trademark and launched a new slogan: "Make the change" (let change happen).

That's what investors do.

They not only sell Lining (since then, their share price has dropped by 42%), but also sell other manufacturers and retailers who have similar distribution problems, such as Anta (Anta), XTEP (Xtep) and 31st degree (361 Degrees).

During this period, the only rising Chinese sportswear stock was Pou Sheng, whose share price rose by 37%.

Baosheng is a pure retailer selling large retail stores such as Nike, Adidas (Adidas), Reebok (Reebok) and Puma (Puma).

If you can sell a few percentage points of wholesale discounts to a favored franchisee, Lining may be able to rationalize the domestic distribution network in the next two years while maintaining market share.

But Nike will also invest heavily in China, which has easily become its most profitable market.

At the same time, Credit Suisse's data on the consumption of Chinese sportswear show the difficulty of Lining's challenge.

When household monthly income exceeds 7000 yuan (US $1000), Chinese consumers' preferences will shift from domestic brands to foreign brands.

Like other big consumer goods, China's market champions in sports shoes and sports vests are far from conquering the local market, let alone other countries.