Lining's Road To Pformation &Nbsp; Brand Will Further Mature.

Li Ning Co Ltd (02331.HK, hereinafter referred to as Lining) in its own "weak crown" year, ushered in beyond the expected pformation of labor pains.

In May 24th,

Orders are also falling.

The product orders data released by Lining in April showed that the number of orders for shoes and clothing products in the third quarter of this year dropped by 17% compared to the same period last year, and the orders fell by 6% in the second quarter, which has declined for two consecutive quarters. If wholesale prices were calculated, the order amount in the three quarter of this year dropped 14% compared to the same period.

In July 2010, Lining formally announced the pformation. At the same time of opening the new logo, Lining put forward the new slogan of "Make the change".

A year later, the change did happen, but in the opposite direction: the order fell, the investment institutions looked empty and the stock price fell sharply.

The former three executives were responsible for operation and marketing, and Fang Shiwei was considered to be the key person in Lining's pformation.

However, as Li Ning Co CEO Zhang Zhiyong explained, brand remodeling is difficult to achieve overnight.

In the fierce competition of Chinese clothing market, brand upgrading is a challenge for every company.

Lining has to continue his journey after the pition is over.

In his statement, Lining stressed that three executives such as Guo Jianxin were "active on their own development needs".

Lining's spokesman, Zhang Xiao Yan, said the company CEO Zhang Zhiyong will serve as chief operating officer, and the chief market officer will be appointed by Chen Jijun, general manager of brand strategy department.

A person close to Lining's management confirmed to Caixin reporter that Lining's personnel changes were indeed "bad related to pformation performance".

Since last year's pformation, Lining's sales have dropped significantly, and the main consumer groups have been losing a lot.

These people further revealed that Anta announced the 2010 annual report in February 21st, and its profit has surpassed Lining. This "stimulus" may be the "fuse" of Lining's personnel changes.

Lining, the three top executives, resigned in March.

In July 2010, Lining announced the pformation of brand remolding and channel integration as the core.

In the brand remodeling, Lining's original "L" logo has become a cross "human" font. The brand slogan of "Nothing is impossible" has always been "Make the change".

The big sign of "post-90s Lining" refers directly to the younger generation of consumers.

After that, Lining launched a series of products such as Athletic Pro and orange omnipotent.

Lining CEO Zhang Zhiyong explained in the 2010 annual report that when he decided to change the cause, he said that although the substitution of domestic sports products by leisure products is obviously enhanced, the sports product's functional growth is limited, but this is only temporary.

With the promotion of urbanization and the upgrading of domestic sports market consumption, sports functional products will have a good growth space.

Zhang Shenwei, an industry analyst at SamSung China Economic Research Institute, said that Lining's pformation is not smooth. An important reason is that the estimate of consumption upgrading is too advanced. After Lining's pformation, he emphasized the movement characteristics of products too much in marketing, which did not get the recognition of potential consumers.

In fact, the market of leisure and fashion has been let off.

Zhang Shenwei believes that the current consumer demand for fashion products is the current sports brand market should pay more attention to the trend.

The integration of bone and bone channels has become another main reason for the decline of Lining's orders.

In the past, Lining expanded by means of channels, and the compound growth rate was over 30% for ten consecutive years.

With the rapid rise of human costs and rents, Lining believes that the business model of relying solely on new stores to expand channels is becoming increasingly unsustainable.

To improve the efficiency of single store, Lining has been promoting the integration of sales channels since last year, encouraging large dealers to acquire small distributors.

According to the information released by Lining website, as of the end of 2010, Lining had 129 distributors and more than 2000 distributors, but most of the distributors were small, and more than 1700 distributors only had 1 outlets, and the operating efficiency was not satisfactory.

A Beijing Lining distributor told Caixin reporter that Lining's products are not selling well now, and some shops have begun to reduce the order quantity of Lining, because after many price increases, the price of high-end products of Lining is only about one hundred or two hundred yuan compared with those of Nike and Adidas. "Everyone is not short of this money. Instead of buying Lining, it is better to add some money to buy a foreign brand directly."

Lining raised prices several times before and after the pformation last year.

In April 2010, the price of footwear increased by 11.1%, and clothing products increased by 7.6%. In June 2010, footwear products and clothing products increased by 7.8% and 17.9% respectively. In September of the same year, footwear and clothing products were raised 7% and 11% respectively.

Zhang Shenwei said that many distributors are not only selling Lining products, but also a distributor who sells several brands at the same time. Lining's sales channel integration helps rivals expand their sales channels.

According to Wang Yiming, director of sports marketing, Haitian Online Union, under the current distribution system of Lining, local distributors purchase futures from Lining, while small distributors purchase goods from distributors.

Large dealers worry that too many orders will lead to their backlog. Therefore, the willingness to integrate small distributors is not strong. Instead, they reduce the number of orders voluntarily.

In Wang Yiming's view, "the timing of Lining's choice of integration is not appropriate."

At the time of Lining's integration and elimination of small distributors, Anta has announced in a high profile that it will realize the "Wan Dian plan" of sales channels by the end of this year.

According to Anta (02020.HK) announcement, "Anta's orders in the third quarter of 2011 increased by 20%, and the average selling price of shoes and clothing recorded double-digit growth".

A person close to Lining's management pointed out to Caixin reporter that Lining had another big problem: the brand positioning was not clear, the strategy changed too much, "to internationalize, to be fashionable, to exercise and to change."

For so many years, no one can tell clearly what Lining's brand is, it is now high and low, and it is caught in the middle end of the industry.

Throughout the 90s, Lining remained the first in the domestic sporting goods industry.

Around 2000, Lining encountered bottlenecks, with annual sales hovering around 1 billion yuan.

Lining's management team's reflection is not satisfied with the domestic brand. Since then, it has sponsored foreign sporting events and tried to internationalize strategy.

At the same time, Nike and Adidas began to grow rapidly in China. Apart from maintaining high-end markets in cities such as Beijing and Shanghai, they also actively engaged in the two or three line market of Lining's base camp, and sold the market share of Lining through the introduction of low price products and discounts.

In 2003, Nike's domestic turnover exceeded Lining for the first time and became the industry leader. Adidas also walked ahead of Lining a year later.

Then Lining reflected on two times and began to emphasize the fashion of product design.

For this reason, Zhang Zhiyong, the then general manager of the company, dug up Le Shuyu, a Taiwanese who had rich experience in fashion brands in 2007, as deputy general manager.

After Le Shuyu entered Lining, he started a personnel storm, fired a large number of designers, and introduced new people from Nike and other multinational companies.

According to those close to Lining management, this radical practice caused great controversy inside the company. After a year, Le Shuyu resigned with "health" reasons, and Lining's brand and strategic focus shifted again.

In 2008, Lining suddenly discovered that his competitors were no longer just the pnational giants such as Nike and Adidas. The Jinjiang Gang represented by Anta, and the leisure sports clothing brand represented by Kappa, which was sold by itself at a low price, is rapidly becoming a powerful force. Lining has started brewing the pformation of "90 after Lining".

Despite the gains and losses in every step, Lining's brand image and products are upgrading in the process of constant positioning. Now Lining is not the old image of "national team sponsor".

But Lining is improving and his opponents are improving.

The rapid growth of the industry has attracted more entrants.

Lining used Nike and Adidas's light asset model, and did not own its own production plant. The local sports brands such as Jinjiang, represented by Anta, quickly completed the initial accumulation in the process of subcontracting for multinational giants, and used their low cost advantages and rapid expansion of the channel's business mode, through low price in the two or three line of the low-end market suddenly rising.

Compared with the 2010 annual report, although Anta's turnover is still lagging behind Lining's HK $9 billion 479 million at HK $7 billion 400 million, but for profit, Anta first exceeded HK $1 billion 551 million for HK $1 billion 108 million, while Anta's 7549 sales outlets also approached 7915 of Lining's, and Anta also planned to achieve "Wan shop scale" by the end of this year.

At the same time, pnational sporting goods giants such as Nike and Adidas are also in the middle and low end market.

Zhang Shenwei described, "now some counties, within one or two kilometers, can see almost all the sports brand stores, and even some brands are more than one, and the whole market is very competitive."

In this war, there is always someone to win, and the key to winning is still brand.

As Lining CEO Zhang Zhiyong has said, the establishment of any brand is not accomplished overnight, and the next 20 years will be the real maturity stage of Chinese brand.