Lining Beat The Price: Forced Nike Adidas Led To Sharp Reduction In Orders

To attack the first tier cities that have been dominated by Nike and Adidas, they have to pay the price. about Lining In 2011, it was bound to be a turbulent year, with declining performance and sharp reduction in orders. The media reports which were not optimistic were changed. Adidas The company known as "hero" seems to vanish like an epic in the sky. Perhaps we cannot fail to judge Lining's brand remodeling just because of these appearances. But it is obvious that Lining is paying the bill for this dream. Perhaps, this is a kind of uninhibited bravery, at the same time, it is a way to live longer.

For months, the atmosphere of the Li Ning Co was full of unrest.

According to Li Ning Co's 2010 results, the annual income of 9 billion 479 million yuan, an increase of 13% over the same period. Its growth rate is lower than the average annual growth rate of over 30% in the past 10 years. However, this result is not surprising. In May last year, Lining made a series of new adjustments to the strategy, product positioning and marketing channels. But by the end of last year, the order of the second quarter of 2011, the order of the order of the declines - zero growth, caused people's concern about the success of the brand transformation.

For a while, staff members fluctuated and team morale was low until a few months ago, chief operating officer Guo Jianxin and chief executive officer. market The resignation of Lin Shi, director of official Shiwei and director of e-commerce, once again pushed Li Ning Co to the cusp of public opinion.

Why bother to spend money but not to please?

Guo Jianxin was a member of IT who joined Lining in 1997.

At that time, Li Ning Co was in a state of stagnation in sales. The company executives realized that apart from opening branches to expand sales, the second important way is to find a set of information systems to improve management level.

Consciousness. Guo Jianxin took up the task as soon as he entered the company.

At that time, Li Ning Co wanted to become the first clothing enterprise in the country to adopt ERP to manage information comprehensively, but this "first" is not easy. Only those who really tried it knew the difficulty of its implementation. First, the problem of capital, IT is a good thing, but not necessarily the first demand; secondly, management lags behind; and more importantly, the immature supply market of IT. There are not many IT service providers and consulting companies who can really understand the needs of the users of clothing enterprises. The Li Ning Co and Guo Jianxin have been struggling for information construction.

However, it has taken a whole year to prove and research. So in 1999, the company signed the AFS1.0D version of the German SAP company (clothing and footwear solutions). It took place two years later, and Li Ning Co became the first domestic R/3 system to adopt SAP, and it also added AFS clothing and footwear solutions to the garment enterprises. However, this "first" nature means to take risks that are not measurable, including the risks of human, procedural correctness, and implementation risks.

Apart from all the difficulties, only one detail can help us to see the hardships of implementing ERP at that time. The information department has a conference system, that is, if participants are late, they must stand by 60 times as late as possible. This is a rare calculation of "seconds per second" by Li Ning Co, and Guo Jianxin has actually executed it. He himself admits "it may seem a bit ridiculous," but this kind of severe punishment is one of the extreme ways to ensure the implementation of the project. "The project process is sometimes calculated in seconds. Any slight neglect may lead to a system defect, which makes it difficult to achieve the original goal. "This is Guo Jianxin's deepest feelings. In such countless steps and insistence and standardized operation, the company ERP was finally implemented to ensure that capital flow, logistics and information flow in the company's operation process were optimized.

In the second half of 2003, Li Ning Co started to implement the EPOS system. As before, the same harsh rules need not be repeated. If ERP allows Li Ning Co to see clearly the "five internal organs" of enterprises, EPOS extends its perspective to the "nerve endings" of enterprises. From then on, every day, the store sales terminals run in this system will transmit all the sales targets of the day to the branch and the head office system through the data communication within the prescribed time. All sales data are timely and accurate. According to these data, the sales department can make all kinds of analysis, and can quickly adjust and timely feedback to the brand decision level.

In 2002, IDC and IT magazine's "China's first outstanding CIO" named Guo Jianxin as "excellent CIO". At the same time, Li Ning Co's ERP implementation is also exemplary by SAP.

In the 14 years of Lining's work, Guo Jianxin participated in the whole supply chain of Li Ning Co and eventually built his own logistics chain. This is the most difficult process reengineering. For the company and channel construction, Guo Jianxin, who is not very good at words, has deep feelings and his own opinions. Maybe because of this, he chose to leave.

In 2010, Lining divided the sales organization into three parts: the north, the East and the south. At the same time, we have fully liberalized the power of sales and management in major regions, so that the independent regions are responsible for the marketing and distribution of their respective regions. These practices inevitably diverge from the original operation management plan.

But Li Ning Co believes that "rectification campaign" is inevitable.

With the rapid rise of human costs and rents, Li Ning Co believes that the business model of relying solely on new outlets 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 Li Ning Co website, as of the end of 2010, Lining had 129 distributors and more than 2000 distributors, but most of the distributors were small in scale, and more than 1700 distributors only had 1 outlets. The operating efficiency was not satisfactory. Li Ning Co CEO Zhang Zhi Yong once said, "we put forward an integrated distributor in July of 2010. In September, we entered the market, and in February of this year, from the overall situation, we integrated and eliminated 179 customers. Next we will continue to the 400 target or follow our plan. "This is confirmed by sporting goods distributors. A sporting goods distributor said that in June 2010, Lining launched the bid change. This change mark did not seem to be successful for him, because his sales of Lining's products decreased by 30% over the same period since 2011. "Since the adjustment of the channel, Lining has closed a lot of shops, probably because of the reasons for the performance, some dealers will not do it. According to the distributor, Lining's products are not selling well now, and some shops have begun to reduce the order quantity of Lining's products. The reason is that Lining has raised prices many times before and after the transformation last year. In April, the price of footwear products 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, respectively, in June 2010. {page_break}

When Lining adjusted the brand strategy last year, Zhang Zhiyong's judgment of the future sports consumer goods market is that the price range of more than 400 yuan will be the largest part of the market increment, and Lining must be able to sell more and more expensive. And in this market segment, it will face the positive confrontation between Nike and Adidas, and Lining wants to find his "right to speak".

The result of the move is that after re positioning the product, there is a big practical problem, that is, the traditional dealers begin to wait and see in hesitation, which also directly led to the decline of orders in the second quarter of 2011. After many price increases, at present, the price of Lining's high-end products is only about 100-200 yuan compared with the international brands 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," some dealers simply say impolitely.

Some distributors have not yet explained: "we all think Lining is the leader of the local brand, so we choose to believe it. But why, it repeatedly pursued innovation and change, and paid a lot of cost and effort, but failed to achieve the desired effect. "

"The old man" went away "feeling a bit tired." Guo Jianxin, who chose to leave, told reporters that he was not looking for the idea of going home. "The future will rest for two months." at home watching the TV play "latent", he regretted that the "no man" politics is short lived. "Language" is penetrating. Lin Lin, director of e-commerce, who left Li Ning Co at the same time, was not so laid back. She once built e-lining.com and incorporated Lining's Taobao online store. According to the announcement, he joined the China Pacific (601099, stock bar) life insurance Limited by Share Ltd with a monthly salary of 200 thousand.

The first to apply was Lining, former vice president and chief marketing officer of Li Ning Co, and general manager of the brand marketing system of Fang Shiwei.

4 years ago, Fang Shiwei joined Li Ning Co, which was mainly responsible for Lining brand's marketing and communication, public relations, sports marketing, activity marketing, digital marketing and so on. It is said that he has been basically in a state of unemployment six months before he left office.

3 days after Fang Shiwei's application for leave, Guo Jianxin was informed of the news. At that time, he also expressed the same intention. After Fang Shiwei submitted his resignation report a month later, Guo Jianxin also formally submitted his resignation report.

At present, Fang Shiwei is in Taipei. He said he had received many companies' invitation to choose the future, but he would choose to take a month off as well as Guo Jianxin. "This is probably the most serious personnel crisis since Lining founded so far. "Fang said.

As for the specific reasons for Fang Shiwei's departure, a senior executive of Li Ning Co said the top management team had greater pressure on channels and sales, and at the same time, it could not be very smooth in internal communication. "Li Ning Co's historical and institutional problems can not be solved in the short term. "The unnamed senior executive told reporters.

Taking advantage of resources today, people prefer to compare Anta and Lining. --2010 annual report shows that although Li Ning Co's turnover of HK $9 billion 479 million is ahead of HK $7 billion 408 million of Anta sports, Anta's HK $1 billion 551 million is far more than that of Anta's HK $7 billion 408 million, while Anta's 23.4% is also higher than that of Lining's 16.3%. In terms of measuring operational efficiency, average turnover days, average receivable turnover days and average accounts payable turnover days are 36, 19, 36 respectively, while Lining is 52, 52 and 52. In terms of market value, Anta is about HK $35 billion 800 million, and Lining is currently about HK $15 billion 800 million. The former is more than two times the latter. Obviously, Anta seems to be enjoying the feeling of roaring at the moment.

Many people think that compared to calm and calm Lining, the character and temperament of Anta founder Ding Zhizhong is obviously closer to Nike's legendary CEO Phil Knight - two people are tireless working maniac, believe in experience and inspiration, and strive to dominate everything: big business, big company, big brand.

A manager who left the Li Ning Co to go to Anta gave an example to describe the difference between the two companies: in the plenary session of Li Ningkai, professional managers came to the stage one after another, calmly placed PPT, and expressed their views without delay, just like any large company that was mature. In Anta, from top to bottom, they are very excited, and their speeches are very emotional. Everyone has a sense of apprehension and a crying wolf.

However, it is important to note that behind this seemingly objective and fair comparison of numbers is the dislocation in its development process -- the development stage of Lining and Anta determines the difference of their modes. Lining, who has a history of 21 years of development, has occupied the champion of local sporting goods manufacturers for many years. The growth of the number of branch stores is approaching the limit. The problem it faces is the need to turn to brand premium, increase the ratio of flat to effect and occupy a share in the high-end market. And the rising Anta can still rely on the expansion channel size, at a lower price, from the three or four line of urban low consumption ability of consumers to obtain high turnover.

After the Anta IPO in 2007, it signed the NBA star for publicity, while in its three or four tier city, its shop lay more like "capillary". And throughout the industry, there are similarities in domestic enterprises. Participants use capital to break out marketing and retail outlets. This similar channel based expansion business mode has brought everyone into a whirlpool of fierce price competition. And does this look like the strategy of Li Ning Co?

When the market is in good condition, most enterprises decide to adopt an opportunity strategy in their development. The Li Ning Co set up in 1990 caught up with this good opportunity. At that time, Li Ning Co, like most Chinese private enterprises, had a good mechanism, with initial development funds, and the accumulation of Lining's relationship.

The sales channels down there are also talented people and their energy. After several fundamental problems were resolved, Lining began to sing all the way and run triumphant.

Rees and Trout wrote in the book "marketing revolution": "in the era of rapid economic growth, Japanese companies prospered by producing similar products from competitors, only because the quality of products was better and the prices were cheaper. "Lining faced a similar situation for a long time ago. It was also driven by market opportunities. It was committed to producing more products to the market. The opportunity brought about by the rapid growth of enterprises, so that Lining had no time to take account of what his real strengths were, and assumed that the resources in his hands were the core strengths. "This idea makes many companies think that they are strong and powerful, and Lining wants to compete in the first tier cities. "An employee inside the Li Ning Co said," because customers, UNIQLO and H&M have come in, there are many choices for leisure brands. "In view of the ups and downs of the whole enterprise, no matter what industry, there are many similarities in the growth of enterprises. Every enterprise and every industry has its own hurricane season. For a certain stage of development, the crisis topic it faces may be the same. Under this premise, Li Ning Co hopes to change the product positioning and integrate sales channels through brand remolding, and form a new core competitiveness. In a sense, the price it pays may not be useless for spectators.

The reason is that the general trend is not changed. Sooner or later, Anta will come across a choice like Lining. Maybe the problems and roads that Lining is facing today will be inevitable for Anta tomorrow. {page_break}

What does "Lining" represent in the eyes of consumers?

The reporter interviewed 10 men and women who were 25-35 years old. They had reporters, engineers, housewives, brand commissioners, sales, financial planners, programmers, and received feedback from almost everyone.

For Lining, they have a more direct impression that they can only think of "original" advertisements, "signs changed" and "prices are becoming more and more expensive".

However, it is gratifying to note that a large number of people believe that Lining's applicable group is in the 18-30 year old range, because the color of this year's clothing is very bright, of which only two think it should be 28-45 years old.

Compared with professional market research, it seems that the sample sample is not rigorous and representative, but a glimpse of the whole body is obvious. Although Li Ning Co has been established for so many years, few people can understand and understand its connotation.

Since its establishment in 1990, from the original specialized sporting goods company developed into a set of clothing, footwear, sports equipment, cosmetics, stationery, gifts, leather goods and many other companies as a whole, and then transformed into specialized sports goods companies, Li Ning Co in the operation of the basic concept, product characteristics and brand positioning many times, there is a great difference. This also makes many consumers feel confused. What exactly does Lining represent? Although many dealers, former executives and industry insiders have almost agreed that Lining is an excellent company in the interview, its brand accumulation, strategic planning, system operation and even strict standardization of the company have almost no major flaws.

But in the eyes of many Chinese people, Lining is just a successful brand. Its brand spirit is still a prototype, not complete. A truly mature brand spirit should be a strong trigger for consumers' sympathy. In this way, it is difficult to win by relying on low cost or technology alone.

So, how can a garment that can provide the same function make consumers willing to pay a higher price? Imagine the value chain of the industry as a whole: the value created by OME, brand, and distributor is equal to the consumer's willingness to offer, and as the value creator of the whole value chain, the brand will enhance the consumer's willingness to offer through product design, brand building and consumer communication.

Therefore, the most important work of the dominant brand is to connect the brand with the sports spirit, which is equivalent to upgrading the product from the use level to the emotional level. And this is the most important step in the differentiation of sports brand. At the same time, the stronger the brand's ability, the greater the ability to contain the downstream. This is also the key advantage that domestic brands lack.

Therefore, it is not difficult to explain why Nike, Adidas and other industry giants spend huge sums of money to shoot various advertisements, publicize their brand slogans, sign sports stars, sponsor sports events, and study new technologies. Their purpose is to enhance the performance of athletes, and expect products to be associated with the outstanding performance of athletes, so that products are no longer just a physical object, but with marketing means, and a series of inspiring sports spirits. For Lining and other domestic enterprises, rather than a spirit, it is a kind of consciousness. Although there is a direction now, it is not enough to refine and shock. However, in order to form sustainable competitiveness, Li Ning Co has to do the work well.

There is no doubt that Lining has a long way to go.