Sports Brand Lining Suffers From Internal And External Troubles, And Distributors And Distributors Compete Fiercely.

Lining

What's up?

In six months, Lining's shareholders have gone through two times of panic. One time, at the end of 2010, because of the decline in orders and other reasons, Lining's market value had shrunk dramatically; one was May 24th, Lining.

The direct cause of the fall is the turbulence of personnel.

In May 24th, two executives and a middle-level manager left Lining. The two executives were Lining group vice president and chief market official Shiwei, vice president and chief operating officer Guo Jianxin; another middle-level e-commerce director Lin Ling.

Although the Li Ning Co affirmed that the three quit is for personal reasons, it is a normal personnel change, and the company has enough talent reserves to continue their work. However, judging from the qualifications and background of the three people, things may not be so simple.

Guo Jianxin and Fang Shiwei are members of the Lining seven executive committee, and also the main executors of Lining's brand pformation and channel pformation launched last year. Fang Shiwei joined Lining in 2007 and was mainly responsible for Lining brand marketing and communication. Guo Jianxin has been working in the area for 14 years, mainly responsible for the overall operation system, managing the brand and operation system.

Lin Li led Lining and IBM to build Lining's official online shopping mall and other projects.

Now that the reform is just halfway, they have been printed and gone to any company. The turnover of the core executives is extraordinary.

The resignations of Guo Jianxin and Fang Shiwei were submitted in April and May.

Now Guo Jianxin's work is taken over by CEO Zhang Zhiyong, and Fang Shiwei's work is taken over by Chen Jijun, general manager of the former strategic market department.

Before leaving, the functions of the two party have been weakened.

Lining, director of public relations, said that after Li Ning Co changed its original branch structure to three relatively independent units in North, East and south, part of the functions originally assigned by Guo Jianxin and Fang Shiwei were delegated to the head of the District, and the latter could independently decide the targeted promotion strategy in the area. Zhang Xiaoyan,

The head of the district comes from the Headquarters sales team led by Guo Jianxin in the past.

The June 2010 Lining brand remodeling and channel pformation are clearly undergoing severe tests.

It wants to be younger.

Lining, another employee who left the company recently, speculated that it was possible that Li Ning Co needed to implement the strategy more appropriately, and that the resignation of the Executive may be just the beginning.

In an interview in December 2010, Zhang Zhiyong estimated that this is a reform that will last for at least two years.

It seems that Lining has chosen the right path, but its choice is rather radical. Moreover, it has chosen an opportune time to intercept the troops.

It is very likely that during the process of reform, there are great differences between the two executives who left office and Zhang Zhiyong.

In the channel reform, Lining chose to let the most powerful group of the 129 large dealers buy and sell those scattered troops with low monthly income, or let these stragglers and big fish eat small fish.

This means that the weakest 1/3 in the distributor is either bought or changed by a large dealer.

For the latter, Li Ning Co ceased supply as soon as the contract expired.

This is too great for Lining.

Most of the small and medium distributors whose number is more than 2000 are relatively small, with an average of 2 stores, with over 1700 distributors operating only 1 stores.

But it was they that helped Lining to become the second second in the Chinese market, over Adidas.

These stores quickly extended their tentacles to places that large dealers could not reach for the time being, and they had more resources to get the best store locations in the three or four line market.

But these distributors are mostly run by individuals, and do not have professional retail management system and experience. This seems to be somewhat inappropriate in the sports goods market slowdown.

At least Lining needs more dynamic terminal stores to boost growth in the same store.

Lining favors big dealers who used to be closely connected.

The Harbin based dealer, Shen Ge sports company, was the first to start the reform of the channel by Lining. Shen Ge sports received some Lining shops pferred by other distributors, and bought some distributors in the past three or four line cities, such as the Lining store in Jiamusi.

For large dealers, reform can expand the scale and facilitate their unified promotion to boost sales.

In April 2010, Shen Ge sports had 77 Lining's overall discount: class a Lining store 22% off, B and C 5 to 22% off, factory shop was lower to 70 percent off.

But it is easy to bring pressure to the original Lining stores in the same area and intensify competition.

Because big dealers can get lower discounts, which enables them to compete with local distributors at a lower price.

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After six months of reform, Li Ning Co shares fell nearly 16% in December 20, 2010, and the market value evaporated 3 billion 500 million Hong Kong dollars a day.

The direct reason is that because of product price increase and some distributors' dissatisfaction with the reform policy, Lining orders fell by about 6% in the second quarter of 2011.

In the same period, the competitors performed well, and the order in 2011 was increased by 23%.

In March, when the 2010 annual report was released in March, the Li Ning Co also said that the order meeting in the three or four quarter of 2011 would still take some time due to the reform of the channel and the improvement of the retail environment. The growth rate of the order was expected to be no higher than that of the first two quarters.

It also predicts that in 2011, due to the policy of wholesale discounts and the rising cost of production, gross margins were flat in 2010, 1 percentage points lower than in 2009.

Such contradictions, so that Lining's same store sales growth rate has not risen.

Its third quarterly report in 2010 showed that sales growth in brand stores in 2010 slowed down to 4%, while the same store sales growth in the first quarter and the first half was 5% and 4.6% respectively.

Moreover, for small and medium-sized dealers, besides conservative orders, another option is more and more attractive to them: change the door.

The gap between Anta and Anta is shrinking.

Li Ning Co's 2010 performance report shows that the company's total revenue is 9 billion 478 million 500 thousand yuan, while Anta's revenue in 2010 was 7 billion 410 million yuan, up by 26.1% over the same period last year.

In terms of net profit, Anta grew by 24%, reaching 1 billion 551 million yuan, more than Lining's 1 billion 108 million 500 thousand yuan.

In this case, Lining's change policy is like sending the dealer to his opponent.

Moreover, the old rivals Nike and Adidas are also pushing down the channel to the three line market that once was Lining's base camp.

Among them, Adidas has recovered from the inventory crisis in 2009. Its first quarter results in 2011 showed that Adidas's global revenue grew by 18% over the same period last year, and sales in the first quarter of the Greater China region increased by 36%.

The once lagging company is also carrying out the channel reform. Apart from the original large dealers, it has set up a special group to divide the mainland market into five large areas. Each large area has specialized channel investigation departments, and probes into the markets where the per capita disposable income has reached a certain standard but has not yet been developed, and there is a new shop there.

It is not difficult to imagine Zhang Zhiyong's pressure at the moment.

He also seems to be striving for more time for reform.

In a recent media interview, he said that it would take three years to upgrade the Lining brand to a new platform.