The Pformation Of Lining System

Editor's note: a few years ago, Li Ning Co sold its brand agency in China. This year, Anta listed in Hongkong invests in a new company in Shanghai, competing for the brand agent market.

This year, China's trend is listed in Hongkong alone, and its market value is close to Lining.

The latest news is that Lining has invested in the acquisition of table tennis equipment enterprises.

What is the reason for the change of "Lining system"?

What kind of strategic consideration does Lining have when he walks from agents and main legs to a professional sports brand?

November 8th, Beijing Tongzhou Lining Park, Li Ning Co Olympic strategic conference.

Zhang Zhiyong deliberately wore a bright yellow yellow Lining blazer, and his clean jaw had more moustache.

This made the 38 year old Zhang "exercise" very much.

"The strategic positioning of Li Ning Co in 2008 is to make professional sporting goods and rarely involve retail sales. The second is to focus on sports related brands, and to make more leading sports brands in some sports areas instead of following them."

Zhang Zhiyong used a sentence to explain Lining's doubts about various movements in recent years.

There have been many controversies surrounding Lining.

In July and October this year, the trend of Anta and China was listed on the Hong Kong stock exchange. The two companies predicted growth of over 60% in 2007, while Lining's growth in recent years has never exceeded 40%.

Lining was sandwiched between the "wolves" full pursuers and the leaders such as Nike and Adidas.

On the first day, the market value of the first time was close to HK $30 billion and surpassed Li Ning Co's trend of China. This is the core of the Lining system. Why did Lining sell this good asset at a price of less than 45 million yuan in July 2005?

No: for the first 1 billion yuan, Chen Yihong, the current chairman of China's trend, was the first president of Zhang Zhiyong and the first president of the Li Ning Co.

In 1990 after the 1988 Olympic Games dream, in 1990, the assistant seat of Li Jingwei, general manager of Jianlibao, was resting for two years, and "single fly" created the Li Ning Co.

The fashion for the former National Sports Committee under a sneaker company documentary Chen Yihong, in 1991 with his own horse to join.

The honeymoon period lasted for five years.

In early 1996, Lining merged three companies in Beijing, Guangdong and Yantai into Lining sporting goods group company, a pro chairman and general manager, and Chen Yihong served as deputy general manager; Lining played the de facto role of CEO because of Lining's specific business.

With Lining as the world champion's national influence and Chen Yihong's sales talent, Li Ning Co has been developing rapidly by more than 50% per year, and its sales volume has reached 650 million yuan in 1996.

Ambitious Chen Yihong has put forward the goal of "over 1 billion yuan in 1997".

Lining gave Chen Yihong four years, but from 1997 to 2001, Li Ning Co's sales volume had not been over 1 billion yuan.

Lining realized that 1 billion yuan might be Chen's "ceiling".

He weighed repeatedly and decided to gently ask Chen Yihong to find an assistant.

Chen recommended Zhang Zhiyong, a native of Shanghai who has been promoted to Li Ning Co as chief financial officer.

Despite having 7% of Lining's shares, the second largest shareholder in the Lining family, who was second only to the 2/3 stake, Chen Yihong, who was pferred to the legal representative and laid off, soon said to Lining, "I don't need any more here. I'll go out and do it myself."

This is almost inevitable: Zhang Zhiyong wants to burn three fires, which involves the change of Chen's policy; but Lining does not want to leave an entrepreneurial veteran like this. "You must not go out first."

Lining temporarily suppressed Chen's impulse.

At that time, Li Ning Co was negotiating with Italy Kappa agency agreement: with the help of Lining channel, the exclusive use and operation right of Kappa in mainland China and Macao were obtained.

Lining profits, Kappa safely landed in the world's most potential new market, which is a win-win cooperation.

Lining suggested that Chen Yihong should be responsible for the establishment and operation of the brand agency company, maintaining Chen's existing treatment in the Li Ning Co while allowing Chen Zaixin to occupy a higher proportion of shares.

And Lining also promised that the timing will never stop Chen from starting his own business.

Obviously, in order to achieve 1 billion yuan sales volume, Li Ning Co is ready to open up agency business, while Zhang Zhiyong has spent all his energy on the main business operation. The agency business even needs an experienced helper like Chen Yihong.

Of course, the risk of Chen Yihong's departure from business is also effectively reduced, and the friendship between them continues.

Chen Yihong can not refuse to make decisions that are best suited to both worlds.

In this way, in 2002, Li Ning Co started its first pformation. It was split into three: Beijing Li Ning Co was responsible for the R & D, production and sale of Lining brand, and Zhang Zhiyong led the army. Beijing Trend Sports Company (China trend predecessor) was responsible for the international brand agency, and Chen Yihong was at the helm. The Shanghai Yidong sports company was also established, responsible for sports brokers, event agents and other new businesses.

The "Lining system" was first formed.

And trend company, Li Ning Co holds 80%, Chen Yihong's private Beijing Jiali wind company accounts for 20%, and is completely independent in operation and finance.

Shek: positioning the professional sports brand "sacrifice", but the initial performance of the movement is not optimistic.

Li Ning Co, which only signed with Kappa for 5 years, will focus its main funds on LI NING main brand operation. On the other hand, in the competition with Nike and Adidas, the design of Kappa European version is not suitable for Chinese people.

In 2002, the annual turnover was only 17 million yuan.

In the following 2003, Zhang Zhiyong led the Li Ning Co to sprint, and sales for the first time broke through the 1 billion yuan mark to 1 billion 276 million yuan, and more importantly, the Li Ning Co's listing plan for Hongkong was also finalized, and finally successfully listed on the HKEx in June 2004.

The trend is also difficult to turn around: from 2004 onwards, the Italy design is integrated into Chinese elements, and becomes a tight sexy back to back. From the competition with professional sports brands such as Nike and Adi, it leapt into the new positioning of fashion sports, and sales volume exceeded 150 million yuan in 2005.

But the growth of their performance will not obscure the widening distance between Lining and the trend brand positioning.

As a consultant to Li Ning Co, the advice from Roland Begg consulting company believes that from long-term value planning, Lining, positioned in China's top class and aiming at world class sports brand, is not in harmony with the style of the fashion sports dress.

With only two years' Kappa agency rights, the increase in profits is not conducive to shaping the brand image of Li Ning Co professional sports.

Of course, what Roland Begg could not foresee is that after one and a half years after he suggested that Lining sell the shares, Kappa BasicNet of Italy's parent company would have a financial crisis in early 2006.

It was in this crisis that Chen Yihong bought the Kappa's permanent right to use the brand in the mainland and Macao with us $35 million.

And this permanent right to use, after the trend later went to Hong Kong, the value added is huge.

In July 2005, Lining went public for a year. Chen Yihong and his wife holding 93% of the Titan Corp in Shanghai bid 44 million 814 thousand yuan to acquire 80% of the 80% movements held by Lining.

At Lining's farewell banquet for Chen Yihong, two people were drunk.

Wang Yafei, an independent director of Li Ning Co, described it as "two people were soaked in wine on their chest and held together in tears."

Lining started his second "house" after starting a business.

Unlike the "house" of Lining and Chen Yihong's family members who were in the Li Ning Co during the listing period, in view of this decision, Lining believed that the trend of Li Ning Co in listing was not able to achieve the maximum benefit (before the sale was evaluated by the board of directors), but it was not wrong for the individual: "Chen Yihong made such a great contribution to the company for so many years, and finally had such a good result."

This is also an encouragement for everyone.

I hope everyone has such a good result.

Chen Yihong will buy the trend as a continuation of his relationship with Lining, "for me and Li Ning Co are a happy ending."

Zhang Zhiyong, who has never evaded the question, admits: "there is no room for gains."

Perhaps it is the "house" that has gone through the trend. First, it deeply touched Zhang Zhiyong's understanding of "house" and "de".

At the end of October, Li Ning Co, which moved to the new headquarters of Tongzhou Park, retained several office links only in the bustling new world of Chongwenmen.

In the red and black style professional Lining Park, swimming pools, indoor soccer and basketball courts are available.

The brand is everything. In recent years, Li Ning Co seems to have been giving up.

These homes are active and passive.

Based on the close cooperation between the company and the State General Administration of sports, Lining has neglected the government public relations of the Beijing municipal government when he bid for the Beijing Olympic Games clothing sponsor, thus losing the battle with Adidas.

Fully aware of this deficiency, Zhang Zhiyong, on the one hand, repeatedly launched his hand to consolidate cooperation with the national gymnastics team, table tennis team, diving team and shooting team. At the same time, he signed the two championship basketball teams of Spain and Argentina, and joined hands with the Swedish and Spanish Olympic Committees to create a "heroic team" of Li Ningao's strategy.

On the other hand, Lining sponsored the CCTV sports channel host clothing, embedded LI-NING in the largest media resources of Olympic marketing in China, and in early 2007, the government and public relations office was set up to report directly to Zhang Zhiyong.

Lining's foreign brand agency mode, which has been used for reference by Anta and China, has become one of the two legs of the commercial profits of the latter two businesses, and has formed direct pressure on Lining's stock price in the HKEx.

In November 6th, when PEAK announced its signing to become a NBA China partner, how could Lining "lose" losing the marketing stage such as NBA?

You know, NBA chairman Stern is not only eager to set up the NBA China competition, but also from Microsoft China, Tim Chen, who is known for her government public relations ability, is at the helm of NBA China.

"I think this is the choice of every company. I do not judge.

For me, the key to the two years is to do the Olympic Games, and the partners and things I choose are all related to the Olympics.

In Zhang Zhiyong's eyes, the key to corporate decision is to see the choice of consumers. "Whether consumers can combine NBA with Olympic Games is a problem. Our own judgment is not yet possible."

But the Olympic Games are only Lining's stage goals. Zhang Zhiyong emphasized that NBA, Olympic Games or anything else, including Lining's important sports resources, is just an asset, and assets can not decide Lining's brand strategy.

"If you decide the strategy for this opportunity, the company will not have to do it, so I have to say that do not think that this asset will bring anything to you. If your strategy is accurate, you have many choices, and you can choose more things at any time."

Li Ning Co is positioning its brand strategy in the support of professional sports, which comes from market research.

Research reports show that such a small sports population in China has such a rapid growth in purchasing power of sports products, because many domestic consumers do not buy it as sportswear, but as a brand.

Therefore, Lining can build up a brand first and then get it.

All Li Ning Co assets are only a means to make Lining brand more athletic and more professional.

On the evening of November 15th, Lining announced that the company had spent 305 million yuan to acquire 57.5% of Shanghai red double happiness Group Co., Ltd.

Lining announced that the latter as a famous table tennis equipment manufacturer, the acquisition can strengthen the company's position in China's fast-growing table tennis and badminton products market, further enhance the brand image of the Lining brand and realize its multi brand management strategy.

Merrill Lynch Investment Bank subsequently agreed to agree with Lining's announcement.

Although red double happiness should be accounted for in the 2006 fiscal year.