Li Ning Aftershock: Change Is Really Happening

After a wave of senior executives' resignation in the first half of 2011, the crisis of Li Ning Co., Ltd. (2331. HK, hereinafter referred to as "Li Ning Company") did not end. Recently, Xu Maochun, vice president and chief product officer of CPO, and Zhang Xiaoyan, director of the Department of government and external public affairs (hereinafter referred to as "the Department of public affairs") have also been confirmed to leave.

The outside world can not predict that this is the end of personnel unrest in the three-year adjustment period of Li Ning company, or the beginning of a new wave of aftershocks.

Top management "shift change"

At the end of June 2010, considering that the horizontal growth relying on store expansion is unsustainable against the background of soaring human cost and store rent, Li Ning company took the initiative to start brand remodeling and launched a new brand slogan with the new label "make the change". However, the squeeze of a large number of old standard product inventory, failed to straighten out the channel business integration, so that the company's orders were flat or even decreased year on year. The three-year period of Li Ning's adjustment began.

More than half a year later, the company's core executives, such as Fang Shiwei, CMO (chief brand officer), Guo Jianxin, COO (chief operating officer), Wu Xianyong, general manager of Lotto business unit, left one after another.

This is also considered to be the second personnel "earthquake" in the company's history after Chen Yihong, the former general manager of Li Ning company, left in 2005.

Although Chen Yihong's performance was not as good as that of Chen Yihong when he left.

In 1991, Chen Yihong joined Li Ning in the second year after its establishment. At the beginning of 1996, Li Ning merged Beijing, Guangdong and Yantai into Li Ning sporting goods group company, holding the post of chairman and general manager in person, and Chen Yihong as executive deputy general manager. Because Li Ning did not care about specific business, Chen Yihong acted as the de facto CEO, and achieved sales of 650 million yuan in 1996.

Ambitious Chen Yihong put forward the goal of "more than 1 billion yuan in 1997". However, due to a series of reasons such as the Asian financial crisis and macro-control, from 1997 to 2001, the sales volume of Li Ning company failed to exceed 1 billion yuan. Li Ning realized that one billion yuan might be Chen's "ceiling". He tactfully asked Chen Yihong to find an "assistant".

After that, in July 2005, Li Ning company went public for one year. Chen Yihong and his wife, 93% of Shanghai Titan company, offered 44.814 million yuan to acquire 80% of Li Ning's shares in Dongxiang, officially "flying alone.".

At Li Ning's farewell reception for Chen Yihong, both were drunk. Wang Yafei, an independent director of Li Ning company, described it as "the two men were soaked in wine on their chest, holding each other in tears".

Now, there are fewer and fewer executives worthy of Li Ning's drinking. Fang Shiwei and Xu Maochun belong to the "airborne soldiers", and they were promoted to vice president by "three levels" within two years; Guo Jianxin, Wu Xianyong and Zhang Xiaoyan are all Li Ning's "old departments", but obviously, Zhang Zhiyong is not Li Ning.

As the CEO of Li Ning company, Zhang Zhiyong once put forward the viewpoints of "those who achieve great things will not be bothered", "those who do small things will not be lazy" and "those who lead troops will not be bad".

"Not good", of course, is that we should not be soft hearted when we should use the knife.

In the view of industry insiders, since June 2010, the product design and development under the leadership of Xu Maochun has at least met the company's goal in terms of fashion and fashion; As an assistant to the president, Zhang Xiaoyan has been in charge of Li Ning's government public relations and Corporate Communication for a long time. Due to the company's poor performance, negative news has been frequently reported, and someone is always responsible for this. In particular, a report in July directly pointed to Zhang Zhiyong's "employment" failure.

"In addition to Zhang Zhiyong, all the top executives at the CXO level (such as CEO, COO, CMO, etc.) in the company have been changed." One Li Ning employee said.

Previously, on May 24, 2011, in response to the resignation of senior executives, Li Ning company had issued an announcement saying, "there are sufficient talent reserves and appropriate management structure to meet the corresponding job requirements and the development needs of the company." As a matter of fact, after Guo Jianxin, the former coo, left, Zhang Zhiyong had to serve concurrently as coo himself. Lu Ning, who joined Baosheng International (3813. HK) for about three years, was recently announced as the new coo.

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　 Decentralization and centralization

On October 14, 2011, when announcing the adjustment of the company's organizational structure, Li Ning announced the appointment of Lu Ning and the resignation of Xu Maochun.

According to the new function allocation, COO Luning will "coordinate the brand sales headquarters of Li Ning with the three business sectors of sales regions, products and supply chain". At the same time, the general manager of footwear products and the general manager of clothing / accessories products "report to the chief operating officer, coordinate product planning, design and development and production management, reduce costs and improve efficiency".

In this regard, a former executive only used the words "white clouds and dogs" to express his feelings.

Compared with the fact that the functions of senior executives of Li Ning company have changed in recent years, it is really a sigh that if we had known this day, why should we have done it in the first place.

As mentioned above, both Fang Shiwei and Xu Maochun, the "airborne soldiers" in Li Ning company, belong to "three levels of company promotion".

In 2007, Fang Shiwei joined Li Ning as the director of strategic marketing. He was promoted to CMO in 2009. At the end of 2009, Fang was appointed as the coordinator of brand reconstruction of Li Ning. Xu Maochun was promoted to vice president and CPO only because the company established CPO in 2009.

In order to enrich the CMO's terms of reference, Zhang Zhiyong set up a brand-new functional department Bi (Brand Initiative, brand strategic planning department) under the position of CMO. The establishment of Bi aims to solve the problem of Li Ning brand and product planning. It not only needs to control the brand life cycle, but also integrates the company's brand strategy, sports marketing strategy and product strategy. In Zhang Zhiyong's words, Bi department should be able to draw a complete brand map.

Because it involves brand, sports marketing and product planning, it governs six business categories including basketball, running, women, sports life, urban light sports and badminton. Since its birthday, Bi Department has been a bit like the "development and Reform Commission" of Li Ning company.

The five senior directors of Bi department lead the five categories (badminton is the last to join), and they often cross the jurisdiction of COO and CPO.

In short, after the establishment of Bi and others, the product planning originally under coo's coordination was divided into two airborne CMOS, CPOs and five senior directors.

During this period, we can imagine the relationship between Zhang Zhiyong and Guo Jianxin.

After Fang Shiwei and Xu Maochun left office one after another because of various reasons, Guo Jianxin, the former coo, also left. Lu Ning, who was newly recruited by Zhang Zhiyong, was "centralized".

In fact, in the name of the adjustment of the company's organizational structure, in addition to this "clear line", Zhang Xiaoyan's department also drifted around the company, becoming "foreshadowing".

A person familiar with the matter disclosed that about a year ago, due to the unsuccessful bid exchange, Zhang Zhiyong put his public affairs department and information technology system under the charge of CFO Zhong Yiqi. Zhang Xiaoyan and Zhang Jun, general manager of information technology systems, reported to Zhong Yiqi instead of reporting to Zhang Zhiyong.

Since Zhong was mainly in Hong Kong, the two departments were returned to the direct management of Zhang Zhiyong six months later. But just a month or so, Guo Jianxin left, Zhang Zhiyong also served as coo, and the direct decision-maker of the two departments became Zhong Yiqi again.

The direct consequence of the public affairs department reporting to CFO is that Li Ning's marketing, product marketing and corporate brand communication belong to the decision of Zhang Zhiyong and Zhong Yiqi, and the communication cost has increased significantly.

After Zhang Xiaoyan left office, the main functions of the public affairs department were also divided into two parts. The financial public relations and corporate communication business were assigned to the new CMO, while the government's public relations remained in the original department.

However, there is still no conclusion on Bi ownership and work mode adjustment with cross department coordination function.

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　 Olympic year crisis

Li Ning, chairman of the board of directors of the company, of course, is not unaware of the company's poor performance, personnel turbulence, and the undercurrent caused by the parachute of senior executives and unclear functions.

When talking about the issue that Zhang Zhiyong had taken the initiative to discuss with Li Zhining in the past year, i.e., he had a meeting with him in 2007. Zhang said Li Ning encouraged him to continue "to work.".

Such a discussion cannot be without background.

According to the financial report data, Anta (2020. HK) successfully narrowed the sales gap of nearly 2 billion yuan from the previous year to more than 1 billion yuan in 2007, and Anta's profit was only 0.07 billion yuan less than that of Li Ning in 2007.

From 2008 to 2010, Li Ning's inventory turnover decreased from more than 60 days to 50 days, and Anta from 45 days to 35 days.

In the face of Anta, one of the most fatal strategic mistakes in Zhang Zhiyong's term of office is that Anta became the strategic partner of the Chinese Olympic Committee (COC) at a price far less than the outside world thought at the end of 2008.

According to a retired executive from a sporting goods brand in Jinjiang, Anta's four-year contract price for COC sponsorship is about 400 million yuan, which is quite different from the 600 million yuan or even 800 million yuan widely spread before.

In contrast, Zhang Zhiyong, who once decided to withdraw from the COC bid because of the high price, has since signed NBA star Barron Davis and NBA rookie Evan Turner at a high price.

It is a pity that Davis, who created the "black eight" miracle in the NBA Finals (that is, the eighth place out of the first place) has been suffering from injuries for a long time, like a flash in the pan, without superstar atmosphere; Turner's performance is flat.

At the upcoming 2012 London Olympic Games, Chinese spectators will see Chinese athletes wearing Anta design award-winning clothes on the podium for the first time. Before that, apart from Adidas, which spent a billion yuan, once won the qualification of Beijing Olympic Games, Li Ning was once the only brand of COC award-winning clothes.

Of course, Davis and others are far less expensive than the signing price of COC, but within four years, COC has participated in more than ten international events, including the summer Olympic Games with high domestic ratings. It is puzzling for Li Ning to give Anta the opportunity to step up these brands.

Although he has been in public appearances and letters to employees calling on all employees to support Zhang Zhiyong and the management, it is difficult to be convinced that Zhang Zhiyong is still at ease.

It is worth pondering that with the help of Chen Yihong and Zhang Zhiyong, Li Ning has accumulated her own fortune of 10 billion yuan. However, at the end of August 2010, happy energy saving Co., Ltd. (8032. HK, later renamed as "extraordinary China") announced three transactions: acquisition of 30.9% of Li Ning's shares with new shares and convertible notes of happy energy saving; With 400 million yuan to acquire extraordinary China engaged in sports promotion business; with 700 million yuan to acquire Shenyang Industrial Park project.

If the acquisition is successful, Zhang Zhiyong and Li Ning will undoubtedly have a layer of reporters.

However, once the news is, on the evening of September 1, 2011, extraordinary China announced that the acquisition was "no longer carried out.".

Can this make Zhang Zhiyong more comfortable with the transformation and reconstruction of Li Ning company? The outside world can't get more facts. However, according to insiders, the key to the failure of the acquisition is that the SFC has not given permission.