Guo Jianxin: In A Few Years, Lining Will Become The Top Five In The World.

There are strong Nike and Adi on the top. Down, Jinjiang is expanding. What will Lining do next?

On the stock side, as China's most famous sportswear brand, Li Ning Co is still the largest local sport apparel brand with the largest market share.

However, from an incremental perspective, in the past three years, the performance of Li Ning Co has been inferior to that of other companies in the industry. Following the crowd in Jinjiang's competitors, the development strategy has gradually become clearer. (Anta has taken the professional integrated sportswear clothing brand line, PEAK has taken the professional basketball route, Hongxing Erke specializes in tennis products), and Lining has begun to play the combined boxing. It is worth noting that in the past two years, under the "multi brand strategy" principle of Lining, Li Ning Co has repeatedly made moves, on the one hand, the market has been downwards extended; on the other hand, it has acquired or joint ventures to carry out multi brand operation.

Up there are Nike and ADI. Down, Jinjiang is expanding. What will Lining do next?

Twenty-first Century: what is the strategic consideration of Lining's acquisition of red double happiness?

Guo Jianxin: the products of red double happiness belong to sports equipment. Table tennis, badminton and weightlifting are three pillars, including foot basket volleyball and so on.

The company is a leading industry in the field of table tennis. Its market share is the first, management level, product technology is first class in China, and has a high reputation in the world. It is a partner of the International Table Tennis Federation (ITTF) and will provide most of the equipment for the 2008 Olympic table tennis competition.

The goal of this acquisition is to make Li Ning Co a leader in global table tennis and indoor sports, and to achieve faster growth and greater sales revenue as China's economy develops.

Table tennis has great market potential in China, and the market capacity (including equipment, clothing and shoes) is more than 3 billion 500 million. It is estimated that the annual growth rate of the table tennis market will remain at around 15% in the future.

For the acquisition, Morgan Stanley issued a report that Li Ning Co spent 305 million yuan on the acquisition of table tennis supplier red double happiness. The sales volume of red double happiness in 2006 was 320 million yuan. The acquisition will help to expand its product mix and bring cross selling opportunities to table tennis and footwear products. It is expected that red double happiness will benefit Lining's strong market network and platform.

Merrill Lynch said that although the acquisition of red double happiness made only 5% of its profits, it would be beneficial to Lining's strategic development to bring the famous brands into the bag.

"Twenty-first Century": in April of this year, Lining launched the brand new mobile brand that took the supermarket channel. The latter aimed at the middle and low end market. What plans did Lining have for the downward extension of the market?

What is the current situation of "new movement"?

Guo Jianxin: the introduction of "new movement" is mainly due to the consideration of market segmentation.

China's regional differentiation is very big, and consumers' demand for brands and products is quite different in different regions; therefore, we will provide a wealth of product line combinations to meet diversified needs.

"New action" is aimed at supermarket stores. Now it has entered 20 supermarkets, such as Carrefour, Jingkelong, Shanghai Lianhua and Lianhua, and the retail price is between 100 and 300 yuan.

"New move" has exceeded our expectations after listing.

We plan to have 200 sales points this year.

Involving shoes and clothing, and accessories.

Twenty-first Century: This is somewhat different from Lining's brand positioning. So what is Lining's brand positioning at present?

Guo Jianxin: at present, we aim to be a high-end professional sports brand.

"Lining" is a brand of sports, a fashionable brand and an Oriental brand. These positioning can fully demonstrate the professional characteristics of "Lining". Among them, "oriental characteristics" is the biggest advantage that distinguishes us from competitors.

In the future, we will do more work on the connotation of these three brands.

"Lining" core consumer group is 14 to 23 years old; twenty-first Century: how do you see the current market competition pattern, including the Jinjiang department and other latecomers to catch up?

Guo Jianxin: we are glad to see a number of domestic brands developing together in this mature market in China. But we have a big difference in brand segmentation and market positioning, and the market will get more subdivision.

For Lining brand, we will continue to strengthen our core competitiveness.

At present, we aim to be a high-end professional sports brand.

"Lining" is a sport, fashion and Oriental brand. These positioning can fully demonstrate the professional characteristics of "Lining". Among them, "oriental characteristics" is the biggest advantage that distinguishes us from competitors.

In twenty-first Century, in the book "2010 Best Business Models", Lining's "virtual production" mode is mentioned, which enables Lining to be flexible in understanding the market demand and to a certain extent "light assets" operation.

When did this "virtual production" start?

How to implement it concretely?

Guo Jianxin: it can be said that "Lining" has adopted the way of "light assets" since its birth.

Like other famous international sports brands, Li Ning Co now fully adopts the form of production outsourcing, at present, it does not consider its own production.

We have outsourced production to YY2, the world's largest shoemaking company, focusing on areas where products are best - product design, brand marketing, product distribution, combined with efficient management capabilities, so that investors can see the future value of profits - not by simply reducing the cost, but by upgrading brand value.

Twenty-first Century: in the absence of self production capacity, how can we reconciled with a substitute factory if we encounter a sudden blowout of a clothing demand or personalized customization?

Will the elasticity of production be weaker?

Guo Jianxin: personalized production needs, we will coordinate ahead of schedule, such as limited edition.

Twenty-first Century: internationalization is one of Lining's development strategies.

But according to the 2006 earnings report, Lining's international market turnover accounted for only 0.9% of the total turnover.

Why did we formulate such a strategy and what was the implementation step?

What is Lining's strategic goal in the next stage?

Guo Jianxin: sports without borders, if we want to become bigger and stronger in the sporting goods industry, we must show ourselves in the international sports arena and be recognized.

Therefore, since its inception, Li Ning Co has been actively participating in international sports events, and has launched the brand's international sports marketing and display after its strength has been strengthened.

Of course, the exploration of internationalization is also divided into different steps.

Li Ning Co takes the road of first brand internationalization and market internationalization.

At present, we have formulated three strategic stages: the first stage ends in 2008, and the second stage is 2009-2013 years.

In these two stages, Li Ning Co will take the Chinese market as the most important strategic market, and forecast annual growth rate of 35% to 40% of turnover.

The 2013-2018 year is the third phase, when Li Ning Co will become the world's top 5 Sports Brand Company.

But China is a highly internationalized market. To a certain extent, China is the world, and the local market is always our most important market.

In the past two years, Lining began to walk on the road of "multi brand strategy".

In November 15, 2007, Lining group's indirect wholly owned Affiliated Companies, Yuet Ao Sports Goods Co., Ltd. of Shanghai signed an agreement with four companies to acquire 57.5% shares of Shanghai red double happiness Limited by Share Ltd (hereinafter referred to as "double happiness") with a total price of about 305 million yuan. The latter owns the famous table tennis brand "red double happiness", the main products belong to sports equipment, table tennis, badminton and weightlifting are three pillar product lines.

But from a financial point of view, this can not be regarded as a cost-effective business. The sales volume of red double happiness in 2006 was 320 million yuan.

Along the way, in April 1, 2007, Li Ning Co launched the Z do, a sub brand aiming at the low end market, aiming at the supermarket store, as an extension of Lining brand, in the "new move" LOGO, we can see the symbolic L of Lining.

In addition to its own subbrands, at the end of 2005, Lining established a joint venture with AIGLE, a French outdoor sporting goods brand. Both sides hold 50% equity interest, and the joint venture has a 50 year franchise in AIGLE.

However, in August of the same year, it abandoned the trend of Beijing, a subsidiary of its Italy sportswear brand Kappa.

The latter was listed on the HKEx in October this year. Its turnover in 2006 was 870 million, an increase of 482% over the same period.