Transformation Of Li Ning Co: Layoffs And Poor Performance Of Sub Brands

February 15th, sporting goods

All this is due to the sluggish performance of Lining.

Li Ning Co has released a notice of performance.

In February 13th, Li Ning Co told reporters that the company would take measures such as streamlining personnel, integrating resources and motivating excellent employees to reduce the proportion of human resources in group sales. The plan was to reduce the share by about 0.5 percentage points in 2012.

Deutsche Bank's research estimates that the cost of staff accounts for about 10% of Li Ning Co's sales, and the implementation of streamlining measures is conducive to the improvement of Li Ning Co's net profit margin.

Previously, the average wage and welfare level of Li Ning Co was the envy of the industry.

Li Ning Co is a light asset strategy enterprise, all products are produced by external enterprises, so the number of employees is relatively small. In 2010, the total number of employees in Li Ning Co was 4215, and the total amount of employees' wages and other welfare expenses amounted to 710 million 250 thousand yuan, with an average of 168 thousand and 500 yuan per employee.

In contrast, the "second" of local sporting goods companies

If the per capita wage and welfare level of Li Ning Co can be reduced to the level of Anta, according to the number of employees in 2010, it can at least save 475 million yuan for Lining, that is to say, Li Ning Co will increase the profit of about 475 million yuan, but Li Ning Co is only careful to announce that the proportion of manpower expenditure in sales is expected to reduce by 0.5 percentage points.

According to the income level of 9 billion 479 million yuan in 2010, the income of 0.5% is about 47 million 400 thousand yuan, and the per capita wages and welfare of Li Ning Co are expected to be much higher than that of Anta.

Li Ning Co also decided that a certain percentage of the staff would be cut. For the specific number of layoffs, Li Ning Co replied, "the specific number of staff members is not yet determined, but the proportion will not be too high."

According to industry sources, before the Spring Festival, some employees of Li Ning Co have heard passively leaving. Layoffs may be reflected more clearly in the functional departments, including human resources, information technology and strategic development.

Integrated brand

In addition to layoffs, Li Ning Co will integrate some of the poor business sub brands.

In a written reply to reporters, the Li Ning Co said: "the company will conduct adequate analysis and evaluation of the existing multi brands, and will further promote the healthy development of the brands with potential development and large scale, and adjust and shrink the small and business pressure brands."

In addition to the main brand "Lining", Li Ning Co currently has "red double happiness", "happy road", "Ai Gao", "Kaisheng", "new movement" and other sub brands.

Take the "Lotto" authorized by Li Ning Co as an example. The results show that in 2010, the profit of "Lotto" was a loss of 91 million 749 thousand yuan, and the loss in 2009 before it was 56 million 935 thousand yuan. Other sub brands such as "new move" were not optimistic and had a limited contribution to Li Ning Co revenue.

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Market watchdog Ma Gang believes that the top priority of Li Ning Co is to restore the main brand "Lining" to restore its vitality. "Lining" brand still has strong appeal in the Chinese market, and the market base is better. As long as we concentrate resources and energy, doing the main brand is relatively easiest; after solving the problem of the main brand, the operation of other sub brands will be more smoothly.

Zhang Zhiyong, chief executive of Li Ning Co, explained that the background of layoffs and other means is that the current sporting goods industry in China is facing a pformation. It is a necessary step to make organizational changes and personnel adjustment.

Zhang Zhiyong said: "looking at this change from the perspective of long-term development of the group, organizational structure optimization can help the group improve the efficiency of organization operation and save manpower costs. On the other hand, it can further improve the talent management system and strengthen the group's performance oriented and result oriented corporate culture.

The group will also take more effective measures to identify and encourage talents, so that excellent staff can play their roles and work towards common goals.