Ma Gang Talks About The Truth Of Lining'S High Level Exodus And High Inventory Embarrassment

In the middle of the game, the fierce battle is in full swing, and the changeable situation is especially exciting for the onlookers.

In the past few days,

Since the initiative of brand remolding in 2010, Li Ning Co has entered the third year of reorganization.

Active change is a good thing. However, the news of decline in performance and high level running away since 2011 has made people wonder: what happened to the once brilliant domestic sports brand elder brother?

2010, the cost of rash advance.

June 30, 2010 is an important day for Li Ning Co.

On this day, Lining released.

For the start of brand remolding and channel redevelopment strategy, Li Ning Co CEO Zhang Zhiyong interpreted this as "consideration for long-term development".

"Before 2008, China's sporting goods basically grew through distribution and opening up, but once the growth rate dropped, the driving force of growth will return to the most critical competitiveness of our industry -- brand innovation and product innovation, which is the core reason why we must relocate the brand at this stage."

"Looking for brand DNA, changing from price market to value market" is the most frequently mentioned by senior executives when Lining brand is reshaping.

"In our brand research, fashion, cool, global vision, Chinese consumer preferences are all these three indicators."

Perhaps eager to show "

Perhaps Lining, who is eager to pform from the price market to the value market and reinventing the brand, has made a bold decision to narrow the distance from the international sports brand by raising the price.

In April 2010, Li Ning Co first announced that the price of footwear products increased by 11.1%, and clothing products increased by 7.6%. In June of that same year, Li Ning Co also announced that the average selling price of footwear products increased by 7.8%, and clothing products increased by 17.9%.

In September of the same year, Li Ning Co announced that the price of footwear and clothing products increased by more than 7% and 11% respectively.

However, the main customer groups of Lining brand are still concentrated in the two or three tier cities. The continuous increase in price has made Lining's original cost performance advantage intact, making consumers who are already very sensitive to the price have to turn to Anta, PEAK and other cost-effective sports brands.

An independent critic of sports industry, Ma Gang, told reporters: "for Nike, ADI, Anta, XTEP and other brands to encirclement strategy for Lining brand, Lining needs to take effective strategies to deal with it. This is precisely the background of its brand remolding, but only in time and in the process of implementation, the Lining team is a bit too hasty."

"Lining is the leading brand in the industry, and in some respects he is the trial and error man and Pathfinder of the industry, which can make the latecomers avoid some similar mistakes."

Ma Gang said.

2012, good beginning, good ending?

It is gratifying to note that orders for the first quarter of 2012, Lining's order volume reversed a downward trend of three consecutive quarters, and achieved positive growth, of which footwear products orders increased faster than clothing products.

{page_break}

"We think this is a good sign."

In early February, Lining announced that two investors could subscribe to the convertible bonds issued by the group, with a total value of 750 million yuan.

One is a member company of TPG, the world's leading private equity firm, and the other is a member of Singapore's Government Investment Corp GIC, which manages Singapore's foreign exchange reserves.

Subsequently, Lining announced that for the sake of optimizing the organizational structure, the relevant managerial personnel and responsibilities should be adjusted accordingly, including streamlining personnel.

According to the Deutsche Bank of development estimates, the staff cost of Li Ning Co accounts for 10% of total sales in 2011.

In 2012, after the Beijing Olympic Games, the London Olympic Games will be opened soon. How will Lining grasp the opportunity?

Lining said, "the Li Ning Co will use the London Olympics to make the most unique asset of the Lining brand - the image and concept of China's first sports brand, our sponsored national team, to better connect with Chinese consumers.

So this is the core work of 2012. "

Three years, Lining, chess to the middle of the game, a careless move, there may be a risk of losing the game, one son gains, and may hide the magic of turning the tide.

Victory or defeat is sometimes in a single mind, and it goes all the way.

Since the initiative of brand remolding in 2010, Li Ning Co has entered the third year of reorganization.

Next, Lining will go, everyone will wait and see.

2011, high level running away and high inventory nightmare.

Meanwhile, another important move of Lining is to push forward the reform of the channel system.

On the basis of regional adjustment, Lining launched the optimization of channels, and some distributors who had fewer stores and smaller business areas were merged by superior dealers.

As of the first half of last year, Lining has completed the integration of 256 inefficient single store distributors.

Zhang Zhiyong said: "in the short term, the problems we face are business models, unstable retail channels, and at least short-term instability. A big reason is that we are using third party independent distributors to do sales in our current business model."

Losing the middle-level customers as the backbone of the business, consumers who lost the main two or three tier cities lost some of the distributors who had worked for Lining, and they also had a high inventory nightmare Li Ning Co desperately wanted to get rid of.

The expansion of the sporting goods market in the "great leap forward" campaign began in 2008, making Lining's stock grow substantially.

"It's been a particularly difficult time."

Zhang Zhiyong said.

In 2011 alone, Li Ning Co invested about 300 million yuan to reclaim inventory.

"The proportion of new products less than 60%-75% can make room for new goods by repurchasing stock."

A series of discontent, suspicion and high inventory led to the most direct result: from 2011, the Li Ning Co rate preceded the performance of other industries, and the top executives fled.

In May 2011, as an important executor of Lining brand remolding, the news of core executives of former Lining's chief brand official Shiwei, chief operating officer Guo Jianxin, Lotto (Le Tu) general manager Wu Xianyong and so on left successively.

In November, Lining, Xu Maochun's chief product officer, and Zhang Xiaoyan, director of the government and public affairs department, also announced their formal departure.

"Lining as the industry elder brother, is also the industry first slows up the growth rate, approximately in the first half of 2011."

Ma Gang told reporters.

"In the past, sporting goods brands were relying too much on the growth of channel size to drive growth, and now the number of channels is approaching the limit of growth. The sporting goods industry needs to break through category breakthroughs and promote growth through single store promotion, so growth is slowing down naturally."

For all sorts of adverse news, Li Ning Co responded to reporters: "in the whole strategic pformation, we foresee the challenges and difficulties, and we have met a more grim situation.

But the company will stick to the right direction of reform.