Lay Off, Cut Costs, Play A Ruthless Role In &Nbsp; Where Is Lining'S Strategy?

Lay off, cut costs, play a ruthless role...

Only these are not enough.

In early 2012, a careful Li Ning Co employee found that a gate in the office disappeared quietly.

Originally, only the top managers with permission would have the right to brush the safety gate and enter the "steering" area to grasp the direction of the company.

This is seen by employees as a sign that the company is finally making a storm adjustment.

Almost at the same time, Li Ning Co

The sports equipment supplier carried out a great strategic pformation 3 years ago.

At that time, it benefited from the marketing offensive of the 2008 Beijing Olympic Games. It was showing a good upward trend. China's domestic sales exceeded Adidas for the first time. But Zhang Zhiyong and Li Ning Co made the first judgment mistake at that time. They emphasized too much the benefits of the Wacom spirit of the sports spirit, and avoided badminton as the core.

In June 2010, his second strategy was more radical, turning the target consumer group to the "post-90s" young people. Slogan changed from "Anything is possible" to "make change" (Make the change), and decided to challenge its opponent's base camp, the European and American markets.

Now it seems that reshaping the brand is the most failed strategic layout of sports brand Lining.

It creates opportunities for rivals.

China has become Nike's largest market in the world, and it is playing the same role as Adidas in the two or three tier cities of Lining's dominant market.

The threat from local brands such as Anta, PEAK and other rivals is becoming more and more obvious. Anta's net profit in 2010 exceeded Lining first, while PEAK's income was still small, but the net profit margin had maintained double-digit growth.

In the overall weakness of the sporting goods market, Lining's performance is even worse.

It released its performance forecast in January this year:

Such bad performance made the company's CEO Zhang Zhiyong sit on a volcanic crater.

He and chairman Lining undoubtedly face enormous pressure from the board and investors.

In the past few years, even if the situation is worse, Zhang Zhiyong will regard future goals as the main content of his speech at the annual meeting of the company. This time, he lists the problems of the company by accident, and begins to review and reflect, and emphasizes "accountability and efficiency".

In his letter to his staff, he said that in the past two years, he has been trying to find a solution to this series of problems in the short term, trying constantly on tactics, hoping to improve quickly, but the result is not optimistic.

It all presages that this company must change at a time.

At the beginning of February, Li Ning Co announced the layoffs, and the company made organizational structure optimization and personnel adjustment, aiming to reduce the proportion of human cost to group sales by 0.5 percentage points.

At the end of March, layoffs were drawing to a close.

A Li Ning Co staff member who asked not to be named told reporters that the layoffs were not only small, but also to senior executives: Chief Marketing Officer and brand marketing director, interactive marketing director, strategic director, director of IT department, director of human resources department, sales director of Southern District...

They have all been "left".

The removal of the natural gate that represents the concept of hierarchy is like announcing that the company will remove too many layers from the Department, and strengthen communication between different departments to avoid the "pinch" of the past departments, resulting in the high cost of human and communication.

Chairman Lining is worried about the company's current situation.

He made an impressive speech at the annual meeting a year ago.

The founder of the company took a long time to point out the problem of the company: we must stop swinging between professional sports and sports fashion and concentrate on sports.

He also proposed that resources should be collected from various sub brands and concentrated on Lining's core brand.

But over the past year, the situation of the company has not changed much.

According to Zhang Zhiyong's description, the experience of the company is still simple, temporary and temporary change. If it is still in the old habit and framework, it can only be gradually improved.

But fierce market competition and capital markets have not allowed it to go any further. From early 2011 to December, Li Ning Co's share price has fallen by 61.5%.

To a large extent, this is related to Lining's character and his style of giving the company the founder.

More than a former Li Ning Co employee told reporters that Mr. Lining was very charming and very civil, but his character was mild, and he was "not eager for quick success and instant benefit".

One employee mentioned that in 2008, when he ignited the torch bearer as the main venue of the Olympic Games, Lining wore the Li Ning Co sneakers. However, taking into account the interests of Beijing Olympic sponsor Adidas and the relevant provisions of the Olympic Organizing Committee, Lining had to hide the Lining logo on his shoes.

After the opening ceremony, he even texted and told Fang Shiwei, deputy general manager of marketing system, that he did not want the company to exaggerate the torch bearer.

Zhang Zhiyong is also a Confucian style of fastidious moderation. He hopes that through a sound system to complete corporate pformation, he will never tear up his face and accuse others of his mistakes.

The two character of Lining and Zhang Zhiyong can not carry out any major reform when the enterprise is in a predicament.

The style of the whole company has become more and more mild and even pedantic, especially when compared with the local competitors Anta and PEAK.

Lining needs a "ruthless role" to help manage the company and correct Zhang Zhiyong's strategic mistakes.

Before the end of 2011, he himself approached TPG (Pacific Investment Group of Texas, USA) and GIC (Singapore government direct investment Co., Ltd.).

TPG is considered to be a private equity fund with rich experience in the retail industry. It has invested in Wuming business, Daphne, China fashion casual wear, and especially in 2009, TPG successfully helped Daphne overcome its difficulties.

In early February after the Spring Festival, Li Ning Co announced that it would introduce TPG as a strategic investor in the form of equity trading, and at the same time get TPG 750 million yuan investment to ease the tight financial situation.

Within two days of news release, Li Ning Co's share price rose by 21%.

A former Li Ning Co management, who declined to be named, said that TPG could "do something that Lining himself could not do", which might also prompt the company to be "more ruthless".

For Lining, this is really a helpless move.

Although Zhang Zhiyong's approval rate for the board was still over 70% until the beginning of this year, Zhang Zhiyong's personal capability was not enough to reverse the current decline of the company and his character was not suitable for leading drastic changes.

But in a short time, it is hard for Lining to find a more suitable CEO candidate. "Zhang Zhiyong has worked in Li Ning Co for more than 10 years after all." those experienced managers who have come and gone have made Lining suffer a lot, and their understanding of the company is not enough.

On the surface, it is Zhang Zhiyong who is leading the current unstable situation, but the proposals and proposals for layoffs are all behind the scenes of TPG.

TPG has raised the proportion of layoffs to headquarters staff by 30%. If the number of employees in the headquarters is more than 2000, 600 employees will be laid off, including some veteran employees who have worked in the Li Ning Co for many years or more than 10 years.

Such a directive would make it impossible for the former director of human resources to be able to handle it, regardless of personal feelings or practical operational level.

She had a heated argument with the board of directors, and the Board met on the same night. On the second day, she announced the termination of her contract.

In fact, her status as a scapegoat has long been revealed.

A Li Ning Co insider told reporters that Zhang Zhiyong summed up many of the corporate culture problems in the new year's address, "obviously pointing at her."

The move made the atmosphere inside the Li Ning Co suddenly changed, such as the signal that the ship was on the way into the storm.

Layoffs are the most direct way to adjust the company's performance from a financial perspective.

The company is indeed under financial pressure.

A company providing production OEM for Lining told reporters that the original payment period for Lining was 30 days, but now it has been extended to 120 days.

This is not a case. Another partner of Lining also mentioned that the payment of contractual payments negotiated with it has been postponed.

At the moment, Li Ning Co is in urgent need of funds.

The inventory crisis began in 2009, so far, Lining's stock pressure climbed to its peak in 2011. Public figures show that at the end of 2011, Lining's product inventory increased by 200 million yuan over the same period in 2010.

To ease the pressure on dealers and boost their ability to enter new products, Li Ning Co said last year that it would buy 300 million of its inventory from dealers, which is about 6% of the total sales of Lining in 2010.

Part of those stocks bought back will be sold to Lining's factory store and the other part will be sold online.

Lining's factory store was set up in the second half of 2010, and rising inventories are one of the main driving forces for developing factory stores.

At the same time, Lining's internal labor and operation costs are also astonishing.

According to Deutsche Bank's research report, although Li Ning Co's revenue in 2011 is expected to decline by 6% to 7% compared to 2010, the overall cost, including distribution costs and administrative expenses, is expected to increase by 7% to 8% over the same period.

Zhang Zhiyong believes that this leads to overstaffing within the company - not counting the retail sector, Li Ning Co has more than 1300 employees serving the brand, and the cost center of the company is as high as more than 700.

This situation is particularly striking in Anta's comparison: Anta's sales performance has been on an equal footing with Lining, but the number of its headquarters is only a fraction of it.

The middle level managers at the director level have become the focus of redundancy.

A Li Ning Co employee describes their role as a "voice box" - they spend a lot of time in meetings, but the most important thing is to convey high-level instructions downwards without forming a spontaneous management idea.

The company has formed a phenomenon: high level people always feel inadequate, middle level is only responsible for conveying, and to the bottom executive layer, they always feel lack of people, lack of resources and lack of funds.

Li Ning Co hopes to increase the contribution of foreign market revenue to 20%, and to test the US market in 2010, but it has not been successful.

An international business director was therefore "left" because under the condition of insufficient brand strength, the only way he could think of improving sales volume was to sell the sports shoes priced at hundreds of yuan to the US local dealers at the price of 9.9 US dollars.

The director was recalled to the conversation. His accusation was highly paid. He sat back and forth in business class every month, but he didn't spend much money, but he didn't bring any valuable ideas and ideas to the company, just to cope with the sales targets set by the boss.

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The company decided not to be too lenient with such management.

Similarly, the company is full of many lazy old employees, accustomed to each other brother, recognition of the company will not start their own hands, more and more sense of responsibility.

On one occasion, a manager who was responsible for the operation of the store gave the wrong direction to the shoe in the store.

According to reason, the direction of shoe holder must have an inclined direction, so that shoes can be placed. The shoe is usually displayed on the left foot; but on that occasion, all the shoe inclining directions are wrong, and only the right foot shoes can be placed.

The original batch of shoes was wasted, and the time for new products was delayed.

"Such a big problem, the most is internal review, big enough to make some money."

These people are now the focus of layoffs.

The former professional managers who used to hire high salaries now seem to be not worth it. They have not brought real changes to their management and culture.

It is Lining's idea to hire a professional manager from a multinational company with a high salary. As a founder, he has been committed to "de familial", trying to get rid of his influence on the company and brand although it is very difficult, the 2008 Olympic Games has deepened this influence.

But this practice has been repeatedly frustrated.

Those outside professional managers are always considered to be out of tune with Lining's culture and values.

The models and reforms brought by Nike and Adidas were not recognized by Lining.

A few years ago, an outside senior manager tried to overthrow Lining's existing design. He thought that sportswear should not be black and white, but he wanted to add more colors and inject more leisure wind. This reform, which was considered to be too far away, was eventually not implemented, and the senior executive also left.

Such stories have happened many times in the past few years. Apart from being considered "inexperienced", their high salaries have also caused a lot of psychological dissatisfaction among Lining's older employees.

Zhang Zhiyong negated the direct use of the company's senior staff for many years, which is a shock to the existing staff.

He believes that this is the reason why the company's internal culture is missing.

This rethink movement has turned the existing culture of Li Ning Co into a bottoms up.

More and more strange phenomena have been discovered. You can hardly believe that some of these phenomena will happen to a private listed company that has to be "self reliant" and think that it has passed through time to a Chinese state-owned enterprise in 1980s.

The management of the company seemed to be in a state of disorder at one time.

For example, even if the company's food is good, everyone is still keen to drive out for food, and all the meals are borne by the company. "As long as you write" business communication ", no one will check the usefulness of the money.

There was even a "business trip" instead of filling out any application form. "No one knows where the man went."

Employees from different departments travel to the same destination, and even if the flight is ordered to be less than ten minutes, they will not merge their journeys together. They will make two separate purchases for each vehicle, each cost 400 yuan.

Not long ago, a staff member of the brand department who was not very high was investigated internally for receiving the kickbacks until he was prosecuted by the company.

Since 2011, three or four employees have been dismissed from the company like this because of kickbacks.

"People with a very low level can also manipulate many resources, which is terrible."

An employee said.

You can see from many small details the high management costs of this company.

People in the product department have to go to Scandinavia for business trips every quarter. There are quite a lot of people on business trips, and many of them can be replaced by other ways such as Internet, video phone and so on.

A more exaggerated example is that when London held the badminton world championships in 2011, many irrelevant personnel went to business. While the Guangdong Asian Games in 2011 and the 2009 Xiamen games were held, even the finance department employees followed their colleagues, because "there is no opportunity to travel, but also to go out to have a look."

The employee on duty said that during the good years of the past, some employees would even take their families abroad on business.

Now, this behavior has been strictly stopped - this year's London Olympic Games, Lining has begun to strictly control the number of people who went there.

On the issue of "accountability", IT and HR have become the focus of the accusation.

These two departments have outsourced a lot of work to external cooperative organizations. There are more than 10 conference systems in the company, which are often "outsourced" for one week by outsourced staff.

However, these external consultants do not seem to solve any problems. For example, the IT department did not provide timely installation and terminal system to some stores, leading to the failure to see the sales data of the terminal in time.

Li Ning Co now requires all levels of management to "take responsibility and direct decisions according to their capabilities" to reduce the increasing cost of external intermediary management.

In the more than 10 years of development, Li Ning Co has not flattened the company's hierarchy yet in addition to its rapid expansion.

Take the marketing department as an example. In the past, the chief marketing officer (CMO) was the director of brand communication, and there were also store design directors, display directors and visual directors, as well as interactive marketing director, outdoor event marketing director and so on.

These director level departments are being merged or cancelled. Li Ning Co hopes to improve communication efficiency by reducing the level of posts.

This involves a large-scale restructuring of the organization.

Li Ning Co's various departments are being reorganized, for example, the HR Department has been dispersed into different units, such as marketing department, product department, etc., "BUHR".

Take the procurement department as an example, when the purchasing department needs to recruit employees, the BUHR of the HR department is responsible for contacting the headhunting company, and the purchasing department is involved in the recruitment process.

The product director is responsible for the production.

From the end of 2011, the product department, in addition to the product planning, development and design, also managed the product line, aimed at reducing the communication costs between the design and production departments.

The lack of interdepartmental communication poses a threat to the sales of the company.

In the consumer goods industry, a new product from the research and development design to the final entry to the market requires cooperation between various departments.

But for a long time, Lining's sales department and the product department lack a coordination mechanism, each standing in their own position to see the problem, they think that they really dominate the market - the former often determines whether the product is sold well according to the sales experience, and the latter thinks that the good products they designed have not been pushed into the market in time.

An example of mismatch is the "embarrassment shoe" launched by Li Ning Co in 2008. It has been sold out in several first tier cities, and the online price has been fired several times. But in the end, it missed a large number of listed sales opportunities due to the problem of order forecasting.

Li Ning Co believes that reform can eliminate interdepartmental "pinch" situation.

Although they are willing to invest in headquarters, the income of Lining terminal stores is at the general level of the industry, which is lower than those of Adidas and Nike stores, leading to the departure of some experienced shopping guides and directly affecting terminal sales.

In terms of retail experience, Lining is not as good as his competitors.

A person who had participated in the Lining supply chain integration project told reporters that Lining did not pay much attention to the training of terminal stores staff. Some stores were even confused in their management: product posters were not changed all the year round, inventory control was not strict, and the sales situation of many stores could not be timely feedback to headquarters.

Li Ning Co didn't realize this problem. In 2006, it started the supply chain integration project, trying to improve terminal sales, but it was late in execution. Its main energy was still on store expansion.

"The original goal is to grow around 30% per store per year, but only 10% actually."

These people said.

Once the store's single store problem is solved, Li Ning Co can expand its stores and be further threatened by the threat of Nike and Adidas sinking.

This is the real growth, not just the cost reduction.

"Lining has always believed in light assets, and the bottleneck lies in how to solve the demand for the increase of terminal costs to improve the profitability and management capabilities of products.

Lining has made some changes in this aspect, but it is not clear enough.

Shoes and clothing industry observer Ma Gang told reporters.

Zhang Xiangdou now works from 8 in the morning to 8 in the evening.

As an assistant to the former chairman of the company and one of the senior statesmen of Lining, he was put on the front line to stabilize the army and take the temporary role of CMO and was responsible for the promotion of the Olympic Games.

The upcoming 2012 London Olympics is a trial ground for Li Ning Co.

"Li Ning Co will make use of the London 2012 Olympic Games opportunity to connect the five national gold medal teams sponsored by Lining's most unique asset, to better connect with Chinese consumers, and effectively enhance the brand image."

In a reply to reporters, Li Ning Co said.

The challenge that this company faces is far more than simply improving management details.

As early as 2008, Lining made a multi brand product line layout: outdoor (Aigle), supermarket brand (Z-do), table tennis brand (DHS) and sports fashion (Lotto). In order to enter the badminton market, Li Ning Co also bought the professional brand Kason.

However, too dispersed fronts have differentiated Lining's market input, which has increased operation costs.

For more than 3 years, only Aigle brands have benefited from industry growth, showing signs of profit growth.

This is why Lining, the founder, warned the company to return to the main brand of Lining.

Li Ning Co's reinvention of the brand has not been successful.

In 2010, when it changed the signs and slogans, it repositioned the customer groups and targeted the "post-90s".

According to the survey, 50% of consumers were 35 to 40 years old.

After years of overseas experience and efforts, this company can not penetrate into the young consumers' hearts in terms of design and brand image.

While rival Nike attracts young people with an unfettered brand image, Lining instead emphasizes standardization, and hopes that they will "Make the change" together with them.

Li Ning Co insiders believe that the problem of Lining's brand building is that he does not yet have the ability to tell good stories, such as telling an athlete a complete story and passing on the information about the success and glory of sports.

Only by improving the ability to tell stories can we infuse the real meaning of Lining's brand.

When Lining's products rise in price, customers will be willing to pay for that part of the premium.

It is not wise to rush to push the most sensitive young customer groups to the brand image before it really gets promoted.

"In the global sports market, few brands use age to make brand segmentation."

The key way is CEO, Zhang Qing, a sports consultancy.

Now, the company hopes to break through the previous framework to carry out a major reform.

After a brutal layoff and cost squeeze, CEO Zhang Zhiyong hopes that the repaired aircraft will remain on the right route.

He said to all the employees, "look like a new CEO." if all our managers don't have any burden, how can we do it again? "{page_break}

The burden of Li Ning Co's cost seems to have been unloaded. Will the market give it another chance?

Li Ning Co Chronicle

May 1990

Li Ning Co founded in Sanshui, Guangdong

1996

Li Ning Co sponsors Chinese sports delegation to participate in Atlanta Olympic Games

1998

Li Ning Co took the lead in building the first design and development center of sportswear and shoes in Foshan, Guangdong.

1999

Li Ning Co and SAP co operated with the introduction of AFS clothing and footwear solutions to become the first sporting goods company to implement ERP in China.

In 2001,

The Li Ning Co signed a contract with a famous designer in Italy and France, and the product design took the road of specialization and internationalization. In the same year, the first overseas brand image shop opened in Santander, Spain.

2002

Li Ning Co set up a new brand positioning: Lining, everything is possible.

June 28, 2004

Li Ning Co Ltd successfully listed on the Hongkong stock exchange's main board (stock number: 2331), the first mainland sporting goods company to list in Hongkong.

January 2005

Li Ning Co signed a contract with NBA to become NBA's official market partner.

January 2006

Successful signing of NBA players Damon Jones and Shaquille ONeil

March 2007

Li Ning Co signed the Swedish Olympic Committee

Become the first foreign Olympic delegation to sign the Chinese brand.

2007

Lining acquired 57.5% stake in the famous table tennis brand "red double happiness"

April

Lining brand store landed in Holland

January 2008

The first overseas shoe product R & D center in Portland, USA

March

Cooperate with Michelin technology to develop high performance sports shoes

July

Lining won the exclusive franchise of Italy sports brand Lotto Sport in China for 20 years.

August

Lining lit the main torch at the opening ceremony of the 2008 Beijing Olympic Games.

2009

Lining officially won the sponsorship of China's national badminton team, overtaking the history of YONEX's rule of world badminton.

In the same year, Lining's first overseas flagship store opened in Singapore.

2010

Rebranding

Li Ning Co repositioned its brand image as "post-90s Lining", a slogan from "everything is possible" (Anything is possible).

"To" let change happen to Make the change. "

In the same year, channel pformation, establishment of factory shops, cleaning up retail inventories

2011

Texas Pacific Investment Group TPG

Gradual adjustment of internal staff and organizational structure