Light Up To &Nbsp; Li Ning Co Has Built Up Its Brand.

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, Lining Zhang Zhiyong, the company's CEO, made an unprecedented review of his previous mistakes in the 2012 New Year address. In this letter, he is still emphasizing the "Make the change", but he has to admit that "the aircraft that has been constantly repaired in flight has encountered unprecedented challenges".

The sports equipment supplier carried out a great strategic transformation 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 and targeted. consumption The crowd turned to "post-90s" young people. Slogan changed from "Anything is possible" to "make change" (Make the change), and decided to challenge its rival base camp, the European and American markets.

Now it seems that rebuilding the brand is the most failed strategic layout. 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 of this year: the slow growth of orders and the influence of partial dealer inventory, the group's revenue in 2011 is expected to decline by 6% to 7% compared with 2010, and net profit will drop from 11.7% in 2010 to about 3.7% to 4.7%, which means that the company's net profit in 2011 may fall by nearly half of the previous 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. Li Ning Co, a staff member who declined to be named, told the media 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 and 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 in professional sports and sports. fashion Between the swing, focusing 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. Many employees of the company think that Mr. Lining is very charming and very brave, but his character is mild. One employee mentioned that when he ignited the torch bearer in 2008 as the main venue of the Olympic Games, Lining wore the Li Ning Co. Gym shoes 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 transformation, 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 began to contact TPG (the 6.74 (-0.24, -3.44%) investment group of Texas) 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 said Zhang Zhiyong summed up many of the corporate culture problems in the new year's address, "obviously pointing at her." {page_break}

　　 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 said 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 make overseas market Revenue contributed to 20% of the company's contribution and was tested in the US market in 2010, but so far 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 mark the price of several hundred yuan in China. Gym shoes It was sold to local dealers in the United States at a 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.

　　 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.

Company Administration Once seemed to be in a state of disorder. 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) subordinate was brand The director of communications also has a store design director, display director and visual director. There are also interactive marketing director, outdoor event marketing director and other titles, and each director is also carrying a large team of managers. 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. Since the end of 2011, the product department has been responsible for product planning, development and design, and also manages product lines. The aim is to reduce communication costs between design and production departments.

The poor communication between departments has threatened the sales of the company. In the consumer goods industry, a new product, from R & D to the eventual entry into the market, requires concerted efforts from all departments. But for a long time, Lining's sales department and product department lacked a coordination mechanism. They stood on their own standpoints and looked at problems. They thought they really led the market. The former often judged whether the product was selling well according to the sales experience, while the latter thought that the good products they had designed were not pushed to 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 the terminal. Sale 。 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 said that Lining did not pay much attention to the training of terminal stores staff. Some store management was even very chaotic: product posters were not changed all the year round, inventory control was not strict, and many stores' sales situation 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.

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." Li Ning Co said in response to the media. {page_break}

　 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 has also acquired 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 do not have any burden, how can we do it again?"

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