What Is The Way Out For China'S Sports Brand "After Ten Years Of Gold"?

In February 2012, Lining announced layoffs and decided to adjust the pace of operation with the help of scraps and wounds.

At the same time, the annual report released by Li Ning Co in March 30th this year showed that the company achieved a total operating income of 8 billion 929 million yuan, a decrease of nearly 500 million yuan compared with the previous year, and net profit fell by 65.2% over the same period last year.

Since 2010, Lining has launched the brand remolding plan. Two years later, Lining is still in the mire of pformation.

For companies like Anta, PEAK, XTEP and 361 degrees, the indigenous entrepreneurial genes make them look like fish in water in the Chinese market.

Experiencing "golden ten years" every year 30%

After the high growth rate of 50%, the growth rate of China's sporting goods industry began to slow down. The high inventory and net profit of the enterprises declined, and the shadow of brand homogenization became more and more intense. Meanwhile, Nike and Adidas began to sink in the Chinese market.

In this regard, the reporter interviewed Rees and Rees (Ries&Ries) consulting company chairman Laura Chis.

Reporter: what do you think is the relationship between Lining's current situation and its brand positioning and multi brand strategy?

Laura Chis: Lining's current situation is related to its brand positioning, especially the multi brand strategy.

Multi brand strategy is a good idea for leaders who dominate the market share.

For example, in the US market, TOYOTA's multi brand strategy has been very successful.

At present, TOYOTA has four car brands: TOYOTA (basic brand), Lexus (high-end brand), Prius (hybrid brand), and Sain (low price brand for young people), but important point can not be ignored. In 1957, TOYOTA had only one brand when it entered the US market, and then waited for 32 years to launch second brands (Lexus), that year was 1989.

In, TOYOTA was the largest import car brand in the United States, reaching 929051 units.

Before launching the second brand, we must first ensure that the core brand has dominated the market, which is exactly the marketing criterion Lining violated.

Last year, sales of Lining and Anta were basically flat, with revenue of 8 billion 900 million yuan.

The bad news is that Lining's income comes from four brands (Lining, Lotto, AI Gao, Xin Chao), and most of Anta's income probably comes from Anta brand.

Let's take a look at the net profit margin of the two brands: Lining's net profit margin (6.4%) is only about 1/3 of Anta's (19.1%).

The best interpretation of a brand is not its sales, but its net profit margin.

When you have a strong brand, you can sell products at a high price; when your brand is weak, you have to lower the selling price to achieve the sales target, but doing so will reduce the net profit margin.

Reporter: after experiencing the "golden ten years", the problem of high inventory in China's local sporting goods industry is particularly prominent. Why is there such a situation?

Laura Chis: during the "golden ten years" period, the industry grew rapidly and most of the enterprises thought that they could continue to grow. Therefore, they increased their inventories to suit the sales volume that they thought might continue to rise in the future.

If sales do not increase, these enterprises will continue to insist on high inventories.

In terms of inventory, single brand companies are more likely to be rich than the many Brand Company such as Lining.

The more brands a company has, the more reserves it needs to cope with future sales. This is especially true in clothing and sporting goods companies.

Reporter: how can China's sports goods brand compete effectively when the market is weak and the competition is white hot?

Laura Chis: precise focus.

A brand needs to be represented. Of course, the best representation is "leader". This brand attribute has created a very strong brand such as Nike, Coca-Cola, IBM, McDonald's and KFC.

In the consumer's mental cognition, a leading brand must be better than its competitors' brand, because "the best product can win the market".

This may not be the fact, but it is the inherent cognition of people.

Losing the leading position in the Chinese market is a serious problem for Lining, and it also weakens Lining's ability to build a strong global brand.

For a Chinese sporting goods brand, the best strategy to go global is to emphasize its leading position in the Chinese market (generally speaking, it is to be a "leader in Chinese market").

Reporter: when Nike, Adidas and other pnational sports giants begin to launch low price products and implement channel sinking strategy, how should China's local sporting goods brands deal with the impact of international brands?

Laura Chis: Nike and Adidas will become a big problem for Lining and other Chinese sporting goods brands.

Nike and Adidas performed very well in the Chinese market. In 2010, Nike's sales in China reached 11 billion 800 million yuan, while Adidas's sales reached 8 billion 600 million yuan, even though those figures also included sales in Taiwan.

Among the two companies, Nike's strategy is better, and it can be reflected through its net profit margin of 10.2% last year.

By contrast, Adidas's net profit margin is 5%.

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Nike also has some sub brands, but the company mainly focuses on Nike brand.

Adidas is different. In 2005, Adidas acquired Reebok, and now the company has two main brands.

Although the scale is smaller than Nike, Adidas has allocated resources to two brands, while Nike focuses on single brand.

These two factors (Nike's large-scale and single brand focus strategy) are the important reasons why Nike's net profit margin is two times that of Adidas.

What should Lining do in the future? First of all, it should concentrate all marketing resources on the Lining brand, and there is no need to cut off the other three brands, but it should not make them occupy the resources of the core brand of the company. Secondly, Lining needs to represent a certain characteristic, that is to say, a specific property of Lining's sports shoes can be pmitted to the market (shoes are the key products of the sporting goods brand, clothing and other products are only "accessories").

For example, Reebok has just launched a "curve" geometry running shoes, which can help athletes reduce muscle fatigue.

However, we do not recommend that Lining copy the characteristics of the product. Lining needs to develop similar features but only Lining brand.

That's what Apple Corp did when it launched the first touchscreen smart phone iPhone.

Lining also needs a touchscreen to distinguish himself from other domestic and foreign competitors.

Rees partners (China) marketing strategy consulting firms localization view:

"Lining" should aspire to become a truly international brand.

Some of the enterprises have realized that, as Mr. Lining, the founder, emphasized, Lining brand is the core of the company, and the main resources should be concentrated here.

Besides, the most important part -- how to enhance the competitiveness of Lining's brand is obviously not up to its needs.

The problem Lining encountered today is not a case.

In fact, we believe that most domestic sporting goods brands will encounter "Lining style" bottlenecks after a period of high growth.

From a global perspective, simply speaking, there are two brands: one is the global brand, the other is the regional brand, and the two brands have the living space. But the size of the space and the potential energy of long-term development, the global brand is undoubtedly more advantageous.

Take the automobile as an example, the three largest American automobile companies have built huge enterprises and brands relying on their huge market capacity. But a fatal problem is that because the local market is too large, the United States auto brands are too concentrated in the local market, and there is hardly any strong global automobile brand.

In the long run, if we have no influence in the global market, the influence on the local market will also weaken.

This is also true of China's sporting goods industry.

Whether Lining, Anta or others, the vast majority of the market is still concentrated in China. In the long run, it will form the recognition and positioning of regional brands, so as to fight against global brands will inevitably be at a disadvantage.

This is also the root cause of Lining's growth bottleneck.

Location is determined by cognition. It is the location of consumers rather than the enterprises, no matter what the enterprise publicize or who to speak for.

Similarly, if we do not really change, the problems Lining will encounter today will also repeat itself on other local sporting goods brands.

Therefore, for Lining and other domestic sporting goods brands, there are several crucial points.

First of all, to become a truly international brand, the establishment of an international brand does not depend on finding a few international celebrities to endorse. The key is to enter the international market, especially in the European and American markets.

Secondly, focusing on a sport with international advantages, Lining has tried to focus on badminton. This idea is not wrong in itself. But if there is no cooperation with the international market strategy, this approach will not have a good effect. From the point of view of the spokesperson, those international Chinese stars, such as Liu Xiang and Yao Ming, are all the best candidates to push the Lining brand to the world.

Of course, to achieve these, Lining also faces many challenges, such as global names, international market operation experience and so on.

What is certain is that even if we adopt the correct strategy, Lining's strategic pformation is not a day's work, but rather requires enough time and patience, even paying the price of a gradual decline in sales.

But as Mr. Rees said, thousands of miles of brand road, a step back, seems to be a step back, but in fact, the two step.