Lining Has Higher Employee Costs Than His Peers But No Ideal.

Zhang Zhiyong announced his resignation as chief executive.

The brand remolding campaign, which has lasted for two years, failed.

In 2010, Zhang Zhiyong dominated a bold campaign of brand remolding, including replacing the LOGO that lasted for 20 years, changing the slogan "anything is possible" to "let change happen" and repositioning the customer base to lock in the "post-90s" crowd.

The result of this campaign made Li Ning Co's earnings worse.

Lining's 2011 Annual report shows that the company's operating income is about 8 billion 929 million yuan, down 5.80% compared to the same period last year. Net profit was 386 million yuan, down 65% compared to the same period last year.

Comparison

The net profits of competitors such as XTEP, 361 degree and PEAK were 1 billion 730 million yuan, 966 million yuan, 1 billion 133 million yuan, and 780 million yuan respectively, and Lining ranked the bottom.

However, a former Li Ning Co manager said, "if marketing fails to cover up everything, Lining will still go down the downstream channel."

He believes that the four problems of cost, channel building, rough management, and relationship between the board and management team have led to Lining's current situation.

In fact, as the founder and group executive chairman of the company, Lining had foreseen many problems existing in Li Ning Co. He said in a recent interview, "enterprises are indeed subject to many restrictions and no coffin is shed.

If the external environment oppresses you, you will do it.

Minor adjustments will not change the fundamental problem.

The former executives said that Li Ning Co's cost control has been a key problem restricting the company's profit performance.

This problem has been criticized for a long time in the interior, but it has not been solved for many years.

Lining 2011 Annual report shows that in the cost of staff and marketing costs, Li Ning Co are ranked in the forefront of peers.

Taking staff costs as an example, although the annual revenue is only 30 million yuan, Li Ning Co's staff costs account for 8.7% of revenue, while Anta accounts for 8.5%.

It should be noted that by the end of 2011, Li Ning Co had 4180 employees and 11500 Anta.

Although the whole staff of Anta includes a large number of factory employees, the staff cost of Li Ning Co is obviously higher than that of Anta.

Besides, Li Ning Co also occupies the first place among its domestic counterparts in terms of advertising and marketing expenses.

According to the 2011 Annual Report, Li Ning Co's marketing expenses account for 17.6% of revenue, which is 13.7% higher than that of Anta.

The former executives said that from the R & D to sales, Li Ning Co had high costs in every aspect of the supply chain, and Li Ning Co's internal efficiency did not increase, which would continue to affect Li Ning Co's profitability.

In addition to cost control, channel building is considered to be a fatal factor affecting Li Ning Co's revenue.

In the course of development, Li Ning Co has always adhered to the development mode of two companies outside the company, while Anta's main competitor, Anta, has been insisting on the vertically integrated mode of production and sales.

A former Li Ning Co staff member said Anta's model seemed cumbersome, but today's market environment seems to be able to more effectively control the operation of R & D, production and sales.

The problem of the Li Ning Co's runaway channel has become prominent after the problem of industrial inventory increases.

When Zhang Zhiyong talked about channels in an interview, he was rather helpless to say that when customers consider orders, they will encounter 30% problems of rising rent and 20% increase in wages. Therefore, when purchasing orders, they will become very cautious.

Superstructure failure?

Behind the problems revealed by Li Ning Co, the deeper reasons that affect Li Ning Co's development are also highlighted.

A former Lining important functional department said, "before Lining, from Chairman to employee, is very ideal, and this ideal can form a cohesive force."

But now, Lining's employees have no ideals. I really don't know.

Another middle class who left Lining also said that the feeling of "heart to one piece" suddenly disappeared after Lining's 2010.

The intrinsic assessment system is no longer insisting, but rather "people move" approach, can determine the implementation and promotion of the company.

The evaluation of corporate culture and core values is summarized by the former Li Ning Co executives: "although the company has existed for so long, it is still very rough in management.

The interdepartmental collaboration ability is poor, and at the same time, everyone's departmentalism is heavy, which leads to lower efficiency.

But there is also a former executive who believes that Lining's problem is that meticulous management has gone too far, adding many departments, resulting in increased costs.

At the same time, it brings the dilution of mainstream culture.

His departure also stems from this.

In addition, the running in between the board of directors and management is also a problem for Li Ning Co management.

According to the foregoing Lining relevant personage, the company chooses Anta and Kappa (a clothing brand), which are the result of conflict of opinions between the board and management.

In addition, the source disclosed that Zhang Zhiyong had always been concerned about the efficiency of Li Ning Co but still wanted to improve internal efficiency. However, because he was not a major shareholder of the company, many things were also restricted by the board of directors.

Another former Lining employee thought that the company was right in strategy, but the tactics were not implemented well, and there was no problem of insufficient authorization.

Lining also recently commented in Athens that "I am not an extreme person. I will step back. The team will also take a half step. The advantage of doing this is that we can calm down and adjust, and the bad thing is inertia."

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Lining's struggle

"For any mode, it is a defeat."

Another former employee of Lining said, "so far, I think Lining is a great enterprise."

This represents a view of many employees who feel good about Lining.

The Li Ning Co itself is willing to make changes.

Lining himself has a clear attitude towards future changes. He said that the direction of the company's adjustment has now been determined, and the adjustment will take one or two years.

For specific practices, Lining said, "efficiency will be our first adjustment action; second, adjusting our business mode, business mode will affect the change of organizational structure, function and skill changes, all these things need to be done in one or two years from now.

In fact, in late January of this year, Li Ning Co has made efforts at the capital level to strive to optimize shareholder structure.

At that time, Li Ning Co introduced the strategic investment of the US private equity fund TPG and GIC (Singapore Government Investment Corp) totaling 750 million yuan.

In February, we adjusted the organizational structure and human resources to improve the operational efficiency of enterprises.

In July 5th, Li Ning Co announced that Jin Zhenjun, partner of Dezhou Pacific Group (TPG Capital), served as executive vice president, responsible for internal affairs and operations.

For Lining's reform measures, Jin Zhenjun said that first of all, cost control can put more money into new sponsorship and investment.

This work has already begun.

Secondly, it is to rationalize the commodity structure and reduce things that are not worth selling.

The biggest goal this year is to clean up the stock.