Lining'S Repeated Crises And Market'S Doubts About Its Development Strategy

In July 5th, Li Ning Co CEO Zhang Zhiyong resigned from office, for many years has been out of the company's specific business "Gymnastics Prince" Lining, return to "save" company.

On the one hand, the Lining brand was born and grew up in the mainland, and on the other hand, it must break the restriction of the mainland to become a world-class brand.

Before 2010, Li Ning Co benefited from economic development and maintained rapid growth.

The successful Olympic marketing in 2008 brought the company to its peak.

In 2011, the development of the company showed an obvious turning point.

Company executives leave,

Earnings warning, share price fall...

This series of crises has triggered the market's doubts about Lining's development strategy. What is the source of the crisis? How should Li Ning Co get out of the crisis?

CEO turnover climax

The executives of the "airborne" come from wave to wave, from different FMCG fields.

By 2011, a large number of Li Ning Co executives had left.

Zhang Qing likes to use Kung Fu tea to entertain guests.

Talking to reporters about the past, he lit a cigarette first.

Zhang Qinghe, who has just worked with CEO Zhang Zhiyong for 7 years, is the first marketing manager appointed by Zhang Zhiyong.

Before 2000, Li Ning Co had always been product oriented. Zhang Qing said he had proposed a market-oriented approach, starting with consumer insights, and beginning to intervene in product design, research and development, and later promotion.

Zhang Zhiyong adopted his suggestion.

It was a large market department merged by three departments. Zhang Qing changed from several people to forty or fifty.

"Unfortunately, I have been working for more than half a year."

Zhang Qing said, "

"I came to be a public relations and brand asset manager.

Zhang Qingzhi's paratroopers were the first group of managers from foreign companies, including Wang Li from Baleno to Li Ning Co, and Xu Weijun, who worked as a marketing manager from Coca Cola Co.

Xu Weijun first worked as a marketing manager in Li Ning Co, then an assistant to the president, and finally became a CMO (Chief Marketing Officer).

Less than a year after CMO, he left the company in the second half of 2007.

In the eyes of Li Ning Co's veteran employees, "airborne troops" are coming one after another.

According to them, apart from a product manager from Reebok, there are also people from different fields of fast moving consumer goods, such as Procter & Gamble, Master Kong, Mead Johnson and so on.

Le Shuyu, general manager of Li Ning Co's former brand and Xu Maochun, a product official, belong to "airborne".

In 2011, a large number of Li Ning Co executives left. Following CMO Fang Shiwei, chief executive officer Guo Jianxin, Wu Xianyong, general manager of Lotto business department, Zhang Xiaoyan, chief product officer Xu Maochun, director of the Ministry of external affairs and public affairs, resigned.

In July 5, 2012, Zhang Zhiyong retired from the company CEO, for many years has been fading out of the company's specific business Lining regression management company.

Brand remolding failure

The theme of brand remolding is "after 90 Lining". It is considered the biggest failure. It has hurt old customers and has not attracted young people.

Apart from executive turnover, another reason why Li Ning Co is highly concerned is brand remolding in recent years.

In July 2010, when Lining announced that the Make The Change had changed, there were a series of problems, including the turnover of many executives, layoffs, overstock, and the stock price fell to its lowest level in six years, from the highest HK $32 to below HK $5, and the 2012 earnings warning: the company's expected performance or negative growth.

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Although the company has always stressed that it is "active change", it turned out to be a turning point for Lining's performance in 2011. The continuous rise in performance over the years began to decline. The company's annual operating income was 8 billion 900 million yuan, down 5.80% compared to the same period last year, and net profit fell 65% from the same period last year, from 1 billion 100 million yuan to less than 400 million yuan.

Li Ning Co has been established for more than 20 years, and there have been two brand remoulding. It is just the first time (Anything is possible is all possible) because it is relatively successful, and is rarely mentioned.

"Before that, the company made adjustments almost every year, replacing advertising slogans and experiencing a fumble."

Zhang Qing recalls.

Fang Shiwei is a very concerned person in the airborne force, not only because he was the trader of the Li Ning Co brand remolding campaign in 2010, but also because he entered the company from 2007 to the end of 2009 and achieved three links in his duties.

With the theme of "post-90s Lining", the slogan "90 after Lining" is used in advertising language. This age information is taken as a criterion to be regarded as the biggest failure in the brand remolding campaign afterwards.

It not only hurt the hearts of the old customers, but also did not let the real young people - Lining brand want to locate the market group, from psychological to feel highly fit.

Fang Shiwei took the blame and left in 2011.

"The bigger the booth is, the bigger it will be."

Li Ning Co is wobble in the strategic choice between sports and fashion, and has made multi brand layout, and has been accused of "spreading more and more stalls".

Lining's idea is to weaken his symbol and brand and cultivate the company into a sustainable development company.

In 1997,

Li Ning Co broke out for the first time, and the threshold of annual sales of 1 billion could not be broken.

Faced with the crisis, Li Ning Co embarked on the path of change: eliminating family management, identifying professional development strategies, strengthening technological R & D capabilities, and introducing information management.

At that time, Zhang Zhiyong began to emerge.

From 2003 to 2009, China's economy was developing rapidly, and the sports consumer goods market was also growing.

In 2008, Lining's successful Olympic marketing pushed the company to its peak, and this boom lasted at least until 2009.

In 2009, Lining sold more than Adidas in mainland China for the first time.

Since its listing 6 years ago (as of 2009), Lining has seen an average annual compound sales growth rate of 34.9% and an average annual compound growth rate of net profit of 50.5%.

"Looking back now, the rapid development of the company is to a certain extent based on the development of the whole economic environment, and many problems are also obscured when the market is developing at a high speed."

A former Li Ning Co executive said.

The birth of Lining grew up in the mainland. "I have always felt that Oriental elements should not be lost."

The executive said.

In 2005 and 2006, the company seemed to have found this point and began to emphasize Lining's eastern element. At that time, all the Li Ning Co's external manuscripts, tenders, including public relations activities and advertising, wrote a sentence at the end of the briefing: there must be an innovative eastern element.

However, after the recent brand remolding in 2010, this element is gone.

Another company executive said that for a long time, Lining was wobble about the strategic choice between sports and fashion, and he made many brand layout in outdoor, badminton, table tennis, running and other fields. "The bigger the booth, the more manpower, material and financial resources, which is a real problem."

In the industry view, Lining brand has no confidence in himself. A confident person will stick to his things, be confident and open.

The information conveyed by Lining brand lacks this.

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Before there are wolves, there are tigers.

On the one hand, Nike and Adi have begun to exert their strength in the fixed line market; on the other hand, Anta and PEAK are pressing these domestic brands.

In the face of the crisis, in addition to personnel adjustment, Li Ning Co has begun to adjust its response in other areas.

Not long ago, Li Ning Co announced that in the fourth quarter of 2012, the total number of orders for Lining products was down by double digits. It announced that it would reduce the exclusive concession period of 10 years Lotto (Le Tu) trademark until 2018.

Lotto is the brand of Italy, and Lining has been authorized to operate it since 2009.

However, in Lining's multi brand camp, Lotto has been running a deficit for 3 consecutive years.

The company said that it will make full analysis and evaluation of existing brands and focus more on core businesses.

In June this year, the company also revealed that it had signed a contract with CBA to become an equipment sponsor from the 2012-2013 season to the 2016-2017 season.

This is regarded as a signal of Lining's return to sports strategically.

According to media reports, Lining will pay up to 2 billion yuan for the sponsorship, averaging 400 million yuan per season.

In 2004, when Anta signed CBA's sponsors, the amount was 3 years and 60 million. Even after the renewal, it still averaged 20 million yuan per season.

In fact, Lining was the first basketball player. It was earlier than Anta and PEAK.

However, the first sign of CBA was PEAK.

"Li Yuanwei, chairman of the former China Basketball Association and director of the basketball management center, went to the Li Ning Co to communicate with CBA in sponsorship."

An insider who declined to be named said that the CBA League was not as hot as it was today. At that time, including ADI, Nike and Lining, they were not too optimistic about the tournament.

"After PEAK terminated the contract, Anta was intent on rushing ahead and pulling out the money twice as much as CBA for the CBA tournament."

Anta took PEAK from PEAK for seven years.

Anta takes the opportunity of China CBA to become famous overseas.

In fact, Lining has been in a severe situation before the wolf has a tiger.

On the one hand, Nike and Adi have begun to exert their strength in the fixed line market and gradually enter the three or four tier cities in China.

On the other hand, Anta and PEAK are not only CBA, but also the strategic partners of the Chinese Olympic Committee.

According to the latest order data, Lining came to the five sporting goods company in Hongkong.

The order meeting data is the basis for the performance of sports products listed companies.

Continuous loss of dealers

The dealer champion said that the loss began in recent two years. He thought that the blood contact between the company and the dealer was weakening and the brand remolding was logo.

Lining brand

Zhao Yu, the dealer owner, recently met Lining himself.

Zhang Zhiyong left office CEO, Lining returned to management company, management announced the growth blueprint, formulated three stages of the plan.

The first is to improve channel inventory and enhance channel profitability.

Zhao Yu is the first distributor of Li Ning Co.

"In 2008, we felt that the market was very good, and we were courageous enough to order a lot of goods.

But I didn't expect the market to become so fast that the supply would be bigger than the sales, and the commodities would be damaged more severely.

Zhao Yu said that Lining failed to solve the inventory problem in time, and some dealers' support was not in place.

"The cost of doing business now is much larger than before, and the profits of dealers are quite different from before."

He said, in the past few years, everyone has been crazy to open shop, you robbed me to raise the cost of the shop.

"I was the 12 year sales champion of the whole country, which also fell, and I started losing money in the last two years."

Zhao Yu said.

Li Ning Co has more and more layers. The influence of the company's culture on dealers is fading away, and the blood contact with distributors is weakening.

Dealers also reflect that it is hard to see the CEO at the moment.

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At the end of 2010, Lining integrated the distribution system.

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As the company decided to implement the strategic adjustment of "value consumption led", it decided to close 500-600 stores with poor performance. The strategy raised by Zhang Zhiyong was "big fish eating small fish", which, to a certain extent, damaged the interests of some dealers.

"Small customers in some areas do not take stock, and we have to digest our inventory."

Zhao Yu said.

Zhao Yu still feels that Lining's 2010 brand reinventing for logo is not the right time.

However, Lining's own return has made him feel the return of the spirit of the enterprise. "We are heading for Lining. Lining will not give up. We will not give up."

Now we must stick together, and the most important thing is to stabilize the market.

Introduction of international capital

Private equity fund TPG has a shareholding of 12%, and TPG partner Jin Zhenjun is the executive director and executive vice president of the company. Lining is mainly responsible for the company's external affairs and relations.

In addition to changes in business, Li Ning Co has introduced two big investors.

In January 19th this year, Li Ning Co announced that two investors would subscribe to convertible bonds issued by the group, of which TPG, a private equity fund, will subscribe for convertible bonds of 561 million yuan, and the member company of GIC will subscribe for 189 million yuan convertible bonds.

Assuming that all convertible bonds can be converted into shares, TPG occupies about 12% of the company's share capital.

According to the conditions signed by TPG and Li Ning Co, TPG has the right to nominate two non-executive directors to the board of directors, and the right to nominate a director (or other independent non-executive director) as a member of the audit committee, nomination committee and Remuneration Committee, and has the right to nominate two executive directors as members of the Executive Committee.

In April this year, Li Ning Co announced the appointment of two TPG members, Jin Zhenjun and Chen Yuexian, as non-executive directors of the company and entered the Executive Committee.

At present, Li Ning Co CEO position vacancy, by TPG partner Jin Zhenjun as executive director and executive vice president of the company, Yisheng Restaurant Group chairman of China business division Su Jingshi as an independent non-executive director of the company, before hiring the new chief executive, Li Ning Co will be led by the founder and executive chairman Lining and Jin Zhenjun.

The company said Lining will be mainly responsible for the external affairs and relations of the company, while Jin Zhenjun is mainly responsible for the internal affairs and operation of the group, and will promote the pformation of the group during the pition period.

According to Li Ning Co executives, "nearly two months ago, Jin Zhenjun has done a lot of work."

Jin Zhenjun, a Korean American, graduated from Harvard University and worked in McKinsey, DELL and other companies. He is now a partner in the global private investment firm TPG and head of Greater China.

Li Ning Co did not accept the reporter's request for the development of Li Ning Co.

In his 2011 earnings report before returning to the company, Lining wrote: "as a founder of the company, it is my dream to strive to turn a Chinese brand into a world-class brand and lead the group to become an international level enterprise. This will not change."

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Character impression

Zhang Zhiyong's mission has been completed.

Lining has always had a strong desire to make the brand of Lining a world-class brand and to manage the company with professional managers is the direction he has always determined.

In 1997, faced with the impact of the Asian financial crisis, Li Ning Co embarked on the path of change and cleared the management of family members. Zhang Zhiyong emerged.

"At the end of the 90s, the company was developing a ERP enterprise management system, not only in the sporting goods industry, but also in other industries."

Many people mentioned Zhang Zhiyong's achievements in his early years and talked about ERP.

According to the introduction, ERP can do it. Any casual shoes, as long as you see its serial number, you can find out which factory has come out and what processes have been passed.

It is a very good system for process management, cost control and information sharing throughout operation.

Zhang Zhiyong is one of the core members of the group.

"He had done finance before, and managed too much company. He had gone through some experience in his post."

A person close to the Li Ning Co said that in 2001, Chen Yihong, deputy general manager of the company, recommended Zhang Zhiyong when he left the office.

In February 2001, Zhang Zhiyong was appointed general manager of the company.

Zhang Qing's impression is that Zhang Zhiyong is a very intelligent person with strong learning ability.

"He likes reading books, and he often recommends us to read all kinds of books.

He likes to absorb new things, and in his mouth, there are always some new terms.

Zhang Qing said.

Many Li Ning Co people can not describe Zhang Zhiyong in a particularly accurate way, but we can basically reach a consensus on "he is very fond of numbers". "The pressure from the investors committee is enormous."

"Zhi Yong led the company from 1 billion to nearly 10 billion, and spent 11 years, but how could it not break the threshold of 10 billion?"

An executive at Li Ning Co said Zhang's mission has been completed.