"Lining" - The Way To Go In The Future

At 10 a.m. on July 21st, the Lining store on the 4 floor of the century Jin Yuan shopping center in Beijing was full of people, who were anxiously waiting for the result of the lottery. Those who are being drawn will be eligible to buy Lining's latest basketball, endorsed by NBA star Wade. shoes Wade's return to the special edition.

In this June NBA finals, Wade was wearing the shoes to help the Miami heat win the championship in second consecutive years.

The same queuing scene also appeared in 7 stores in Lining's 7 cities, such as Shanghai and Guangzhou.

The sale of the "Hui Hui special edition" is limited to 500 pairs nationwide, priced at 1099 yuan. Although the price is not high compared to the flagship products of Nike and Adidas, this is definitely sky high price for local brands. Although the price is high, but it can not stop the enthusiasm of consumers, the Jin Yuan store in Beijing has 80 double quotas, but the number of draw lots is close to 800.

Among these people are Wade's iron fans, who buy shoes for collection, and a large number of shoe dealers who shop on Taobao, hoping to get a good price on the Internet after fishing several pairs.

The pattern of the queuing lottery was almost the same as that of Nike and other international brands in the past, and Wade from Nike to Lining finally made the local brand proud.

As an important step in the strategic adjustment of Li Ning Co, Wade, who signed the contract in October last year, has attracted many external criticisms. Many people feel that Lining, who is financially worried, is signing a contract with a price of 10 million dollars. This is too risky for a player who has been over 30 and is in the late career.

The following stories are somewhat more like those people expected. In the past season, Wade's performance on the court has been fluctuating because of the knee injury. However, the result is quite different. Wade finally blocked the mouth of the doubt with another championship trophy.

Like Wade, Li Ning Co has been questioned by the outside world for more than a year. Then, after a series of shocks such as the founder's comeback and CEO substitution, can the company turn a big reversal like Wade?

　　 Debt repayment for the past few years

From the beginning of the failed brand remolding in 2010, Li Ning Co lost itself at the marketing level.

At that time, in order to implement the unrealistic international strategy, Li Ning Co launched a full line marketing campaign. Badminton, basketball, running and women's fitness have all become the focus of promotion. The result of this aimless marketing strategy is that the market does not buy it. When consumers no longer choose Lining products, inventory problems also erupt.

After Lining's comeback with TPG, he reformulated the direction of marketing and established a focus on basketball.

In fact, the important reason for the rapid growth of Li Ning Co after listing in 2004 is due to the strength of basketball products.

In 2004, Li Ning Co acquired the identity of NBA official market partners. In 2006, the signing of NBA superstar O'neal once made Li Ning Co's reputation on basketball products reach its peak. However, since then, the company has invested resources in other projects. The swaying of strategy has made Li Ning Co's advantages accumulated in basketball in the last few years, and is gradually being eaten up by the Jinjiang department.

After the turmoil, Li Ning Co finally realized the importance of basketball to the company. As the highest sports participation event for young people in China, basketball is an unavoidable battleground for all integrated sports brands.

Li Ning Co, aware of this, began to cram lessons in the past year for the debt it owed in the past few years. One of the most popular moves is to spend 2 billion sponsoring the CBA League and signing NBA star Wade.

But its action in basketball is much more than that. The Li Ning Co also worked with the Chinese Middle School Sports Association and the Chinese Basketball Association to win sponsorship of the Chinese junior high school basketball league, and began to start with the doll. In addition, insiders revealed that Li Ning Co is still competing with Nike for the equipment sponsorship of the Chinese men's basketball team.

Lining hopes to establish a comprehensive basketball resource system through this series of measures to consolidate the professional image of the brand.

In addition to the basketball product line, Li Ning Co also began to work in the field of running. Before 2008, Li Ning Co once devoted a lot of resources to running categories, but it suddenly stopped when it was already in full swing.

Although the intensity of marketing has weakened, some classic series on the product line has been continued.

It is widely questioned whether Li Ning Co's big gamble in basketball can achieve good results. According to insiders, the sales of Li Ning Co running and basketball products have increased substantially in the past year.

One thing that can be used as evidence is that Li Ning Co recently just knocked out a shop selling counterfeit Lining products with Taobao, which sold more than 700 copies of the tenth generation of Lining's ultra light running shoes in less than a month.

Copied by domestic Shanzhai manufacturers, this is also the treatment that international brands can enjoy in the past. This is a proof that consumer attitudes towards Lining products are changing.

As for the badminton products that were once selected as the breakout of the company in the former CEO Zhang Zhiyong administration period, Lining himself has shown that this is still the core direction of the company although he has comeback, but in the past year's TV advertisements, he has basically seen no badminton products, and the marketing of badminton products has been shrinking all the way. At present, he only maintains his position in the industry through sponsoring professional events.

Of course, the outstanding performance of individual products is difficult to conceal the company's overall decline in orders, but at least let the outside world again see the hope of Lining's brand.

UBS recently released a "buy" rating on Lining's stock. UBS's channel survey shows that in a second tier city, Lining's new product line is attracting more and more consumers, and the discount rate of conventional channels has dropped from 35% last year to 15% to 28%.

　　 Transformation to retail

Inventory problem is the last straw that crushed Li Ning Co after 2010. This is also the first difficulty faced by the new management.

In order to solve the inventory problem at a single blow, the Li Ning Co launched a channel revival plan involving a sum of up to 1 billion 800 million yuan in December last year to repurchase inventory and help channel balance. This also directly caused Lining's loss of nearly 2 billion yuan on the book last year.

In order to avoid considering the impact of existing channels, the stock of repurchase is sold to areas not covered by Lining terminal stores, such as the four or five tier cities in China and the African market. In addition, a part of inventory finally flows to the channel of the electricity supplier.

In April this year, Li Ning Co launched a big promotion with all customers. The price of some products with a minimum price of 19 yuan was questioned by the outside world, which would hurt Lining's brand. But for Li Ning Co, long pain is better than short pain, which is a must for the company in the process of self-help.

Behind the stock problem is the shrinking of the market, but the deeper reason is that the business model in the past has been unable to adapt to the current environment.

In recent 20 years, the domestic sports brand has been insisting on the annual order pattern of 4 times a year. The brand needs to predict the market demand and preferences one year ahead of schedule.

When the market is growing at a high speed, this approach is not a big problem. But with the escalation and change of consumer demand, it is becoming more and more difficult for us to anticipate one year ahead of schedule. The traditional order form also seems to be more rigid.

This is the fundamental reason why local sports brands need to adjust their business models.

The business model adjustment advocated by Li Ning Co is to transform from wholesale to retail in the past. This does not mean that we intend to cut down the middle dealers, but to interact directly with the terminal consumers and listen to their needs.

An insider from Lining told business value that this adjustment corresponds specifically to the company's business model, which is to increase the ability to respond quickly to the market. "For example, it has recently been discovered that some elements or colors are popular in the market, so we must quickly make products to seize the market."

In the past, it took 12~15 months to generate creative products from the past, and now the goal of the company is to shorten the process through various means.

After winning the NBA championship this year, the Li Ning Co launched 1000 commemorative T-shirts at the first time and sold out quickly, and the reaction time of the products "only took more than ten days".

Over the past year, Li Ning Co has been trying this pattern of rapid response on a small scale. According to the insider, the company hopes that this fast response product will account for 20% of the non professional sports life products next year.

In addition to the adjustment of business mode, the Li Ning Co also needs to pay attention to the overseas transfer of orders at the back end supply chain level. Since last year, Lining has transferred some of his orders to Kampuchea and Vietnam. The decision made by the former CEO Zhang Zhiyong was retained and executed after the company changed hands.

An insider familiar with Lining's supply chain told business value, at present, Lining. clothing The proportion of overseas orders has exceeded 10%.

The reason why it will be transferred overseas is to consider the increasing labor cost in China, but on the other hand, it is a continuation of the internationalization strategy of the company.

Although Li Ning Co has been in a bad mood because of internationalization, Lining himself has made clear that the company will focus on the domestic market after its comeback, but this does not mean that Lining has completely abandoned his dream of internationalization.

The domestic market has been basically saturated. Sports brands want to seek new growth and seize the overseas market has become an inevitable trend. Anta CEO Ding Zhizhong said in a recent 2013 China sporting goods industry summit forum that letting Anta "go out" is the biggest challenge he faces at the moment. "In the future internationalization, the supply chain must have more layout." The source said.

Of course, the overseas transfer of orders is also faced with many severe challenges, for example, the reaction time of the supply chain will be greatly increased, which is in conflict with the goal of the company's rapid reaction mode. If we want to do the next step, it is learnt that Lining is also weighing the inside.

　　 Pain and worry

Any enterprise will undergo pain in its reform, and Li Ning Co is no exception.

At the moment, the pain of Li Ning Co is the current executive vice chairman and Korean American Jin Zhenjun. The running of the TPG team behind the company's original power has not yet been completed.

Although the company generally recognised the prescriptions of Jin Zhenjun and TPG at the strategic level, they faced many problems in the specific operation process.

According to Li Ning Co insiders, one of the most striking contradictions is that the new team tends to completely negate the past experience of the company and all over again, but in his view, the company does not have all the links.

Moreover, Jin Zhenjun himself had no experience in the sports industry before, and was not familiar with the laws of the industry. "Every industry has its own rules. You can't go against the rules. Now many things we can only be forced to accept, this will be a blow to confidence and enthusiasm. " The person said, "if you mention a proposal not accepted, the two proposal will not be adopted. But if three or four are rejected, will you continue to make suggestions?"

The greater worry lies in the reconstruction of the internal culture of the enterprise. After a massive exchange of blood at the senior level and the departure of a large number of core cadres, the corporate culture accumulated by Li Ning Co over the past 10 years has disappeared.

"Li Ning Co has no culture at all." A veteran employee who has worked for nearly 10 years in has been outspoken. The atmosphere inside the company has been quite frustrated. "Business has its ups and downs, but a century old enterprise must have its corporate culture inherited from generation to generation. In recent years, the departure of old employees has hurt the company very much.

In the longer term, Lining's outlook is still not clear enough.

As an investment company, the goal of TPG is to bring Lining out of the trough as soon as possible. Of course, no one doubts that TPG has such capability. After being transformed by TPG, Li Ning Co will be able to become a huge machine with healthy and efficient operation of all indicators. But is this really the result of the company's hope? Judging from whether a company is good or bad is not just the cold numbers on the financial statements.

When the media interpreted TPG's presence in Lining, its achievements in helping Daphne out of the difficulties after 2009 were repeatedly mentioned, but few noticed that when TPG was sold away in 2011, Daphne quickly fell to a low level again. Its share price has dropped more than 50% this year, and the same store sales in the latest quarter have also dropped by 13.7%, far exceeding the average level of the industry.

Just like many athletes after serious injuries, though they seem to have recovered their health, they can never regained their competitive status in the field. The question now is, will Li Ning Co face the same problem?

Although Lining has repeatedly indicated that he is consistent with the goals of the TPG team after his comeback, this consistency is only a short-term goal. As an investment company, TPG's team is not really responsible for the long-term future of Li Ning Co, because that is not in line with its own interests.

The whole sporting goods industry is changing quietly. Digitalization has become the direction of international giants, especially Nike. Its digital sports platform Nike+ has been accumulating for 7 years. Adidas has also launched its own digital sports platform miCoach to compete with it. However, none of the Li Ning Co and many local sports brands has raised this trend to a strategic level.

A middle-level Li Ning Co has reluctantly expressed "business value" that he has realized the trend of digitalization, but this is not what the company needs to do at this stage at this stage.

How to balance the relationship between short-term "self rescue" and long-term "revival" is the real problem that Lining should consider internally.