How Did Lining Revive The Tide Of The Country?

Since 2019, the boom of the sporting goods industry has continued to rise. It is the high growth track of the entire clothing sector. As one of the most representative industries, the stock price of Li Ning Co has been soaring all the way, which has increased by 200% since the beginning of the year.

As one of the leading brands of local sports, Lining has gone through twists and turns and reborn in Nirvana. On the one hand, the company has been focusing on the integration of local characteristics and avant-garde fashion in the two aspects of product functionality and fashion, and has won widespread popularity among young consumers. On the other hand, Lining also improved the overall internal business efficiency through channels and positive changes in the supply chain.

The rise of domestic products also contributed to Lining's growth. The cultural confidence of the new middle class is stronger and stronger, and the sense of local culture is on the rise. Based on the deep understanding of the national brand, Lining constantly finds the spiritual characteristics of the brand culture and develops it flexibly, and gets consumers' favor through product quality and cost performance advantages.

At the same time, the new generation of consumers growing up in the rising environment of the country has gradually become the protagonist of the consumer market. They began to attach importance to their personalized experience instead of sticking to the inherent brand concept and paying more attention to cost performance.

Since 2015, Lining, who has begun to attach importance to the mentality and emotion of the younger generation, has undoubtedly had more advantaged conditions and has become the best representative of the rise of domestic goods.

Golden Age

From the prince of gymnastics to the business wizards, it happened in 1990.

Li Ning Co, founded in 1990, is just thirty years old. A thirty year history of Lining's development is a perfect miniature of the development of Chinese brand clothing.

In the early 90 years of last century, the local sporting goods market was still a blank. Even Chinese athletes took part in the competition and won the awards. Lining, who has retired, began to want to become a Chinese sports brand, and hoped that the brand could continue to support China's sports.

To be a gymnastic prince with more than ten years' sports career and dozens of gold medals, Lining is blessed to push this matter forward.

Statistics show that Lining brand successfully applied for the registration of "Lining brand" in November 1989. In 1990, Li Ning Co started from Sanshui, Guangdong, and formally started the production and operation of "Lining brand" sportswear.

The newly born Lining brand has ushered in a brilliant opportunity to debut in the 1990 Asian Games in Beijing. As a representative of the athletes, Mr. Lining, wearing a snow-white "Lining" sportswear, solemnly received the torch of the Asian Games from the Tibetan girl Dava Ozon. At that moment, Lining's brand was successfully launched in the "C position" of the Asian Games, and became the Olympic flame of the Asian Games.

After the Asian Games' debut, Lining's series of sports products were selected as special equipment for the Chinese sports delegation to participate in all major international competitions, ending the history of Chinese athletes using foreign sporting goods in the Olympic Games. From 1993 to 1996, Lining's annual sales revenue increased by more than 100%.

In 1996, for the better development of the company, Lining moved the company to Beijing and changed the name to Lining sportswear company. In 1999, Lining began to optimize the corporate governance structure and took the lead in implementing ERP (enterprise information management system) management in the industry. Since then, Lining has ushered in the most brilliant ten years in the history of company development.

Statistics show that in 2001, Lining's business income was 735 million, and by 2010, it reached 9 billion 478 million. In ten years, business revenue increased 12 times. During this period, Lining experienced the brilliance of the Hong Kong Stock Exchange in 2004, and ushered in the highlight of the 2008 Olympic Games. In 2010, the turnover of Lining brand reached a peak of 9 billion 778 million yuan, which reached 9.7% in the local market, surpassing Adidas and ranking second in the industry. At this time, Lining is well deserved to become a domestic sporting goods "one brother" who can compete with Adidas, Nike and other international sporting goods giants.

　　 Extreme decline

At this time, Lining, who became a domestic brother, began to want to change to the international fashion and youth, so as to compete with NIKE, Adidas and other international brands.

To this end, Lining launched the brand remolding plan in 2010, repositioning the brand as "fashion, cool, global vision" and positioning the consumer group as "post-90s". In addition, according to Li Ning Co's market strategy, the company began to raise the price of products ranging from 7% to 17.9% yuan while changing the brand name of Lining.

However, since the design of the trend and the brand positioning of "post-90s Lining" have not been favored by new user groups. In the sense of design and fashion, but with NIKE, Adidas and other international cards far away from the situation, rashly raise prices. When young people face the price difference between Nike and Adi, it seems that there is no reason to choose Lining. After raising the price, Lining also lost the advantage of cost performance, which aroused the resentment of 70 and 80's consumers. For a time, Lining fell into a very passive position.

Side effects soon appear. In 2011, Lining's performance report showed that its revenues and profits declined, and the total revenue of the company was 8 billion 929 million yuan, down 5.8% compared to the same period last year. Net profit was 386 million yuan, down 65.19% compared with the same period last year.

When it comes to Lining's strategy of positioning, he has ushered in the "cold wave" for the first time. Since the 2008 Olympic Games, the wholesale mode of over reliance on distributors has already revealed a crisis. The inventory of famous brands in the industry has begun to surge, and Lining has also seen a large backlog of inventory. Data show that in 2010 -2014, Lining inventory turnover days increased from 52 days to 109 days. At the same time, Lining battalion receivables turnover days also deteriorated. In 2010, Lining receivables turnover days for 52 days, and by 2012, this data surged to 97 days.

The local brand manufacturers, which have been trapped in the quagmire of high storage, have started heavy channel adjustment since 2012. Data show that in 2012, only six "local" sporting goods giants such as "Lining" and "Anta" were close to 5000 stores in 2012. Among them, the number of Customs stores was as high as 1821. At the same time, the industry has begun to swallow the bitter fruit of the blind expansion period. In the background of the sharp decline of Brand Company revenues, the industry added value began to decline.

Data show that in 2012, the total number of Lining shops decreased from 8255 in 2011 to 6434, and the number of stores in that year decreased by 1821. Among them, the number of franchised stores has decreased by 1692, and the number of direct outlets has decreased by 129.

With the sharp decline in the number of stores, Lining in 2012 ushered in operating income and net profit both slide. Data show that in 2012, Lining's operating income was 6 billion 739 million yuan, a sharp decrease of 24.5% over the same period last year, with net profit of -19.79 billion. Since then, Lining has been surpassed by Anta and lost the position of a domestic sports brand industry.

Since then, Lining has begun a radical reform of the channel, and strengthened the management and control of retail, and promoted the transformation from wholesale mode to retail mode. On the one hand, we should continue to close down inefficient outlets and increase the strength of direct shops. On the other hand, for quality dealers, Lining reduces the inventory and cash flow burden through one-time inventory repurchase and restructuring accounts receivable structure.

In 2013, there was a net decrease of 519 stores in Lining, including a 814 reduction in the number of franchisees and an increase in 295 outlets. Operating income fell 12.7% over the same period, and the amount of loss narrowed to 392 million yuan.

In 2014, with the growth of Lining's direct storefront and the improvement of its efficiency, Lining's business income increased to 6 billion 728 million yuan, an increase of 15.4% over the same period, basically returning to the level of 2012. However, due to excessive operating costs, the net profit was further deteriorated compared with 2013, and the net loss amount reached 781 million yuan.

Overall, Lining's channel reform has played a certain role, but has not changed the company's operating losses. Jin Zhenjun, chief executive of Li Ning Co, also announced his departure in November 17, 2014.

Phoenix Nirvana

The Li Ning Co, which has fallen to the altar, greet the return of founder Lining. At the end of 2014, with the departure of Jin Zhenjun, the former chief executive, Lining announced that he would return to the company's front-line management and act as the company's agent CEO. Since then, Lining has begun to change, the company began to turn around the deficit, profits, gross margins, market share rose.

On the one hand, Lining began to strengthen the company's product strength, and continue to focus on improving the brand. On the other hand, Lining continued to strengthen the company's weaknesses in channel management and supply chain management. After two pronged reforms, Lining ushered in a phoenix like revival of the company.

After taking the helm, Lining first led the company to return to product development and design. The company has been focusing on the integration of local characteristics and avant-garde fashion, and has gradually won the popularity of young consumers.

After a long period of thinking, the team set the goal of transformation as "a real sports professional brand". In the context of product homogenization, Lining adopted a more closely integrated approach with specific individual sports, focusing on the five core areas of basketball, running, training, badminton and sports and fashion.

Through the tilt of R & D investment and marketing resources, Lining's competitiveness in these five core categories has been continuously enhanced, and the advantages of the company's professional sports products have been strengthened. At the same time, the proportion of Lining's non core products in the company continued to decline, and the proportion dropped to 2% in the first half of 2019.

It is worth mentioning that, in the context of the company's cost reduction and efficiency enhancement, Lining did not hesitate to invest in R & D. Statistics show that R & D expenditure has increased from 130 million yuan in 2015 to 230 million yuan in 2018, and the proportion of R & D investment has also continued to rise.

While improving the product quality, Lining and his team have begun to innovate Lining's brand. On the one hand, through the fashion show of New York fashion week and Paris fashion week, Lining completely overturned the impression of tradition. On the other hand, in marketing, Lining is no longer limited to sports sponsorship, and has begun to try to cooperate with fashion media in depth. He has narrowed the distance from young people by means of artist street shooting, fashion show, KOL promotion and so on. A more "young" Lining has begun to take shape step by step.

In 2018, "China Lining" series of costumes in 2018 New York fashion week's high-profile appearance, ushered in the collective exclamation of netizens. For a time, a variety of show products were quickly swept away on the brand's official website.

A humorous "I might have bought a fake Lining" before, fully expressed the consumer's recognition and admiration for the promotion of Lining's product power and influence. Lining also formally broke the stereotype of her brand "middle-aged sportswear". Since then, Lining has successfully completed the brand remolding.

　 Focus on retail power providers

Since the establishment of the brand, Lining's channel has been using the outsourcing mode, and after the dealer has completed the payment and delivery, the product has been sold. The rough management method adopted in the early stage of the local sports brand made Lining suffer from the subsequent cold wave. Since 2014, the retail reform of the company has promoted the transformation from wholesale mode to retail mode. However, due to the biased implementation, the operation cost has been surging, and the result is not high.

Since 2015, Lining has led the team to refine the retail management framework and enhance team execution. While building diversified channels, Lining continued to strengthen retail management and store services. Since then, the company's channel management has been on the right track. The growth rate of the same store has been negative since the second half of 2014.

Source: Orient Securities

In the Lining diversification channel strategy, the electricity supplier performance is most eye-catching. Since 2014, Lining has begun to strengthen cooperation with the major e-commerce platforms, and actively open up online sales channels. Through the sale of online and offline connections, efforts to achieve the company's products full channel sales.

It is worth mentioning that, unlike other manufacturers, the electricity supplier will be regarded as a platform to digest the old and unsalable products. Lining regards the electricity supplier as an interactive platform for users to interact with the brand products. Lining's online business has been growing at a high speed by providing a separate development and separate supply of e-business products.

Statistics show that over the past 2014-2019 years, Lining's online business has increased by more than 40% annually. In 2018, Lining's electricity supplier income reached 2 billion 220 million yuan, accounting for 21.1% of the company's total revenue, of which electricity providers accounted for nearly half of the total contribution, electricity providers have become Lining's most dynamic sales channels.

With Lining's efforts in the whole line of products, brands and channels, Lining's performance has ushered in a comprehensive recovery. In terms of operating income, since the end of 2014, the revenue growth has continued to decline, Lining's annual revenue growth has remained above two digits, and the 2015-2018 year revenue CAGR has reached 14%. In 2018, Lining's business income reached 10 billion 510 million yuan, breaking the highest historical record of 9 billion 480 million yuan in 2010. In the first half of 2019, Lining's revenue was 6 billion 250 million yuan, and its revenue growth rate further increased to 32.7%. This data is also the highest level in recent years.

Source: Orient Securities

At the same time, Lining also showed excellent performance in net profit. In 2018, the company's revenue was 10 billion 511 million yuan, and its net profit was 715 million yuan, up 39% from the same period last year. In the first half of 2019, Lining's revenue was 6 billion 255 million yuan, and its net profit reached 795 million yuan, a two times increase over the same period of the previous year.

　　 Lining and the rise of Chinese goods

In Wu Xiaobo's words, "2019 is the year when the rise of domestic goods". This year, millet has hatched tens of thousands of Chinese brands, and Lining has changed from a brand abandoned by young people to a trend.

For historical reasons, European and American import brands have long been synonymous with quality and fashion in the eyes of domestic consumers. This is especially typical in the field of clothing.

With China's second largest economy in the world, people's cultural confidence is getting stronger and stronger. Or borrow Wu Xiaobo's view, "when a country's per capita GDP exceeds 10 thousand dollars, the new middle class will become the main force of consumption in this country, and the local culture consciousness of this part of the consumer will rise on a large scale."

In the past 2019, China's per capita GDP just broke through the $10 thousand mark. At the same time, HUAWEI, GREE, Lining, Bosideng and a number of high-quality domestic brands are washing away the low-end and "cheap" labels, relying on the quality and core technology of their products, and are recognized by more and more people, starting to compete in the world market, supporting the bright brand of "new domestic products".

At the same time, with the 90's and 00 after becoming the most important protagonists in the consumer market, they have a broader vision and are willing to try more new things when they grow up in a new growth environment. Compared with the previous generation of consumers who stick to the inherent brand concept, the new generation of young consumers pay more attention to their personalized experience and the price performance of their products. This has also become an important condition for the rise of domestic goods.

Since 2015, Lining, who has "intimate" contacts with the younger generation of consumers and frequently interact with each other, is undoubtedly blessed with unique conditions and has become the best representative of the rise of domestic goods.

But it is obviously not only because young people are more patriotic, but not only the quality and core technology, but also the long-term accumulation of their own national brands, and the spiritual characteristics and flexible development of the brand culture. This is the real transformation of the rise of domestic goods, and Li Ning Co is an important pioneer and leader of this trend.

Source: Lining's official website

After years of market baptism, Lining has found the differentiation and cost-effective advantage of products that are different from international brands, and has enjoyed a higher premium by virtue of their tonality. Lining, who has entered the age of 30, has changed from "country flavor" country card to "national tide" Lining.

Success and failure also make people grow up, whether in sports or business. Lining, who has gone through a series of setbacks and reborn in Nirvana, is becoming more confident. And waiting for Lining ahead is still a new journey of "everything is possible".