Li Ning's five-year change path: Reviving Li Ning's success

Guide: 2010, 20 anniversary of Li Ning Company. This year, the well-known enterprises choose to replace the logo, while the slogan "Everything is Possible" to replace the "make the", the leader is CEO Zhang, he opened the big screen of change Li Ning.
2010, 20 anniversary of Li Ning Company. This year, the well-known enterprises choose to replace the logo, while the slogan "Everything is Possible" to replace the "make the", the leader is CEO Zhang, he opened the big screen of change Li Ning.

In July 2012, Zhang resigned and Kim took over, carrying the banner of reviving Li Ning on his shoulders. November 14, 2014, said that some Li-Ning executives have received an email notification, Kim "leave" Li Ning. In 5 years, the local famous sporting goods enterprise, successively 2 CEO successively high-rise banner of the company change, finally sadly ended. We might as well take the 5-year change road of Li Ning.

Zhang: Reinventing the brand and moving towards internationalization

Zhang is Li Ning's second CEO. It took over from Chen Yihong hand Li Ning Management power, will Li Ning company from 1 billion times all the way into the threshold of tens of billions. Li Ning Company 20 years, when Li Ning Company has more than 7,900 stores in the country, but also has sports equipment brand double happiness, badminton brand, at the same time with the French outdoor brand Aigle and Italy leisure sports brand Lotto China Operation Rights, Zhang has completed the domestic market many category layout, Its attempt to reshape Li-Ning brand into the international market, so he launched a round of changes, so that Li-ning fashion, internationalization.

2009, the Spanish agent of Li Ning signed a formal contract. July 2009, Li Ning Singapore store opened in December 2009, Li Ning Badminton store opened in Tsim Sha Tsui, Hong Kong, January 2010, Li Ning American store opened. Li Ning's internationalization enters the two-line operation mode which the agent manages and the proprietary shop manages. According to Zhang Planning, 2009-2013 years of international testing period, 2014-2018 years full force internationalization, 2018 to achieve foreign sales accounted for 20%, into the world's top 5 goals.

Internationalization and brand remodeling Cross

June 30, 2010, Li Ning Company to change the standard, brand remodeling. The plan began in June 2007, and the Li Ning brand remodeling team was established. Designed to create a cool, stylish, internationalized new image. 2010 is an era of soaring CPI, rent, labor costs, transportation, water and electricity costs are rising, almost every sports brand in the promotion of retail prices, after the change of the standard Li Ning became a radical, the price of its 2010q4 clothing products rose by 17.9%. Change the standard and raise price, to Zhang the change to bring huge hidden trouble.

The new standard on the one hand attracted the original like the classic logo consumers of the war of words, but also brought inventory problems. The publicity of the bid, which means that all the old products become inventory, all the Li Ning stores need to quickly clean up their inventories in a short time. And the new products have greatly increased prices, the direct consequence is that the cost-performance advantage disappears, this kind of quick raise price method, causes the Li Ning's product to lose the competitive power in the three or four line market, causes the consumer and the terminal retailer's collective to vomit the trough, also for the single shop sales drop, the stock backlog, and the large amount closes the foreshadowing This section was later interpreted by the media as Li Ning market positioning lost. At the same time, Zhang's leading Li Ning company also carried out a channel integration.

At the end of 2010, Li Ning has nearly 8,000 stores, joined the proportion of up to 90%, the franchisee has more than 1700 single store retailers, these retailers, the management capacity and competitiveness are weaker, Li Ning hope that the larger retailers will integrate these inefficient operators, so as to achieve the scale and specialization of retailers. In the first half of 2011, Li Ning Integrated 256 single shop operators. achieved some success, but Li Ning's inventory is soaring. The 2011 financial results showed that the amount of stock in Li Ning amounted to $1.133 billion and the inventory was set at $1.875 billion, while the stock in 2010 was $810 million, and the inventory was set at $1.151 billion. In the July 2012, the Zhang-led brand of Li Ning has been reshaped and transformed for the past two years. Over the past two years, Li Ning's stock has risen sharply, profits have slipped, executives have left, and the 2012 Spring Festival has laid off nearly 30%. 2012, July 5, Li Ning Company announced that Zhang resigned as CEO, Li Ning and TPG Partners jointly responsible for Li Ning Company CEO position.

Kim: Focus, revive Li Ning

In July 2012, Kim assumed the position of acting CEO of Li Ning. Kim's takeover of Li Ning announced three plans to revive Li Ning:

① focus on retail terminal sales and clearing of channel inventory, improve product and operational cost structure, strengthen organization and execution capability, improve channel efficiency, profitability and performance, focus on core products and domestic market, and strengthen brand investment and improve marketing efficiency.

② (2013 – 2014) to improve supply chain management, marketing and product planning models, to provide more first-class products and customer experience.

③ (over the next 2-4 years) to transform the business model to improve the profit structure of the company and Channel, to better meet the market demand in the product and consumer brand experience, and to build a virtuous circle in increasing the efficiency of retail sales and the return on cash and investment.

The three plans, which are the action plan of the Jin's pan-Ning, each of the Jin's actions in Li Ning are in action and deployment around the three plans.

Focus on core products and the domestic market. Jin Shi has contracted with Le Chin, Ai Gao's cooperation, stop the new brand sales, the basic suspension of the Zhang more than the category of multiple brand layout. In the internationalization, the Jin Shi also overall contraction, Hong Kong stores closed, exit the United States market, coupled with the economic crisis, Li-ning Spanish agents bankruptcy, Li-Ning's internationalization of only the remaining red double brand overseas business and badminton category in Southeast Asia sales business. In addition, the distribution of marketing resources from the Zhang era of the overall flowering contraction to focus on basketball resources, leading the signing of the CBA and NBA star Wade, gave up with entertainment star Lin Chi-ling, tennis star Cilic, Ljubicic and other endorsement contracts. In 2014, Li Ning gave up the contract with the Chinese gymnastics team. The main reason is that Li Ning's marketing costs are high, while gymnastics can enhance the brand influence of Li Ning, but gymnastics products can not achieve good market benefits.

Channel revival. June 2012, the company stock 1.138 billion yuan, accounts receivable 2.5 billion yuan. This not only means that the company has a backlog of stock, Li Ning's channel vendors are also facing a backlog of inventory, unable to return. and the external environment is deteriorating, Anta, special step, and the brand is also falling into inventory backlog, the national sporting goods market is carrying out a clear inventory competition. If Li Ning to the existing large inventory dealers sit idly by, then the dealer is unable to enter the new goods, at the same time receivables can not be recovered, at the same time, the face of Li Ning retail outlets to operate the consequences of other brands. To this end, Li Ning company spent 1.8 billion from the dealer repurchase inventory, offset accounts payable, promote new products in the channel flow.

Supply chain improvement. August 2012, Kim invited former Dell supply chain Management senior person Deng as Li Ning supply chain leader. Deng was responsible for setting up the Big Data center of Li Ning, to promote the collection of 80% stores of Li Ning, at the same time, Deng in the original futures model of the market to introduce fast anti-commodity combination, fast anti-commodity through the test store, if the sales reaction is good, immediately fill the list, to the market, if the sale is not good, then suspend production. This is the gold's emphasis on the retail-oriented model----demand-driven, agile supply chain system.

Expand direct Business. To enlarge the direct business is an important part of the business model of Li Ning's transformation, and it is the important content of the Jin's promoting the retail efficiency. June 2012, Li Ning owned 6,657 franchise stores, 646 straight camp, direct sales accounted for 20.8%, June 2014, Li Ning has joined the store 4,552, direct shop 1119, direct sales accounted for 38.3%. According to its earnings, Li Ning licensing sales accounted for 48.9% of Li Ning's total income. The expansion of direct business, directly led to the first half of 2014 Li Ning continued to lose money.

Jin's revival of Li Ning has yielded some results. The first is to put Li Ning from the mire of inventory pulled out, followed by channel rehabilitation plan, restore dealer confidence, for Li Ning's reform to win valuable opportunity, again, improve the efficiency of Li Ning supply chain. However, Li Ning also pays a higher cost. Performance for the performance of Li Ning sustained losses, market share decline, the industry leader status is not guaranteed. From the earnings, in 2012, Li Ning lost nearly 2 billion, 2013-year loss of 390 million, 2014-year loss of 586 million. The number of stores also decreased from 7303 in June 2012 to 5671 in June 2014, with a net decrease of 1632, with the total number of stores and anta being widened from -504 in June 2012 to 2030, with further declines in market share.

China's Sporting goods market is a fast-growing and rapidly changing market. Adidas, the official sponsor of Beijing's Olympic Games, expanded blindly in the Chinese market in 2008, burying a hidden danger in its 2009 channel pains, but Adidas quickly adjusted its position in the midrange market, sporting life category and entertainment marketing to regain its status in the Chinese market.

Zhang Times, Li-Ning company in the 2008 China market to achieve excellent results, but internationalization and brand remodeling process is too aggressive, so into the mire of inventory door, plus the company's original management and airborne management concept of different, triggering conflict, the formation of the company's decision-making cycle slow, execution is not smooth. Kim era, to establish a new strategic direction, which means that there is a conflict with the original strategic direction, and the King airborne a large number of senior executives, the intention to improve decision-making efficiency, improve executive power, which directly led to Li-Ning management of another round of oscillation, leading to familiar with the Li-Ning culture, Li Ning dealer system On the one hand, to face the pressure of capital market to boost performance, on the other hand, the clash of cultural differences, which may be the leading reason for the departure of the Kim.

In the outside world, China sporting Goods in a new period of opportunity, the last wave of market adjustment directly eliminated a part of the medium-sized sporting Goods enterprises, their free market space is being redistributed. In addition, the State from the macro level to promote the sports industry and the national fitness, with sporting goods shoes, sports equipment and equipment, Li-ning is in the window of this round of opportunities. Li-ning company needs to be familiar with the culture of Li Ning, dare to take over Zhang and Kim Pass to change the baton of the brave, lead Li Ning people to start again. Some say Li Ning's next CEO is a Spaniard, and some say it's better to let Chen Yihong and China move in a cross shareholding to keep Li Ning.