Can Lining Get Out Of The Trough?

According to reports, with the confirmation of Zhang Xiaoyan, the director of the Ministry of public affairs and the director of external public affairs, and the departure of Xu Maochun, chief product officer, the number of executives Li Ning Co has gone to the top of this year has reached 5.

After a very successful "brand"

In addition, Li Ning Co's brand positioning is not clear and strategic change is very big.

Scrutinize, at the same time, we should be internationalized, be fashionable for a while, and have to exercise and change.

For so many years, no one can tell exactly what Lining's brand is.

As a result, it can only be high or low, sandwiched in the middle end of the industry.

On the one hand, we are anxious to challenge Nike and Adidas in the international arena. On the one hand, we cannot afford the driving force of the middle and low end consumer groups in China.

At the end of June 2010, taking into account the horizontal growth in dependence on shop expansion, the cost of human resources and store rentals

In the first half of this year, net profit of Li Ning Co decreased by 50% compared with the same period last year, and its share price has fallen by more than half since the beginning of this year.

Lining, the founder of the list, fell to 291st place from 64 last year.

JP Morgan's analysis reports that Li Ning Co's revenue will fall 13% this year and its profits will fall 60%.

Zhang Zhiyong, President and chief executive of Li Ning Co, admitted in a media interview that "brand remodeling" is not a success.

With the sinking of Nike and Adidas to the two or three tier cities, the domestic sportswear brands are facing more and more pressure.

In a report, HSBC pointed out that Chinese consumers' brand loyalty is not high, especially in the two or three tier cities.

As Nike and Adidas have launched various low prices, the loyalty of local sports fans will remain unknown.

Zhang Zhiyong, President and chief executive of Lining, publicly acknowledged that the price hike made Lining lose some loyal customers.

Last year, Lining took the place of Adidas in the Chinese sports brand market and jumped to second. At that time, Lining, the chief executive, predicted that in less than 10 years, Lining would become one of the five major sports brands in the world. Lining's first half performance report in 2011 showed that the net profit of the company in the first half of the year was 294 million yuan, which was 49.5% lower than that of 582 million yuan in the same period last year.

In a short span of a year, how did Lining's performance appear to be "extreme"? {page_break}

Previously, whether in the performance notice or in public statements, Lining has repeatedly stressed that the decline in performance is affected by the rising cost of raw materials and labor costs.

Recently, Zhang Zhiyong's position may be more sincere: "I think we must learn how to strike a balance between price driven and quality driven."

In April this year, when the news of price rises came from the Lining brand, our reporter visited the investigation.

At that time, the reporter had done a simple investigation on the street.

A number of consumers interviewed by reporters said they would choose Nike if Lining's price caught up with Nike.

One consumer is talking about the Lining brand: "take the basketball products for example. In terms of technology content and appearance, it can't catch up with Nike and ADI. It is strong enough to catch up with CONVERSE.

On the cheap, but also much more expensive than other domestic products.

As for "if Nike and Adidas prices rise, will they buy? Will they choose other brands instead of?" questions, most of the consumers interviewed randomly said that they would reduce their purchases and hesitate when buying, but they would also choose when they had to buy.

The latest performance report is not optimistic. It is a direct market reaction of consumers to Lining's rise in price.

Sincere listening to the reaction of consumers to products may be necessary for Lining to prepare for the next battle.

Swinging brand strategy

It has been 3 years since we proposed to be the best brand in China, to challenge Nike globally and return to cheap routes.

These 3 years are undoubtedly the critical period of Lining's rapid growth. However, its swinging brand strategy has not formed its own consistent brand image.

From this point of view, Lining seems to have a long way to go from the world's first line brands.

Lining, President and CEO Zhang Zhiyong, said that the price of raw materials was higher in the second half of this year. The gross profit margin was expected to decline further than the first half of the year. The net interest rate fell by 1 to 2 percentage points over the first half of the year. Due to the fierce competition in the mainland market, the retail outlets were too large and the single store efficiency was not high. As at the end of June, the number of Lining stores was 8163, closing 256 in the first half of the year, and the total number was expected to reach 8300 in the first half of the year, closing 400 stores all year round.

At the same time, Adidas is stepping into Lining's site, small and medium-sized cities, with the goal of covering 550 to 1000 cities by 2015.

Even in less prosperous cities, with the growth of revenue, consumers are eager to upgrade their consumption levels and buy foreign brands, Adidas chief executive of Greater China said.

HSBC predicts that with the acceleration of wage growth next year, the market share of some local brands will decline.

Chinese consumers' brand loyalty has never been high, especially in the two or three tier cities.

In a recent report, HSBC pointed out that with the introduction of various low prices by Nike and Adidas, the loyalty of local brands can also remain unknown.

Perhaps, as the industry has predicted, Lining may face two to three years of "short pain". I hope Lining can find a balance between price driven and quality driven as soon as possible.