Li Ning is unique in “creating an international brand first and then exploring the international marketâ€, focusing resources on the development of short-term franchise business to develop its own brand, or acquiring a big brand with many famous brands through mergers and acquisitions of internationally-renowned brand names.
On December 9, 2005, the trading volume of Li Ning (HK 2331) suddenly rose to 18.7 million shares, compared with less than one million shares in the previous trading day. In an instant, Li Ning's stock fell nearly 8%, closing the day at 5.25 Hong Kong dollars. As for the Li Ning shares that have been relatively strong since the listing, it is really rare that such heavy volume declines, and there are sudden speculations in the market.
Three days later, on December 12th, Li Ning issued an emergency announcement that Li Ning, the controlling shareholder of the company, sold 16.8 million shares at a price of HK$5.586 per share and cashed in nearly HK$100 million. Its shareholding decreased from 38.67% to 37.03%. The cash proceeds will be "mainly used to nurture the development of young athletes and sports in China, not profit-making."
When the news came out, Li Ning's stock price immediately rebounded and stabilized. On January 18, 2006, it closed at HK$5.9, a new high since listing, and has risen more than 170% over its issuance price of HK$2.15. According to market analysts, the broadness of the Chinese sports market and the high growth of Li Ning are the basis for investors.
According to experts’ predictions, the total footwear market in mainland China, Hong Kong, and Taiwan will reach US$2.5 billion by 2008. This will surpass Japan and become the second largest footwear market in the world after the United States. . In this context, Li Ning’s operating income increased from 958 million yuan in 2002 to 1.878 billion yuan in 2004; it increased by 40% in the first half of 2005 to 1.104 billion yuan; net profit increased by 42.6% to 78.31 million. yuan. The absolute profit of a clothing brand has surpassed many billions of years of sales of well-known home appliance brands.
Founded in 1990 and struggling for 15 years, Li Ning has become the first brand in the Chinese sports market. Former sports stars have made a successful business. Li Ning is the first person in China. However, in the face of the huge development opportunities of the Beijing Olympic Games, Li Ning Company is not at all easy. After all, the strongest competitors are the international giants Nike and Adidas.
In August 2005, Adidas acquired Reebok at a cost of US$4 billion. The industry's second- and second-placers teamed up with the former leader Nike. Before the Olympics could not abandon the opportunity, Adidas won the official qualification of the official Beijing Olympic Games in early 2005. The price was 1.3 billion yuan, while Li Ning Company quoted 1 billion yuan. Seemingly one step away, but from the strength of the competition, Li Ning can be called desperate, a lot of desperate pride.
The gap is far more than just capital strength. Like all Chinese sportswear brands and even all Chinese clothing brands, Li Ning has to do “internationalization†in the “international competition†with the international big brands on the Chinese home market. However, the current practical significance of the internationalization of the Li Ning brand is limited to its own brand in the local market to overcome its international opponents.
In the past, Li Ning defeated all international opponents in the international gymnastics arena with his personal skills and became the world star in the mainstream sports events that the Chinese sports industry can truly stand on. But now, Li Ning is trying to lead a company to fight the international market. The complexity is far greater than personal skills. Moreover, despite the overwhelming presence of Chinese clothing and footwear in the global market, it has not gained a dominant position. Perhaps Chinese sporting goods will fulfill the famous saying of the Chinese sports community - "After several generations of people's efforts have won the world," but the winner may not be Li Ning, just like the short-lived "athletic life" of athletes. The 20-year life cycle of Chinese companies has been raging.
Li Ning’s internationalization strategy began in 1999. After the rapid development of the first few years, the bottleneck was encountered when the turnover reached 600 million to 700 million yuan. Since then, Li Ning has introduced AFS apparel and footwear solutions from SAP, built a highly integrated ERP system within the company, and hired a professional consulting company to assist in the overall strategy in the areas of market strategy, advertising, and finance. Including IBM consulting firm and Leo Burnett advertising company.
In November 2001, Li Ning’s first overseas brand image store opened its doors in Santander, Spain. At that time, its goal was “by 2004, the international market would account for 20% of sales revenueâ€. However, this goal eventually failed. In the first half of 2005, Li Ning’s revenue from the international market accounted for only 1.3%, which was lower than the 2.4% in the same period in 2004.
At the end of 2004, Li Ning made adjustments to its internationalization strategy and decided to “create an international brand first and then explore the international market.†“This approach is different from other Chinese companies' low-cost dumping methods. We hope to increase the brand's additional "One of the evidences is that in January 2005, Li Ning became an official partner of the NBA, and one year later it signed the active player of the NBA, Damon Jones, as the spokesperson.
After the IPO in mid-2004, Li Ning Company became even more cautious on the road to internationalization and mergers and acquisitions despite its hundreds of millions of cash holdings. In mid-2005, Li Ning sold its Beijing franchise, which is the franchise of the Italian KAPPA brand, to the former executive director, Chen Yihong, and obtained the exclusive rights of the French outdoor brand AIGLE in China.
According to Li Ning, the reason is that the franchise of the KAPPA brand expired in 2007. The two sides could not reach an agreement on long-term cooperation, and signed a 50-year joint venture cooperation agreement with AIGLE. "To be used in the development of short-term The resources of the franchise business focus on the development of its own brand, or through the acquisition or long-term joint venture with internationally renowned brands to achieve multi-brand business goals."
This transformation is precisely the most important significance brought by the introduction of IBM consulting, that is, helping Li Ning to define the strategy - "to become a strong brand in the field of professional sports goods in the future", and its goal is to enter the global sporting goods by 2018 5 Strong, becoming one of the most influential brands in the global arena.
In September 2005, Li Ning walked into Umbro, a veteran British sportswear company. At that time, the news headline of the British “The Times†was: “Li Ning from China will acquire Umbro in the UKâ€. However, to this day, this news has only stayed at the rumor level. Li Ning's brand has been effectively disseminated internationally.