Li Ning frustrated: Due to failure to maintain brand image continuity

In the latest China Rich List, Li Ning, which established China's most famous retail brand, dropped from the 64th place last year to 291st place.

Li Ning’s decline in wealth rankings also reflects the decline in the ranking of the gymnastics Olympic champion. Last year, Li Ning replaced Adidas in China's sports brand market, ranking second.

At that time, Li Ning, as chief executive, predicted that Li Ning would become one of the top five sports brands in the world in less than ten years.

But since then, Li Ning's profits and stock prices have begun to decline sharply, and the company has begun to rethink its ambitious brand strategy.

This is a temporary frustration, or an insurmountable "bamboo ceiling" (referring to the situation in which the American large-scale enterprise peasants face difficulties in entering top management). Is it true that even in the hometown of bamboo, Chinese brands cannot really dominate? The key to the problem lies in whether Chinese companies can do a good job in branding, marketing, innovation, design, and quality, and get rid of blind “shanzhai”.

In the global market, successful Chinese brands are hard to come by. We may wish to regard the trials and encounters of Li Ning brand as a microcosm of the fate of Chinese brands.

At the 2008 Beijing Olympics, the founder of the Li Ning brand ignited the torch of the opening ceremony. He is not only China's top athlete, but also one of China's most famous entrepreneurs. The scene in which Li Ning ignited the torch at the Bird's Nest Stadium - which immediately linked the strong patriotism that the event evokes with the Li Ning brand - can definitely be called the greatest marketing campaign of the decade.

But those days seem to have long gone: In the first half of this year, Li Ning's net profit fell 50% year-on-year. Since the beginning of this year, its share price has fallen by 57%.

Last year, Li Ning released a new logo (like the old logo, the new logo is also similar to Nike's). Li Ning also launched a brand remodeling program that aims to establish itself as a direct competitor to global brands such as Nike and Adidas.

However, for such high-end local brands, many consumers do not buy it, so Li Ning seems to have walked back to the old road.

In the Chinese market, Li Ning is still slightly ahead of Adidas, second only to Nike, but market analysts predict that it will soon fall back to third place. If you can afford something from a foreign brand, most Chinese consumers are reluctant to spend the same amount on domestic brands.

Andy Edwards, the planning director of the advertising company BBH, said in an interview in Shanghai: “In the competition with Ad Li, Li Ning did a good job, but it relied on imitation.”

"Now Li Ning needs to create more value, stop plagiarism, find its own unique voice... and let this sound run through all brand-related things, especially products."

Shaun Rein, the author of the soon-to-be-published book "The End of China's Cheap Consumption," said that Chinese companies are trying to build brands, "but they will take a step back every two steps."

Lei Xiaoshan said that when Li Ning was rapidly growing three years ago, it was "not enough brand positioning strategy." "It first proposed to be China's best brand, then expressed that it would challenge Nike on a global scale, and finally went back to the cheap route. It all happened in 3 years. It did not maintain the continuity of its own brand image." .

In a recent interview with Beijing News, Li Ning’s chief executive, Zhang Zhiyong, admitted that the price increase had caused Li Ning to lose some loyal customers.

Zhang Zhiyong said: "I think we must learn how to find a balance between price-driven and quality-driven."

In the Li Ning discount store on the outskirts of Shanghai's Hongkou, salesperson Dai Quangang stated that the high-end goods are no longer included in the store. “This zone is a residential area. People prefer cheaper products.”

Today, the inventory of Sports Shoes inventory priced from *** 339 yuan to 569 yuan (53 to 90 US dollars) range, and Adidas store across the road, the price of sports shoes is between 580 to 1180 yuan .

At the same time, Adidas is making big inroads into Li Ning’s territory—small and medium-sized cities. The goal is to have its own sales network cover 550 to 1,000 cities by 2015.

Colin Currie, head of adidas Greater China, said that even in less affluent cities, consumers are eager to upgrade their spending and purchase foreign brands, as revenues increase.

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

“Chinese consumers’ brand loyalty is often not high, especially in some second and third-tier cities.” HSBC stated in a recent report that “With the introduction of various low-priced models by Nike and Adidas, local brands’ fans Being able to maintain loyalty has also become an unknown number."

As Li Ning begins to "fit better and even lead the long-term development trend of the Chinese sportswear industry," it expects to face "short pain" for two to three years.

Those who are concerned about the development of Chinese brands will wait and see if Li Ning can break through this "ceiling of bamboo" once and for all.


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