Zhang Zhiyong Analysis: Lining'S "Three Legs" And The Strategy Of Bottoming Out

Chi-Yung Chang

It's never been so stressors like this.

Zhang Zhiyong is Li Ning Co Ltd CEO.

In July 7th, Zhang released the "first half of 2011 operation and performance forecast and full year outlook" in Hongkong (hereinafter referred to as the "report").

The report said that we should stick to brand promotion and exercise at the early stage of active reform.

This is really a tough time for Li Ning Co after the 2008 Beijing Olympic Games.

Strategy: "no matter what happens."

Zhang Zhiyong, who starts from the financial manager, will certainly not see the complicated meaning behind these simple proportions.

There were giants such as Nike and Adidas before, and Anta and 361 were followed up. Li Ning Co has long been entangled in the two ends.

"Great things are not boring.

I have talked with Lining that we can not worry about all kinds of outside opinions all day long, but instead, we should constantly encourage ourselves, and stick to what we think we are right for.

Zhang Zhiyong said, "in terms of earning power, the net profits of several sports apparel enterprises in China are higher than those of some international Brand Company whose brands are the leading ones. But can you say that these domestic companies are stronger than those of these international giants?"

"Obviously not."

Zhang Zhiyong himself gave the answer, and what he described as "great event" was the pursuit of "the world class brand of Lining" pursued by Li Ning Co founder and chairman Lining.

Indeed, at the Li Ning Co annual meeting in early 2011, Lining himself raised the expectation that Lining should first be a Brand Company instead of a profitable company.

But the problem facing Zhang Zhiyong is whether there is a path to improve the brand of Li Ning Co and earn money by standing.

Following this goal, in June 30, 2010, Li Ning Co launched the brand reinventing campaign, replacing the brand slogan of "L" squirrel logo and "everything is possible" for 20 years.

But in the past year, with the resignation of former COO Guo Jianxin and so on at the end of May 2011, it has been discovered that such a good thing for both sides is "no way out" at least in the current Chinese sporting goods companies.

As a result, the most unexpected thing happened outside the company. Zhang Zhiyong, who was most concerned about corporate governance, went to the front desk, CEO and COO.

"From the point of view of occupational safety, there is no cushion for going to the front desk.

As a company CEO, I am sure I know the development of the company in the next six or seven months, but at this critical stage, I am willing to take this responsibility.

Zhang Zhiyong said, "in the long run, the company definitely needs more internationalized talents, but the advantage of" shoulder to shoulder "is that the company can make the most efficient implementation of pformation at the most critical moment.

Zhang Zhiyong also confirmed that his communication with Lining himself was greatly strengthened after 2010, and Lining was very clear about his decision making intention.

On the one hand, the communication between the two is to strengthen the "unanimous understanding" of the company's strategic development, and on the other hand, establish confidence in the future.

In July 7th, after the report was released, attentive Lining sent a "letter to employees" from Hongkong. He said in his letter: "the board of directors and management have reached a consensus on the goal of active change, and fully support CEO and management's implementation plan for achieving the goal of change."

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Channel: walking on three legs

In addition to hard to see the brand remodeling in the short term, Zhang Zhiyong and Li Ning Co have recently been widely criticized for their channel strategy - integrating their more than 8000 retail outlets with too small distributors and distributors.

The complaints of the small and medium channel businesses are clear: they have been fighting against Li Ning Co for more than 10 years in the market, and have recognized Lining's strength and status as the first sports brand in the country. However, the deep ploughing of Li Ning Co will require these large dealers to merge smaller dealers and smaller distributors.

Li Ning Co's 2010 earnings report clearly stated that the company will integrate 1700 distributors and distributors who own only one retail terminal.

Zhang Zhiyong believes that in today's sharp rise in store rentals and labor costs, only the scale of dealers continues to grow and their management level can be improved. The docking with Lining supply chain can better reduce the cost of both sides.

Taking these factors into account, it is not difficult to understand why the revenue of Li Ning Co will decline in the 2011 year. When the uncertain future is going to fight with Li Ning Co, which dealer is willing to buy more goods?

In the second half of 2009, we are considering the matter of channel reform.

Now, channel reform is actually two core tasks.

Zhang Zhiyong said, "one is to expand the scale of the operation of distributors, one is to speed up the construction of self owned factory stores.

With the expansion of the dealer scale and the enhancement of operational efficiency, we can cope with the rising rent and manpower costs; and every garment brand and every quarter will produce a tail cargo order. The factory store built by the brand itself will be directly sold through the recycling of the dealer's tail cargo, which will help reduce the burden on the distributors and enhance their enthusiasm for ordering the new quarter.

The figures disclosed in the Lining report confirm what Zhang Zhiyong calls channel reform.

Data show that as of the end of June 2011, Li Ning Co has integrated 256 low efficiency single store distributors and is expected to complete the integration of 400 single store distributors by the end of 2011.

Over the same period, the number of Lining brand shops reached 191.

Zhang Zhiyong did not elaborate much about Lining's international channel strategy.

But in fact, this is called the "third legs" of Lining's channel reform.

At present, the international channels of sporting goods Lining can be divided into three types: one is the European "authorized business" represented by Spain, one is the Southeast Asian self operated advantage store represented by Singapore, and the other is the American mode of acquiring foreign e-commerce companies and developing and selling online products.

Lining's general manager of Licensing companies in Spain is Raul de Pablo.

Around July 15th, Raul will launch the company's marketing offensive by sponsoring the Spanish club of Serbia.

"The cost of sponsorship is paid by our company, but the Li Ning Co will provide some sponsorship."

Raul told the China business newspaper that the company currently has annual sales of about 5 million euros, but its expenditure on marketing alone has reached the same amount.

"I have strong confidence in Lining brand."

Raul, who was engaged in sportswear processing business, said that before the 2008 Beijing Olympic Games, Lining sponsored the Spanish Olympic Games and the Spanish men's basketball team, the Spanish Spanish club, and so on, so that the Spanish people had the first recognition of Lining brand.

At present, Raul, who officially signed Lining's Spanish market in 2009, has distributed Lining products to about 300 Spanish retail stores.

In contrast, Lining's self built shop in Singapore is mainly aimed at the large number of badminton players in the area, so it mainly runs Lining's badminton equipment.

Taking into account the sales volume of self built shop has reached about 50 million yuan a year, Lining has plans to further expand the retail terminals of Malaysia, Indonesia and other popular countries in Singapore.

Brand: or bottoming out

Besides the channel reform, Lining has only left the most controversial brand remodeling.

In this regard, Zhang Zhiyong said, before the brand remodeling, the company's most worried about is the new brand positioning of the creative communication process, on the one hand, the creative personnel must most accurately understand Lining's brand positioning and writing scripts; on the other hand, when consumers watch the relevant ads, the signals interpreted must be consistent with the company's original intention.

Obviously, for the Li Ning Co, which aims at brand remolding, the challenge is quite difficult: the consumer's interpretation is often uncontrollable if the former is controllable.

"Everyone in the company, including me, is under tremendous pressure.

But the pressure of mobility and performance is not all bad. We can no longer afford to lose our competitiveness in boiling water.

Poor performance and resignation are responsible for the outcome, at least indicating that the company is willing to make changes instead of appeasing the meaningless reasons for shirking.

Zhang Zhiyong said that before the clever reinvention of the brand was found, the company would suspend the brand advertisement in 2011, and more emphasis on the advertising of product function, "the advertisement of product function is relatively easy to grasp".

Lining himself is relatively calm about this. In his letter of July 7th, he made it clear that "this is the cost of change that the company must pay, which is also a great pain that a Chinese company must bear from" made in China "to" Chinese brand ".

But in fact, compared with the bad trend of the order notice in the first three quarters of 2011, Lining's fourth quarter order notice showed that the company had already hit a bottom rebound.

According to the report, Lining's fourth quarter new product orders ended in June, and the order was calculated at retail price, up by more than 5% over the same period.

In the three quarter of the previous three quarter, the one or two quarter of the order was flat with the same period last year, and the order amount in the three quarter fell by 8% over the same period.

Of course, in 2011, under the established circumstances of the general situation, 2012 coincided with the London Olympic Games, which can be called the "new year" and "encounter" of sporting goods companies.

The trend of orders for Li Ning Co in the first quarter of 2012 will be announced at the end of September 2011.

Is it possible to get out of the bottom and bottom up? After more than two months, the answer will emerge.