It Involved The Seizure Of Li Ning'S Goods At The U.S. Port Of Entry By North Korean Workers

Last month, a U.S. Customs department seized Li Ning's goods at all U.S. ports of entry because it found that "North Korean workers" were involved in the company's supply chain.

According to the United States "through sanctions against the United States against tactics", the United States forbids North Korean workers to participate in the production of goods into the United States.

The US incident against Li Ning reminds people of Huawei and ZTE. However, for a shoe and clothing brand, especially for the shoe and clothing brand whose revenue of the whole overseas market only accounts for 1.3%, this has little impact on Li Ning.

But on the other hand, for Li Ning, who announced his internationalization strategy more than 20 years ago, opened a store in the United States 12 years ago, and has not yet made a figure overseas, it seems that this has become the straw that killed the camel.

Who can support the domestic market with national tide and domestic products?

Last month, Li Ning released the annual performance report for 2021, with total revenue of 22.57 billion, up 56.1% year-on-year; Net profit reached 4.01 billion, up 136.2% year on year.

Strangely, the high growth performance did not boost Li Ning's stock. On the 18th day after the release of the financial report, Li Ning's share price continued to rise in the previous two days. On that day, Li Ning opened lower and closed down by more than 5%, and its market value fell below the defense line of HK $160 billion.

Careful analysis, the high growth of Li Ning's financial report data is mainly due to the low base in 2020.

The year before last, the growth rate of Li Ning's revenue was only 4.2%, and the growth rate of net profit was 13.3%. If excluding the influence of performance in 2020, in fact, in the past two years, the compound growth rate of Li Ning's revenue was 27.6%, and the compound growth rate of net profit was 63.6%, which was not as good as that in 2019.

Whether in terms of performance or the trend of the stock market, 2018 is a turning point for Li Ning.

This year, Li Ning, with its distinctive Chinese element design, became popular in New York Fashion Week, and entered a climax of development. In particular, in 2019, its net profit achieved a three-digit growth. This climax last appeared in the 2008 Beijing Olympic Games.

However, the national trend of New York Fashion week did not blow for a long time. With the arrival of the epidemic, Li Ning's performance was almost at a standstill in 2020.

But on the other hand, as the epidemic turned abroad, Li Ning, a local enterprise, also benefited from misfortune.

With the global epidemic becoming more and more serious, the contradictions between countries are becoming more and more prominent. China has become the target of attack. This is the "Xinjiang cotton" incident at the beginning of last year.

Because of this, the voice of domestic products reached a peak, and the sales of foreign footwear and clothing brands declined, which gave great opportunities to local brands such as Li Ning, Anta and Hongxin Erke.

Interestingly, at that time, some people who liked to fry foreign brand shoes focused on domestic brands such as Li Ning and Anta. Li Ning's "way of Wade 4" was fried from 1499 yuan to 48889 yuan.

Therefore, from this point of view, the growth of Li Ning's revenue in 2021 also contains a kind of "moisture", which is essentially different from the revenue and profit in 2019 driven by "national tide".

"Guochao" is endogenous, which reflects Li Ning's success in design and marketing and people's aesthetic confidence; However, the wave of "domestic products" triggered last year is exogenous and an emotional consumption of the people, which will inevitably disappear with the control of the new crown and the stability of the economy.

According to the data of insight Data Research Institute, from April 2021, the downward trend of sales of Nike ADI in tmall flagship stores will be narrowed month by month, while the sales growth of these domestic footwear brands has slowed down significantly.

It can be predicted that after the public returns to rationality, Li Ning and other local brands will rise, or they will have to face off with foreign brands in technology research and development and design.

Acquisition, the solution of overseas market?

In the past few years, Li Ning has grasped this wave of national trend by adding strong Chinese elements to its products, thus achieving great success. But the foreign market that Li Ning always wanted to open is still very far away.

Li Ning was founded in 1990. Nine years later, Li Ning put forward the strategy of brand internationalization. In 2000, nine European countries, such as Spain, Greece and France, expanded their franchised distributors, and Santander in Spain became the landing city of Li Ning's first brand image store.

In terms of marketing, at the 2004 Athens Olympic Games, the Argentine men's basketball team wearing Li Ning's jersey beat the American "dream team" and became a highlight. In 2005, Li Ning became an official partner of the NBA and continued to be exposed in the first world countries.

But unfortunately, before 2010, Li Ning's international market revenue has been less than 1.5%, unable to build itself into an international brand.

On the one hand, this is due to Li Ning's lack of overseas experience, on the other hand, it is due to Li Ning's "steady" international strategy.

At the beginning of the 21st century, China joined the WTO, and many foreign competitive products poured into China. Li Ning, who was under great pressure, adjusted his internationalization strategy and made it clear that First build international brand, then open up international market. As a result, Li Ning has few overseas stores and can't support sales.

In 2009, Li Ning launched the second nationalization strategy, setting the goal of becoming one of the world's top five sporting goods brands in 2018 and achieving the goal of 20% income from overseas.

The opportunity is that in the 2008 Beijing Olympic Games, Li Ning, the prince of gymnastics, lit the main torch of the bird's nest. In addition, Li Ning's Spanish team against Nike sponsored Chinese men's basketball team was another successful brand promotion case. At that time, Spain's Raul (whose family does sports clothing processing) saw business opportunities and found Li Ning to cooperate.

As a result, Li Ning became a sponsor of the Spanish team "Spaniard" in 2010, and became the main sponsor of Sevilla's jerseys and training supplies in 2011. According to the data released at that time, in 2010, the sales volume of Li Ning shoes and clothing in Spain exceeded 6 million euro, with more than 500 distribution outlets.

However, the Spanish market in charge of Raul suddenly fell into a financial crisis in 2012 and had to turn to the headquarters for help. However, at that time, Li Ning was experiencing a brand reconstruction and inventory crisis in China, and its revenue had been surpassed by Anta, and there was no time for him to care about it. He could only let Raul go bankrupt. The internationalization strategy at this stage was broken again.

In recent years, Li Ning's overseas market has been stagnant for more than 20 years.

According to the financial report data, the overseas market contributed 1.9% of Li Ning's revenue in 2019, and decreased by 0.4% in 2020. In 2021, Li Ning's overseas revenue is about 300 million (296 million), accounting for 1.3% of its income.

Now, the small goals set at that time have become the boastful Haikou. However, Li Ning did not seem to give up overseas.

In March 2021, Lane capital, controlled by Li Ning, bought Clarks, a British National footwear brand founded in 1825, for 100 million pounds.

According to the data, Clarks has been operating in more than 47 countries and regions, with 1400 independent brand stores. Half of Clarks' revenue comes from overseas markets. Some media interpreted the acquisition as Li Ning's internationalization by borrowing old brands.

According to the current situation of Li Ning, overseas will not become the strategic focus of the company, but it must be part of the strategy.

Competition between "multi category" and "multi brand"

As a pair of "CPS" of domestic sports shoes and clothing, Li Ning and Anta can not get around.

Since Li Ning was overtaken by Anta in 2011, Li Ning has never turned over in the past 11 years. In 2021, Anta's revenue is 22.81 billion yuan, more than that of Li Ning's 22.57 billion yuan.

Behind the gap between Li Ning and Anta lies the gap between "multiple brands" (single brand, multiple categories and multiple channels) and "multiple brands" (single focus, multiple brands and all channels).

Now Anta has successfully "incubated" FILA. In 2020, the total revenue of FILA reached 49%. By 2021, the revenue of FILA brand was 10.82 billion, exceeding 10.57 billion of Anta brand.

However, Li Ning's "multi category" strategy has not improved. In 2007, Li Ning acquired 57.5% of the shares of the famous table tennis brand Hongshuangxi, and in 2009, Kaisheng was incorporated into the company with 165 million yuan to develop badminton related products.

However, Li Ning's "multi category" strategy is destined to be a road with broad boundaries and unlimited prospects, but it is difficult to break through. If we expand our products to badminton and table tennis, we can't give full consideration to the size of Li Ning. Li Ning's brand is not helpful to these two categories. Many people may not know the relationship between double happiness, Kaisheng and Li Ning.

And if Li Ning encounters development problems, these brands can only be used to block bullets. In 2015, Li Ning, whose development was hindered, sold 10% of the shares of Hongshuangxi, a well-developed company, in exchange for 125 million to support Li Ning.

It is worth noting that today Li Ning's five core categories are basketball, running, badminton, training, sports life, excluding table tennis.

Now, Li Ning's brand matrix, in addition to Kaisheng and Shuangxi, also has Danskin, which is positioned as yoga clothing, and Aigle (Aigle), which focuses on outdoor sports. On March 3 this year, Li Ning established Li Ning Sports children's wear Co., Ltd. with RMB 250million to further increase its chips in the children's wear market.

In 2008, as the last torchbearer, Li Ning lit the main torch of Beijing Olympic Games, and Li Ning brand became the biggest winner; 14 years later, Anta replaced ADI as the clothing partner of the Winter Olympics in Beijing. At the opening ceremony of the Beijing Winter Olympic Games, the Anta down jacket worn by the Chinese delegation became the focus of discussion.

Thirty years of Hedong and thirty years of Hexi, I don't know when Li Ning will lead the Chinese footwear market again?