Business / Companies

Li Ning stumbles from gold medal position to no-man's land

(Agencies) Updated: 2014-09-02 10:25

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Li Ning's efforts to recapture its glory days by appealing to a younger generation have been evident in its product design and high-profile marketing campaigns using Western sports stars.

Bright colours, including hot-pink basketball shoes and loud green polka-dot trainers, have increasingly replaced the classic red and white look favoured by Li Ning himself that resonated with the company's traditional market in its heyday. Li Ning, who is now executive chairman, declined to comment.

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In that price range, Li Ning is positioning itself above local competitors such as ANTA Sports and Peak Sport, but slightly below foreign rivals Nike and Adidas.

It's a strategy that has yet to bear fruit. The company's declining fortunes provide a stark contrast to the positive results from home-grown rivals as China's sportswear industry shows solid signs of recovery following an expansion blitz after the 2008 Beijing Olympics led to bloated inventories.

Li Ning's push to revive the brand has seen a multi-million dollar marketing drive that included signing up NBA basketball superstar Dwayne Wade.

The company's promotion and advertising expenses accounted for 19.4 percent of its 3.14 billion yuan ($511 million) revenue in the first half of 2014, compared with 10.8 percent at ANTA.

Even as Li Ning invests to try to build the brand, the company still faces inventory issues that can effect its reputation, said James Button, a director at Shanghai-based consultancy SmithStreet.

"They're trying to say they're a high-quality brand and are at the same level as foreign players, but at the same time it is very visible that they're dumping inventory at very low prices," he said.

The company has said it is prepared to take the time it needs to achieve its goal of making Li Ning the only brand that represents the "Chinese Dream" - the ideal of individual success in the country's society - across all categories of sportswear.

"I think Li Ning is so tied in with the Chinese Dream ... it's more a part of national positioning than it is sports positioning," Button said.

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