Recently, Li Ning Company announced a profit warning, and it expects the company to make substantial losses in fiscal 2012. The resurrection channel plan put forward and implemented under such circumstances has caused more questions to the outside world.
For Li Ning, 2012 is undoubtedly the most difficult year. High inventory pressure, close to thousands of stores, frequent exchanges of executives, brand remodeling failed... This series of turmoil has made Li Ning overwhelmed.
Turmoil is also reflected in various operating data of Li Ning. In the first half of 2012, Li Ning’s total revenue was 3.88 billion yuan, a year-on-year decrease of 9.54%, and net profit fell by 85% to only 0.44 billion yuan. “As we have emphasized for more than one year in the past, under the overall international and domestic economic environment, the Chinese sportswear industry has undergone a transition period. How fast this process depends on each brand and its upstream and downstream partners Self-adjustment strategy and execution force.†Li Wei, director of Public Relations Department of Li Ning, interviewed the Times Weekly reporter, on the one hand, stressed the industry background factors, and he also said, “I hope 2012 is the starting point for the company's revitalization.â€
Sporting goods companies have long maintained the expansion of the wholesale model, as has Li Ning. The dilemma caused by this extensive development has caused Li Ning to struggle. Under this circumstance, Li Ning, the company's founder, revisited the front desk and Jin Zhenjun, a partner of TPG Capital, subsequently joined Li Ning as the executive vice chairman, responsible for internal affairs and operations. The replacement of personnel cannot immediately cure all problems.
Recently, Li Ning Company announced a profit warning, and it expects the company to make substantial losses in fiscal 2012. Li Wei explained to Times Weekly: "It was mainly due to the one-time costs involved in the reform plan, including the channel renewal plan. The funds needed for the channel renewal plan reached an astonishing RMB 1.4 billion to 1.8 billion yuan and will involve accounting. On the inventory and bad debt provisions and provisions."
Li Ning’s costly revival plan also made the outside world more skeptical. A senior marketing source told reporters: “The funds involved are so huge that they are even at a loss. Li Ning has indeed come up with very courage. But the result remains to be seen.â€
Tough 2012
In 2012, the end of the world did not arrive. This year's Li Ning Company, it is not easy to live.
On July 5, 2012, Li Ning announced a change in senior personnel. Zhang Zhiyong no longer served as the CEO of Li Ning. Jin Zhenjun, a private equity investment company TPG partner, was transferred to executive director and executive vice chairman of the board of directors. Li Ning, chairman and founder of the company, also headed to the front desk to jointly assume the CEO function with Jin Zhenjun and jointly manage the day-to-day management of the company before finding a replacement. Regarding Li Ning’s own return, the outside world also had different views, but the reaction in the capital market was quite rapid. Li Ning’s stock was able to soar on that day.
At the time of Li Ning’s creation, Zhang Zhiyong had joined. At first, he was just an ordinary cashier for Li Ning. In 2001, Zhang Zhiyong replaced Chen Yihong as the CEO. Zhang led Li Ning Company, attacked everywhere, and finally broke through the 1 billion yuan sales mark that had been impossible to break through long before. Then a series of problems that appeared in the process of rushing to the scale of 10 billion, let Zhang finally had to leave.
Although Zhang Zhiyong left, Li Ning himself and Li Ning Company still gave him a high rating, praising Zhang Wei for leading the Group to develop into a leading sports brand in China. In fact, Zhang Zhiyong’s departure is to some extent responsible for his actions. "He has achieved success, but he has also overlooked many issues, which has caused Li Ning's current difficulties," said one person in the industry.
In fact, since 2010, Li Ning has encountered various operational difficulties. Orders for 2011 saw a sharp drop in orders, with a drop of up to 22% year-on-year that surprised the outside world.
In addition, Zhang Zhiyong’s departure is only a small part of the turnover of Li Ning’s personnel. In 2011 before the departure, former chief operating officer Guo Jianxin, former chief brand official Shiwei, and Lotto business general manager Wu Xianyong, chief product officer Xu Wei, and public relations director Zhang Xiaoyan have already left.
Among them, Fang Shiwei's departure is not associated with the failure of Li Ning's brand remodeling.
In 2010, Li Ning, a company with a good reputation for the future, publicized its brand remodeling plan. This remodeling not only enabled the new brand identity, but also changed its brand slogan from “everything is possible†to “MAKE THE CHANGEâ€. In the same year, Li Ning boldly intended to carry out a strategic transformation and clearly proposed to attract young consumers in the “post-90s†period.
However, the market is not sympathetic to this change of Li Ning Company. The entire plan fell into a failed stalemate. In the first half of 2012, the net profit was 0.44 billion yuan. This figure decreased by 84.9% compared with the same period of last year. Li Ning subsequently made structural adjustments to its stores and closed 1,200 inefficient stores.
In an interview with Times Weekly, an informed person familiar with Li Ning Company pointed out to reporters that Li Ning deliberately pursued the scale of development in the past. “Extensive development led to imbalanced inventory control and decreased store efficiency.†At the same time, the person also believes that “If Without the rapid development of previous years, there will be no scale today. Therefore, in the prevailing environment at that time, all companies have chosen extensive development."
Li Ning, which started in the 1990s, set a sales target of RMB 1 billion for the coming year. However, in 1997, Li Ning's performance was very far away, only 680 million yuan. This goal was finally achieved in 2003. Since then, Li Ning has begun a period of rapid growth.
Perhaps because of the booming performance, Li Ning Company neglected many problems that existed. According to a person familiar with Zhang Zhiyong, “There were already a lot of potential negative factors before 2012. It just didn’t get the company’s attention. Throughout 2011, the brand remodeling plan did not go smoothly, orders fell, and inventory had fallen. Start high."
Li Ning people also recalled to the Times Weekly reporter that the 2008 Olympic Games caused a certain amount of inventory pressure on major sporting goods companies. This statement is true, as are other brands such as Adidas. However, Adidas's financial report shows that in the first half of 2012, Adidas' global sales achieved a 10% increase, while Greater China increased by 19%.
“We hope that 2012 will be the bottom of the industry and the starting point for the company's revitalization. Li Ning has already fully prepared for the long-term development opportunities in the future.†Li Wei expects.
Channel Revival
After Zhang Zhiyong left, not only Li Ning personally went to the front desk, but another person named Jin Zhenjun also appeared in the public view.
Jin Zhenjun, a Korean-American, is a partner of TPG, a global private investment company, and head of Greater China. He has served as director of several TPG-invested companies, including South Korea's Dell, Guanghui Auto, Daphne, and others.
After Jin Zhenjun took office, he was mainly responsible for the internal affairs and operations of the Li Ning Group, including the implementation of the leadership blueprint for change. “What he brings to Li Ning is his global expertise in rapid growth strategy, strong operational capabilities, local and international knowledge, and TPG's consumer space.†Li Ning’s expectations for Jin Zhenjun are high.
From the perspective of Kim Jong-Jun’s resume, he does have profound global and domestic retail industry management and operating experience, and he is widely recognized in the establishment of the company’s operational capabilities and the promotion of corporate transformation. After TPG invested Daphne in 2009, Jin Zhenjun led Daphne out of trouble. In Daphne’s two years, Daphne’s share price has risen fourfold and sales have increased by 50%. According to reports, Jin Zhenjun is skilled in Korean, Chinese, and English. It is alleged that his team with more than 20 people will provide off-site support for Li Ning.
“In the short-term, the industry has poured in many people and there has been a situation of oversupply. Five years ago, sportswear brands were still wholesalers in China, not retailers,†said Jin Zhenjun. For a long period of time, the sporting goods industry maintained a high growth rate. Li Ning Company made great strides in this excellent situation. Data show that from 2004 to 2008, Li Ning's stores increased from 2,272 to 5,935, and their revenue increased from 1.878 billion yuan to 6.69 billion yuan.
Since its establishment, Li Ning has maintained its largest share in the domestic sportswear market. In 2003, it was surpassed by Nike China for the first time; in 2004, it was left behind by Adidas. In 2008 Beijing Olympics, company founder Li Ning lit the main torch tower, which is tantamount to a great marketing initiative. Li Ning Company was therefore sought after by the market, and it was a time of even greater strength. Li Ning Company achieved revenue of 8.386 billion yuan in 2009, and surpassed adidas sales in China. However, in the following year, Li Ning Company began to enter a slide channel. Extensive expansion followed by a close closure of stores and discounts. Some analysis pointed out that the early high growth of Li Ning Company was mainly due to the increase in the level of household consumption and the gradual shift in lifestyle to leisure. In recent years, consumer demand has gradually moved closer to professionalism, fashion, and leisure.
This view has long been overwhelmed by the rapid growth of the industry. “At the time, these brands focused their efforts on growth rather than sales planning, brand building and customer understanding. Chinese retailers should pay more attention to brands. Before you had to do store openings and channel management, it’s not This is the case," said Jin Zhenjun in an interview with the media.
In the past, the industry relied too much on wholesale operations and had encountered bottlenecks. From the point of view of industry development, the retail-oriented business model was inevitable. The change in the industry is a watershed in the 2008 Beijing Olympic Games. All companies are optimistic about the sportswear market released after the market in 2008. This miscalculation was an important factor that caused the industry to be struggling and Li Ning's difficulties.
After Jin Zhenjun arrived, Li Ning Company launched drastic reform measures, sponsoring the CBA, signing Wade and so on. The most striking of these series of measures is the expensive channel rejuvenation plan. This plan requires one-time budget support of RMB 1.4 billion-1.8 billion.
Li Wei believes that the recently announced channel rejuvenation plan is an extension of the change plan announced in July 2012. “This plan will speed up the backlog of inventory backlogs, revitalize downstream distribution, and increase the profitability of channels and retail terminals. We believe that the channel revitalization plan is a key step for the company’s transformation and it is also fundamental to the success of the reform. Only through the revival plan, the downstream Channels can solve the problems accumulated by the industry for many years."
At the same time, the arrival of Jin Zhenjun proposed a new marketing positioning "three focus" strategy: "focus on the domestic market in the core market, focus on the core business of sporting goods business, focusing on the core brand of Li Ning." In accordance with the three-phase change blueprint program, respectively By implementing strategies in terms of brands, products, channels, etc., Li Ning Company hopes to improve its operating performance and enhance operational efficiency and strategic execution results.
“Going further down is a relatively stable process, including the adjustment of products, financial health, and cash flow, and other operations that need to be resumed. So it takes time,†said Jin Zhenjun.
Turmoil is also reflected in various operating data of Li Ning. In the first half of 2012, Li Ning’s total revenue was 3.88 billion yuan, a year-on-year decrease of 9.54%, and net profit fell by 85% to only 0.44 billion yuan. “As we have emphasized for more than one year in the past, under the overall international and domestic economic environment, the Chinese sportswear industry has undergone a transition period. How fast this process depends on each brand and its upstream and downstream partners Self-adjustment strategy and execution force.†Li Wei, director of Public Relations Department of Li Ning, interviewed the Times Weekly reporter, on the one hand, stressed the industry background factors, and he also said, “I hope 2012 is the starting point for the company's revitalization.â€
Sporting goods companies have long maintained the expansion of the wholesale model, as has Li Ning. The dilemma caused by this extensive development has caused Li Ning to struggle. Under this circumstance, Li Ning, the company's founder, revisited the front desk and Jin Zhenjun, a partner of TPG Capital, subsequently joined Li Ning as the executive vice chairman, responsible for internal affairs and operations. The replacement of personnel cannot immediately cure all problems.
Recently, Li Ning Company announced a profit warning, and it expects the company to make substantial losses in fiscal 2012. Li Wei explained to Times Weekly: "It was mainly due to the one-time costs involved in the reform plan, including the channel renewal plan. The funds needed for the channel renewal plan reached an astonishing RMB 1.4 billion to 1.8 billion yuan and will involve accounting. On the inventory and bad debt provisions and provisions."
Li Ning’s costly revival plan also made the outside world more skeptical. A senior marketing source told reporters: “The funds involved are so huge that they are even at a loss. Li Ning has indeed come up with very courage. But the result remains to be seen.â€
Tough 2012
In 2012, the end of the world did not arrive. This year's Li Ning Company, it is not easy to live.
On July 5, 2012, Li Ning announced a change in senior personnel. Zhang Zhiyong no longer served as the CEO of Li Ning. Jin Zhenjun, a private equity investment company TPG partner, was transferred to executive director and executive vice chairman of the board of directors. Li Ning, chairman and founder of the company, also headed to the front desk to jointly assume the CEO function with Jin Zhenjun and jointly manage the day-to-day management of the company before finding a replacement. Regarding Li Ning’s own return, the outside world also had different views, but the reaction in the capital market was quite rapid. Li Ning’s stock was able to soar on that day.
At the time of Li Ning’s creation, Zhang Zhiyong had joined. At first, he was just an ordinary cashier for Li Ning. In 2001, Zhang Zhiyong replaced Chen Yihong as the CEO. Zhang led Li Ning Company, attacked everywhere, and finally broke through the 1 billion yuan sales mark that had been impossible to break through long before. Then a series of problems that appeared in the process of rushing to the scale of 10 billion, let Zhang finally had to leave.
Although Zhang Zhiyong left, Li Ning himself and Li Ning Company still gave him a high rating, praising Zhang Wei for leading the Group to develop into a leading sports brand in China. In fact, Zhang Zhiyong’s departure is to some extent responsible for his actions. "He has achieved success, but he has also overlooked many issues, which has caused Li Ning's current difficulties," said one person in the industry.
In fact, since 2010, Li Ning has encountered various operational difficulties. Orders for 2011 saw a sharp drop in orders, with a drop of up to 22% year-on-year that surprised the outside world.
In addition, Zhang Zhiyong’s departure is only a small part of the turnover of Li Ning’s personnel. In 2011 before the departure, former chief operating officer Guo Jianxin, former chief brand official Shiwei, and Lotto business general manager Wu Xianyong, chief product officer Xu Wei, and public relations director Zhang Xiaoyan have already left.
Among them, Fang Shiwei's departure is not associated with the failure of Li Ning's brand remodeling.
In 2010, Li Ning, a company with a good reputation for the future, publicized its brand remodeling plan. This remodeling not only enabled the new brand identity, but also changed its brand slogan from “everything is possible†to “MAKE THE CHANGEâ€. In the same year, Li Ning boldly intended to carry out a strategic transformation and clearly proposed to attract young consumers in the “post-90s†period.
However, the market is not sympathetic to this change of Li Ning Company. The entire plan fell into a failed stalemate. In the first half of 2012, the net profit was 0.44 billion yuan. This figure decreased by 84.9% compared with the same period of last year. Li Ning subsequently made structural adjustments to its stores and closed 1,200 inefficient stores.
In an interview with Times Weekly, an informed person familiar with Li Ning Company pointed out to reporters that Li Ning deliberately pursued the scale of development in the past. “Extensive development led to imbalanced inventory control and decreased store efficiency.†At the same time, the person also believes that “If Without the rapid development of previous years, there will be no scale today. Therefore, in the prevailing environment at that time, all companies have chosen extensive development."
Li Ning, which started in the 1990s, set a sales target of RMB 1 billion for the coming year. However, in 1997, Li Ning's performance was very far away, only 680 million yuan. This goal was finally achieved in 2003. Since then, Li Ning has begun a period of rapid growth.
Perhaps because of the booming performance, Li Ning Company neglected many problems that existed. According to a person familiar with Zhang Zhiyong, “There were already a lot of potential negative factors before 2012. It just didn’t get the company’s attention. Throughout 2011, the brand remodeling plan did not go smoothly, orders fell, and inventory had fallen. Start high."
Li Ning people also recalled to the Times Weekly reporter that the 2008 Olympic Games caused a certain amount of inventory pressure on major sporting goods companies. This statement is true, as are other brands such as Adidas. However, Adidas's financial report shows that in the first half of 2012, Adidas' global sales achieved a 10% increase, while Greater China increased by 19%.
“We hope that 2012 will be the bottom of the industry and the starting point for the company's revitalization. Li Ning has already fully prepared for the long-term development opportunities in the future.†Li Wei expects.
Channel Revival
After Zhang Zhiyong left, not only Li Ning personally went to the front desk, but another person named Jin Zhenjun also appeared in the public view.
Jin Zhenjun, a Korean-American, is a partner of TPG, a global private investment company, and head of Greater China. He has served as director of several TPG-invested companies, including South Korea's Dell, Guanghui Auto, Daphne, and others.
After Jin Zhenjun took office, he was mainly responsible for the internal affairs and operations of the Li Ning Group, including the implementation of the leadership blueprint for change. “What he brings to Li Ning is his global expertise in rapid growth strategy, strong operational capabilities, local and international knowledge, and TPG's consumer space.†Li Ning’s expectations for Jin Zhenjun are high.
From the perspective of Kim Jong-Jun’s resume, he does have profound global and domestic retail industry management and operating experience, and he is widely recognized in the establishment of the company’s operational capabilities and the promotion of corporate transformation. After TPG invested Daphne in 2009, Jin Zhenjun led Daphne out of trouble. In Daphne’s two years, Daphne’s share price has risen fourfold and sales have increased by 50%. According to reports, Jin Zhenjun is skilled in Korean, Chinese, and English. It is alleged that his team with more than 20 people will provide off-site support for Li Ning.
“In the short-term, the industry has poured in many people and there has been a situation of oversupply. Five years ago, sportswear brands were still wholesalers in China, not retailers,†said Jin Zhenjun. For a long period of time, the sporting goods industry maintained a high growth rate. Li Ning Company made great strides in this excellent situation. Data show that from 2004 to 2008, Li Ning's stores increased from 2,272 to 5,935, and their revenue increased from 1.878 billion yuan to 6.69 billion yuan.
Since its establishment, Li Ning has maintained its largest share in the domestic sportswear market. In 2003, it was surpassed by Nike China for the first time; in 2004, it was left behind by Adidas. In 2008 Beijing Olympics, company founder Li Ning lit the main torch tower, which is tantamount to a great marketing initiative. Li Ning Company was therefore sought after by the market, and it was a time of even greater strength. Li Ning Company achieved revenue of 8.386 billion yuan in 2009, and surpassed adidas sales in China. However, in the following year, Li Ning Company began to enter a slide channel. Extensive expansion followed by a close closure of stores and discounts. Some analysis pointed out that the early high growth of Li Ning Company was mainly due to the increase in the level of household consumption and the gradual shift in lifestyle to leisure. In recent years, consumer demand has gradually moved closer to professionalism, fashion, and leisure.
This view has long been overwhelmed by the rapid growth of the industry. “At the time, these brands focused their efforts on growth rather than sales planning, brand building and customer understanding. Chinese retailers should pay more attention to brands. Before you had to do store openings and channel management, it’s not This is the case," said Jin Zhenjun in an interview with the media.
In the past, the industry relied too much on wholesale operations and had encountered bottlenecks. From the point of view of industry development, the retail-oriented business model was inevitable. The change in the industry is a watershed in the 2008 Beijing Olympic Games. All companies are optimistic about the sportswear market released after the market in 2008. This miscalculation was an important factor that caused the industry to be struggling and Li Ning's difficulties.
After Jin Zhenjun arrived, Li Ning Company launched drastic reform measures, sponsoring the CBA, signing Wade and so on. The most striking of these series of measures is the expensive channel rejuvenation plan. This plan requires one-time budget support of RMB 1.4 billion-1.8 billion.
Li Wei believes that the recently announced channel rejuvenation plan is an extension of the change plan announced in July 2012. “This plan will speed up the backlog of inventory backlogs, revitalize downstream distribution, and increase the profitability of channels and retail terminals. We believe that the channel revitalization plan is a key step for the company’s transformation and it is also fundamental to the success of the reform. Only through the revival plan, the downstream Channels can solve the problems accumulated by the industry for many years."
At the same time, the arrival of Jin Zhenjun proposed a new marketing positioning "three focus" strategy: "focus on the domestic market in the core market, focus on the core business of sporting goods business, focusing on the core brand of Li Ning." In accordance with the three-phase change blueprint program, respectively By implementing strategies in terms of brands, products, channels, etc., Li Ning Company hopes to improve its operating performance and enhance operational efficiency and strategic execution results.
“Going further down is a relatively stable process, including the adjustment of products, financial health, and cash flow, and other operations that need to be resumed. So it takes time,†said Jin Zhenjun.
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