A Grand Entrance - Li Ning's Emergence As A Global, Chinese Brand

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Li Ning’s Emergence as a Global, Chinese Brand
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Rotterdam School of Management
Erasmus University
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Rotterdam School of Management
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A month after the gala opening of the first Li Ning store in Hong Kong on 4 December 2009, the
number one Chinese sportswear company opened its first US shop in Portland less than a mile
from Nike Town. Wang Wei, the board member responsible for international marketing, was elated.
He had dreamed of seeing Li Ning plant its flag in Nike’s backyard for a decade.
Despite of the excitement, however, he was concerned. Although Li Ning clearly stated its mission
to be ‘a world leading brand in the sporting goods industry’, many people in the firm had a different
idea. They argued that with increasing competition at home from both foreign and Chinese rivals,
committing resources to internationalization was the wrong strategy – in the end, almost all sales
were domestic. This resistance to internationalization partly explained why Li Ning’s global
expansion went slowly. The board was already discussing internationalization strategies since 1999
and planned to generate half of all sales abroad by 2008, but Li Ning did not directly access foreign
i
markets until 2007 and at the end of 2008, 98.8% of its business remained in China. Its first store
abroad in Maastricht, the Netherlands, moreover, closed down a year after opening. Only in 2009
did the momentum of internationalization pick up again. Li Ning opened a flagship store in
Singapore and planned to open between 70 and 100 shops throughout Southeast Asia by the end
of 2010, selling badminton sportswear and equipment.

Wang Wei believed that a short-term defensive strategy of protecting domestic interest would divert
Li Ning from its long-term mission and jeopardize its sustainability as a brand and company. He
needed to convince the board to support internationalization, but wondered how far Li Ning should
internationalize. Should it move to global markets or continue to focus on China? Should it maintain
its position in offering high quality products for low prices or develop a more differentiated
international brand image?
COMPANY HISTORY
Li Ning’s history begins in 1989 when it was established under the name of Guangdong Li Ning
Sports Company Ltd. in Southern China and produced in its early years predominantly sportswear.
The vision of the founder, China’s Olympic gold-medal gymnast of the same name, was to support
sports initiatives within China among students and to provide sports facilities to schools. In 1990,
the company had its first major breakthrough when, with the help of its founder’s reputation as a
national sports hero, the company was assigned to equip the Torch Rally of the 1990’s Asian
Games. After this success, the company extended its product range to include leisure and sports
footwear. Becoming aware of its potential, the firm systematically explored its brand within China. It
did so by sponsoring various sports events and professional athletes. Li Ning sponsored Chinese
Olympic Teams three times between 1992 and 2000 and from 2004 onwards.
In order to penetrate the Chinese market, the firm established a franchise system to cover even the
most remote regions within China. Its origin and influence as a family business changed after
economic success during the financial crisis between 1996 and 1998 and led to an organizational
restructuring that professionalized the company, minimizing the family’s influence over daily
operations and enhancing the quality of its products. The company opened its first product
development centre, moved the headquarters to China’s capital, and renamed the firm to Beijing Li
Ning Sports Goods Company Ltd.
Li Ning continuously grew between 1998 and 2008 and firmly established itself as China’s No.1
sports good brand (see Appendix 1 for financial highlights 2004-2008). The company went public
in 2004 on the Hong Kong Stock Exchange where it raised $US 70.5 million to establish itself as an
international brand, competing against global sport fashion brands such as Adidas, Nike, and
Reebok. Although not an official sponsor of the 2008 Olympics in Beijing, the company did sponsor
a number of highly reputable Olympic teams and especially hit the news when its founder, Li Ning,
was selected as the final torchbearer of the Olympics to carry the Olympic torch into the stadium on
the opening ceremony.
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Short Biography of Li Ning
Li Ning was born in 1963 in Liuzhou, in China southern province of Guangxi. He joined one of
China’s many sports gymnasiums as a child. In 1982, with six of seven gold medals available
for men, he won the 6th World Cup Gymnastics Competition in Zagreb and was titled ‘Prince of
Gymnastics’. Two years later in 1984, he won three gold, two silver, and one bronze medal
during the Olympics in Los Angeles, becoming the athlete with the most medals during the
Games. Until 1986 he also held the title of World Amateur Champion and Asia Games Amateur
Athlete Champion. Li Ning continued his sports career between 1984 and 1988 but had to quit
early after an injury during the Seoul Olympics. In 1989 he retired as an active sports star with a
total of 106 medals that he won during the last 19 years. However, his career in the world of
sports had not ended with the injury. Already in 1987, Li Ning took part in the Athlete
Commission of the International Olympic Committee, the only Asian member during that time.
From 1993 on, he became member of the Men’s Artistic Gymnastics Technical Committee of
the Federation International de Gymnastique. Arguably, his most honourable title was awarded

to him in 1999 when he was elected by an international jury as one of the World’s Most
th
Excellent Athletes of the 20 Century alongside Muhammad Ali, Pele, and Michael Jordan. In
China, he became famous as a national sports hero. In addition, his fame excelled with his
charitable work by financing gymnasiums and sports facilities at local schools, encouraging
young Chinese to do more sports, constructing a corporate sports campus near Beijing, or
founding organizations to help retired athletes. In 2008, Li Ning was selected as the final
torchbearer of the Olympics in Beijing.

Product portfolio
Li Ning’s product portfolio contains apparel, footwear, and accessory products for sports and
leisure. Its official product lines offer equipment for basketball, running, fitness, football, tennis, and
general exercise. Since 2004, footwear has become an increasingly important product category due
to the significant improvements in product design; since 2005 the firm has launched about 600
different styles of shoes every year. The footwear category consists of sandals, socks, and shoes,
accounting for about 45% of the company’s revenues in 2008. The apparel product category
accounted for 47% of the revenue. The accessories consist of bags, caps, sports eyewear, and
swim wear and represents 8.2% of revenue (see Appendix 2A for percentage revenue by product
category). With basketball firmly in the hands of Nike and football covered by Adidas, Li Ning
positions itself as the global brand for two sport areas: running and badminton.
Li Ning’s products are well perceived by customers. The quality is on par with those of international
competitors such as Adidas, Nike, and Reebok yet the price is much cheaper. In comparison to its
domestic competition, Li Ning’s products are of a much higher quality although somewhat more
expensive than domestic competitors.
Distribution channels
Li Ning products are mainly sold through franchised distributors. Between 2004 and 2008, the
company opened on average 840 stores every year, an overall growth rate of 18.7% in this five-
1
year period. As of June 2009, Li Ning had 6,809 retail stores, of which 130 distributors operated
6,464 stores. The other 345 stores are owned by Li Ning and managed retail stores in Beijing,
Shanghai and 15 other provinces. Li Ning is pursuing a strategy of channel penetration that focuses
1
This is an 18.7% CAGR (Compound Annual Growth rate) of store openings and states the year-over-year growth rate of Li
Ning’s store openings between the years 2004 and 2008.
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on second- and third-tier cities where approximately 76% of its stores are located.2 Although
consumers in second- and third-tier cities have a substantially lower income level and thus
consumption, these markets show the highest growth potential and 80% of all new Li Ning stores
are located in these markets (see Appendix 2C for number of franchised and directly managed
retail stores between 2004 and September 2009).
Li Ning has 11 flagship stores in prime locations in major first-tier cities. These flagship stores are
intended to increase the influence of the Li Ning brand and drive sales. In regards to distribution
and its retail outlets, Li Ning was focusing on two main points. First, upgrading existing stores with
the latest trends and styles and communicating Li Ning’s brand personality, values and spirit to
increase the customer shopping and sporting experience, and second, increasing store efficiency
by improving the managements’ of its extensive network of distributors, sub-distributors and retail
stores. Especially the last points was considered essential as revenue generated from sales to
franchised distributors accounted for 88.1% of the total revenue, while sales from Li Ning owned
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and managed stores accounted for only 7.8%.
In addition to Li Ning branded products, the company distributes the French brand AIGLE, the
Italian brand Lotto, and the domestic brands Z-Do and Double Happiness through their extensive

network of stores. Revenue from these other brands, however, accounted for only 5% of the annual
turnover of 2008 (see Appendix 2B for percentage revenue by sales channel).
CHINA’S SPORTS FOOTWEAR, APPAREL AND EQUIPMENT INDUSTRY

Even though the sports footwear, apparel and equipment industry is a global industry and
dominated by global companies such as Nike, Adidas and Puma, the Chinese market represents a
large portion of the global industry and is a rapidly growing and highly potential market (see
Appendix 3 for China footwear market forecast). From 2007 through 2009, and in particular as a
result of the Beijing Olympics, China increasingly became the subject of major sportswear brands’
attentions as a market.
Market share
Although exact figures are unavailable, Li Ning claims to have up to 50% of China’s sportswear-
market sales and is a formidable challenger to Nike and Adidas. Li Ning has focused on smaller,
second-tier cities where Nike, Adidas and other western competitors have not. So it still has to
prove it can face off the competition against Nike and Adidas in Beijing and Shanghai. As recently
as 5 years ago, Li Ning was number one in China, but it has lost market share as Adidas and Nike
expanded from Beijing and Shanghai to smaller cities.
In 2008, Li Ning Sports, which has more than 1,000 specialty shops, grossed US$108 million in
sales and turned in profits of US$11 million. Its 2008 revenue grew almost 54% to $978 million (see
Appendix 4 for Li Ning revenue growth 2004-2008 by product, brand, and distribution channel).
Sales growth
China’s economy has seen dramatic growth in the last decade and the sports footwear and apparel
industry is no exception. However, from an industry growth rate of 15% in 2007 and 2008, the
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market growth has slowed in 2009 to an estimated 4% growth rate.
A key strategy to safeguard against such external economic shocks is a balanced approach to
market segmentation and saturation. Overall, the sports footwear, apparel and equipment market in
2
Chinese cities are commonly distinguished as either first, second, or third tier cities although no general definition can be
found. Generally, Shanghai (Yantgze), Shenzhen and Guangzhou (Pearl River Delta), and Beijing (Capital) are considered
first tier cities. Second tier cities usually cover other key regions and comprise cities such as Shenyang, Dalian, Tianjin and
Harbin (industrialized North East), Chongqing, Chengdu and Wuhan (central China) and Nanjing, Suzhou, Hangzhou and
Ningbo (eastern coastal area). All other rapidly growing urban zones are considered third tier cities.
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China has a value of approximately US$7.9 billion market, with footwear representing US$1.6
billion, apparel US$3.3 billion and equipment (including bikes) representing US$3 billion. As far as
specific sports, running to account for US$550 million, soccer US$252 million, swimming US$244
million and basketball US$118 million.iv
The fast-moving consumer goods sector that Li Ning operates in, however, is very vulnerable to the
direct impact from the economic crises. In 2008, having been affected to a relatively large extent by
the current economic downturn and the comparatively higher market saturation in the area, Li
Ning’s revenue in the more developed eastern region recorded a period-on-period growth of 22.6%,
which was lower than that in the less developed northern and southern regions. The company is
striving to intensify sales channel monitoring and to strengthen management and control of the
retail capability of stores in order to maintain the continuous steady growth of revenue in that
region. Under the direct impact of the global financial crisis, revenue from international markets
recorded a period-on-period decrease of 5.1%.
Li Ning announced in October 2009 that its same-store sales growth rate declined in the third
quarter of 2009 by 8.2% compared to the third quarter 2008. The decline in sales growth was
attributed primarily to the spike in growth in the third quarter of 2008 due to the Beijing Olympic

Games. Even so, the sales growth overall to date in 2009 remains strong and the company said its
v
orders for the fourth quarter of 2009 rose 14.5 % year on year.
The logo of Li Ning

Li Ning’s logo is designed according to its founder’s initials L and N. It is perceived by

international consumers as being similar (or even a copy of) Nike swoosh. Its stylized L-shaped
logo stands for youth, passion, and vitality and its red colour symbolizes in China beauty,
success, and dynamism.
The slogan of Li Ning
Li Ning’s slogan is Anything is Possible. It also reminds consumers of Adidas’ slogan Impossible
is Nothing.
DOMESTIC AND INTERNATIONAL COMPETITION
Using the 2008 Beijing Olympic Games as a backdrop to open more stores and launch marketing
campaigns, Nike and Addidas increased their presence in the Chinese market in a big way. Nike
opened its Beijing flagship store in August 2007. Adidas announced shortly thereafter that it was
building its largest international store in Beijing and would have approximately 5,000 retail stores
open in China by the end of 2009.
Nike
Nike came in with the power and confidence typical of the worldwide market leader and Charlie
Dension, Nike’s brand president who was in Beijing for the store opening, declared: ‘China is one of
Nike’s biggest growth opportunities, and one of the most dynamic retail markets in the world. Our
Beijing flagship store creates a strong brand statement with a compelling world-class shopping
experience. As we head toward the Olympics, we’re extending our brand leadership, deepening our
consumer relationships and building what we expect soon to be a US$1 billion business and Nike’s
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second largest market in the world.’
Nike has grown from a US-based footwear distributor to a global marketer of athletic footwear,
apparel and equipment that is unrivalled in the world. Its product portfolio now includes the luxury
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brand Cole Haan, the casual fashion brand Converse, the action sports and youth lifestyle brand
Hurley, and the UK soccer brand Umbro. Nike’s principle business activity is the design,
development and marketing of their brands. All of the manufacturing is outsourced to suppliers, the
majority of which are located in China (36%) and Vietnam (22%). Nike sells its products in more
than 170 countries and has an extensive network of independent distributors and Nike-owned retail
channels including factory outlets, flagship stores (Nike Town) and their website,
www.nikestore.com. They also have entered into license agreements that permit unaffiliated parties
to manufacture and sell various apparel, equipment and accessory items, such as swimwear,
children’s apparel, training equipment, eyewear, electronic devices and golf accessories.
The US accounted for 42% of Nike’s total revenues in fiscal year 2009 (which ended 31 May 2009),
which is slightly less than the 47% it represented in 2007. Non-US sales accounted for 58%,
representing a slight increase from the 53% in fiscal 2007. Independent retail outlets amounted to
more than 23,000 in the US and more than 28,000 outside of the US (excluding licensees).
Prior to fiscal year 2009, Nike was geographically organized according to four regions: (1) U.S., (2)
Europe, Middle East and Africa (collectively, ‘EMEA’), (3) Asia Pacific, and (4) Americas. By the end
of May 2009, Nike had reorganized into six geographies: North America, Western Europe,

Central/Eastern Europe, Greater China, Japan, and Emerging Markets. The emphasis on China as
an organizational unit is an indication of the importance of the Chinese market for Nike’s long-term
competitiveness and growth. The growth in China was the primary driver of the Asia Pacific region
sales growth of 15% in fiscal year 2009 and 26% in fiscal year 2008. See Appendix 5 for Nike key
financials 2004-2008.
Adidas
Although Nike commands an over 40% US share versus Adidas’ 15%, the rivals are locked in a
much tighter race in China, the second largest market in the world for both companies. On 5 July
2007, Adidas opened its largest Brand Centre worldwide in Beijing. For the first time in history, this
new Adidas Brand Center offered products from both Adidas divisions – Sport Performance and
Sport Style – under one roof, taking the Adidas retail experience to a new level.
Adidas commented that the opening of the Beijing Adidas Brand Centre was another milestone in
securing market leadership in China, one of the world’s most important markets for the Adidas
brand. The Beijing Brand Centre would serve as a role model for Adidas concept stores in key
metropolitan cities around the world.
The Adidas Group is one of the global leaders within the sporting goods industry, offering a broad
range of products in 3 core segments: Adidas, Reebok and TaylorMade-Adidas Golf.
Headquartered in Herzogenaurach, Germany, the Group has more than 33,000 employees and
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sales of EUR 10.3 billion.
Size Indications of Li Ning, Nike and Adidas
Nike Adidas Li Ning
Revenue / turnover 18,627 10,799 0,979

(US$ mln)
Employees 32,500 38,982 4,001
Based on 2008 figures
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Anta
Nike and Adidas are not the only competitors that Li Ning has to attend to. The local rival, Anta
Sports Products Limited, has been chipping away at Li Ning’s market share. Established in 1994
and originally a price fighter, in recent years Anta has turned to building an international brand
image that started in February 2007 with the signing of two NBA Houston Rockets players, Steve
Francis and Luis Scola. Most recently Anta has signed the leading tennis play Jelena Jankovic to
endorse its tennis products.
In the first six months of 2009, Anta’s turnover increased by 27.7% as compared to the first six
months of 2008. In the same period, the gross profit margin increased by 2.6%. Also by the end of
June 2009, Anta had 6,129 retail outlets primarily in second and third tier cities. Approximately 50
distributors manage the extensive retail network. Anta has also opened flagship stores in major
cities that are intended to improve the awareness and image of the brand. Additionally Anta is a
vertically integrated company with R&D and design, production and marketing capabilities that
allows the company to control key value chain activities.

LI NING’S INTERNATIONAL ATTEMPTS
For Li Ning, international markets represent another and so far untapped markets. Up until March
2010, Li Ning’s internationalization efforts or contacts with foreign companies fall into 5 categories:
export activities, international marketing efforts, the establishment of R&D centres in Hong Kong
and Portland, distribution agreements with foreign sport fashion brands, and a few recent attempts
to directly access foreign markets. So far all these internationalization attempts aim to make Li Ning
an international company in the eyes of their Chinese consumers. By internationalizing, the

company wants to make its products more attractive to young urban Chinese so it will be more
competitive against Nike and Adidas at its domestic market.
Export activities
As early as the beginning of the 1990s, the company began exporting its products to Hong Kong,
East European, and American markets. However, its products were not exported under the brand Li
Ning but sold to retailers who labelled them with own house brands or other brand names. By 2007,
Li Ning had established a cheaper mass-market sportswear and accessories brand Z-do.
International marketing
Similar motivations guided Li Ning global marketing efforts. Since the early 1990s, the company
sponsored international sport events such as the Olympic Games in Barcelona, Atlanta, and
Sydney, and the Asian Games in Hiroshima and Bangkok. During the last 5 years, the company’s
appearance at international sport events gained a new momentum by sponsoring individual
international sports stars such as Damon Jones, a NBA Basketball star, and football stars in
England’s Premier League. From 2004 onwards, Li Ning was the official sponsor of the Sudan
National Field and Track Team, a premier international reference for running sports. In 2005, the
company signed a 3-year marketing partnership with NBA Properties, allowing Li Ning to advertise
itself as an official sponsor of the NBA, use its logos, and receive slots for air TV. For the 2008
Olympics, Li Ning sponsored only a few teams such as diving, table tennis, shooting, and
gymnastics, but gained the reputation for being ‘…the most efficient marketer for the Olympics in
viii
terms of spend versus return.’ However, all international marketing efforts up until the sponsoring
of the Beijing 2008 Olympics were directed at targeting Chinese customers in first tier cities like
Beijing, Shanghai, and Guangzhou and to increase the brand awareness of Li Ning’s sporting
goods of Chinese consumers.
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R&D centres
In order to remain competitive in design and fashion, Li Ning established two research and
development centres abroad. The first was founded in Hong Kong in 2004, shortly after the
company’s listing on the stock exchange, to tailor product design to Chinese consumers. Hong
Kong was chosen because the design team could stay in close contact with the latest global trends
and design concepts. A research project was also initiated during this time to compile a database of
foot sizes and shapes from all corners of China.
In 2008, Li Ning opened another small design office focusing on shoe design, next to Nike’s R&D
centre in Portland, Oregon. This R&D centre quietly tapped the pool of creative talents in the region
and hired Alan Hardy, a former senior designer at Nike and design director at Converse.
Distribution agreements
In 2005, Li Ning diversified its product range by partnering with the upscale French sports apparel
brand AIGLE and was granted exclusive rights to distribute AIGLE products in China for 50 years.

In the same year, it acquired a share in the Italian sportswear and casual wear brand Kappa to

exclusively sell its products in China. Shortly after it sold Kappa in 2008 to another Chinese
company, Li Ning signed a 20-year distribution deal to import and sell another Italian brand, Lotto.
Lotto products are sold in single-branded stores and in prestigious department stores, not in the Li
Ning branded stores.
The agreements with foreign firms to exclusively manufacture, market, distribute, and sell AIGLE
products and to exclusively distribute Lotto products in China focused solely on securing a strong
position in the Chinese market.

Direct access to foreign markets
Li Ning did not make any attempt to access foreign markets until 2007, when it signed an
agreement with a Dutch firm to distribute its products in the Benelux. The Dutch partner opened a Li
Ning flagship store in Maastricht, a city near the German and Belgium border. A Dutch hip-hop Star,
Ali B, was paid to endorse Li Ning sportswear. Dutch consumers were satisfied with the quality and
design of the products.
The initiative to enter the Netherlands did not come from Li Ning’s board of directors, but from two
Dutch entrepreneurs who approached Li Ning in Beijing and took quite some effort to convince the
board to cooperate in penetrating the European market. The board was eventually persuaded that
the firm could gain important experience in the Netherlands for later expansion into the 3 largest
European markets – the UK, France, and Germany.
Since Li Ning mainly catered to the Chinese market, however, international sales had weak support
from headquarters. The domestic sales division chief was much more powerful than the board
member responsible for international activities. Although the latter promised the Dutch
entrepreneurs to supply products in European sizes, the production line did not replace large-size
shoes, sweaters and pants when stocks ran out. As a result, the Maastricht store had to close a
year after opening.
In 2008, a second store was opened in a smaller Dutch city, Almere by the same distributor and Li
Ning soon after took over full ownership. In July 2009, Li Ning opened another flagship store in
Singapore and planned to open between 70 and 100 stores by the end of 2010 in Southeast Asia,
mainly Indonesia, Malaysia, and Singapore, focusing on badminton equipment. In December 2009,
it opened its first store in Hong Kong with a glamorous ceremony attended by many local
celebrities.
By contrast, the opening of Li Ning’s first US store a month later was low-key. The store is located
in the Pearl District of Portland, next to Li Ning’s design centre. Li Ning’s CEO, Zhang Zhiyon, said
ix
this store was to ‘test the water’, selling sports fashion slightly cheaper than Nike and Adidas. For
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the US market, Li Ning also got endorsements from high-profile athletes like Baron Davis of the L.A.
Clippers who previously endorsed Reebok.
THE PATH AHEAD
After years of unparalleled revenue growth, Li Ning’s board of directors contemplated the course of
action Wang Wei outlined. The board had no doubt that Li Ning needed to exploit opportunities in
global markets and announced before opening the US store that the company aimed to ‘become
one of the 5 biggest global sporting goods brands by 2018, with overseas sales expected to
account for 20%.’x
The board thought that a strong market position at home gave Li Ning sufficient experience and
capability to target foreign markets. Things were not so simple, however. There were many aspects
to consider – should Li Ning focus on China or go global and, if it went global, what region,
consumer segments, type of investment, and business activities should it consider? Li Ning had to

identify capabilities needed to successfully internationalize and decide how to develop or acquire

these capabilities. Cultural differences were no minor issue either, given the huge gap between
Western and Chinese business practices. In trying to realize its long-term vision, Li Ning had
reached a turning point.

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Source: Li Ning’s annual report 2008
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Appendix 1: Li Ning financial highlights 2004-2008
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11
Appendix 2B: Li Ning percentage revenue by sales channel
Appendix 2A: Li Ning percentage revenue by product category
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Appendix 2C: Li Ning number of franchised and directly managed retail stores
CAGR: 18.72%, average store openings p.a. 840 (2004-2008)
Li Ning Stores 2004 2005 2006 2007 2008 Sep 09

Franchised retail stores 2.526 3.261 4.188 4.881 5.935 6.464
Directly managed retail stores 361 112 109 352 310 345
Total 2.887 3.373 4.297 5.233 6.245 6.809
Growth rate (franchised) 22,54% 22,13% 14,20% 17,76% 8,18%
-
-
222,32 -2,75% 69,03% 10,14%
13,55%
Growth rate (managed) %
Growth rate (total) 16,83% 27,39% 21,78% 19,34% 9,03%
Source: Company Press Release and Financial statements 2008, Interim 2009


Source: Li Ning’s annual report 2008

12
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Appendix 3: China footwear market value forecast
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Appendix 4: Li Ning revenue growth 2004-2008
Li Ning Revenue by Product (2004 - 06/ 2009)

2004 2005 2006 2007 2008 Interim 2009
Revenue Revenue
Revenue Revenue Revenue Revenue Revenue Revenue Revenue Revenue Revenue Revenue
RMB'000 (%) RMB'000 (%) RMB'000 (%) RMB'000 (%) RMB'000 (%) RMB'000 (%)
Footwear 562.889 29.97% 866.697 35.37% 1.253.134 39.40% 1.856.915 42.70% 2.963.702 44.30% 1.794.972 44.30%
Apparel 1.083.130 57.67% 1.365.802 55.73% 1.685.688 53.00% 2.217.861 51.00% 3.177.785 47.50% 1.924.631 47.50%
Accessories 232.083 12.36% 218.037 8.90% 241.721 7.60% 273.971 6.30% 548.586 8.20% 332.252 8.20%
Total 1.878.102 100.00% 2.450.536 100.00% 3.180.543 100.00% 4.348.747 100.00% 6.690.073 100.00% 4.051.855 100.00%
Li Ning Revenue by Brand (2004 - 06/ 2009)

2004 2005 2006 2007 2008 Interim 2009
Revenue Revenue Revenue Revenue Revenue Revenue Revenue Revenue Revenue Revenue Revenue Revenue
Li Ning 1.772.559 94.38% 2.335.361 95.30% 3.168.045 99.61% 4.244.387 97.60% 6.354.238 94.98% 3.735.810 92.20%
KAPPA 105.543 5.62% 115.175 4.70%
D. H. 2.188 5.40%
Lotto 16.207 0.40%
Other 12.498 0.39% 10.436 2.40% 335.835 5.02% 81.037 2.00%
Total 1.878.102 100.00% 2.450.536 100.00% 3.180.543 100.00% 4.254.823 100.00% 6.690.073 100.00% 3.835.242 100.00%
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Li Ning Revenue by Distribution (2004 - 06/ 2009)

2004 2005 2006 2007 2008 Interim 2009
Revenue Revenue Revenue Revenue Revenue Revenue Revenue Revenue Revenue Revenue Revenue Revenue
Franchise
D. 1.408.577 75.00% 1.896.715 77.40% 2.557.157 80.40% 3.478.998 80.00% 5.485.860 82.00% 3.302.262 81.50%
Concession 225.372 12.00% 27.446 11.20% 311.693 9.80% 730.589 16.80% 816.189 12.20% 417.341 10.30%
Retail 199.079 10.60% 247.504 10.10% 270.346 8.50% 10.437 2.40% 314.433 4.70% 81.037 2.00%
AIGLE 28.625 0.90% 194.489 4.80%
International 45.074 2.40% 31.857 1.30% 12.722 0.40% 3.479 0.80% 73.591 1.10% 56.726 1.40%
Total 1.878.102 100.00% 2.203.522 100.00% 3.180.543 100.00% 4.223.503 100.00% 6.690.073 100.00% 4.051.855 100.00%
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15
16
Appendix 5: Nike key financials 2004-2008
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i
Li Ning annual report 2008
ii th
Global Sports Estimate 2009, 4 annual study of global sports industry, NPD Group Inc,
http://www.npd.com/press/releases/press_090701.html, accessed November 1, 2009.
iii th
Global Sports Estimate 2009, 4 annual study of global sports industry, NPD Group Inc,
http://www.npd.com/press/releases/press_090701.html, accessed November 1, 2009.
iv
Global Sports Report 2008, NPD Group Inc.
v
Li Ning Press Release, 19 October 2009
vi
‘Nike Opens Flagship Store in Beijing.’ www.presseportal.ch/de/pm/100006729/100540852/nike_inc
vii
Adidas Press Release. http://www.press.adidas.com/etracker.aspx/raid-49886/tabid-62/gid-Documents.1.27313/.
viii
Frederik Balfour. ‘China's Li Ning Toe-to-Toe Against Nike and Adidas.’ BusinessWeek, 1 May 2008.
http://www.businessweek.com/magazine/content/08_19/b4083051446468.htm
ix
Li Ning Plans To Open First U.S. Store In Portland In January http://www.sportsbusinessdaily.com/article/135475
x
Li Ning Plans To Open First U.S. Store In Portland In January http://www.sportsbusinessdaily.com/article/13547


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A Grand Entrance - Li Ning's Emergence As A Global, Chinese Brand

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310-138-1

CASE DEVELOPMENT CENTRE

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International Business School

Hogeschool van Amsterdam/HES

Prof. dr. Barbara Krug

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Short Biography of Li Ning

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CHINA’S SPORTS FOOTWEAR, APPAREL AND EQUIPMENT INDUSTRY

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The logo of Li Ning

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Li Ning’s logo is designed according to its founder’s initials L and N. It is perceived by

The slogan of Li Ning

DOMESTIC AND INTERNATIONAL COMPETITION

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Size Indications of Li Ning, Nike and Adidas

Nike Adidas Li Ning

Revenue / turnover 18,627 10,799 0,979

Employees 32,500 38,982 4,001

Based on 2008 figures

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an international company in the eyes of their Chinese consumers. By internationalizing, the

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position in the Chinese market.

Direct access to foreign markets

THE PATH AHEAD

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Source: Li Ning’s annual report 2008

CAGR: 18.72%, average store openings p.a. 840 (2004-2008)

Li Ning Stores 2004 2005 2006 2007 2008 Sep 09

Growth rate (franchised) 22,54% 22,13% 14,20% 17,76% 8,18%

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Source: Li Ning’s annual report 2008

Appendix 4: Li Ning revenue growth 2004-2008

Li Ning Revenue by Product (2004 - 06/ 2009)

Li Ning Revenue by Brand (2004 - 06/ 2009)

Li Ning Revenue by Distribution (2004 - 06/ 2009)

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