Over the past few weeks, a series of rumors have swirled around Li Ning Company Limited (Li Ning), one of China's largest sportswear suppliers.
Second quarter orders for 2011 were reported to have fallen by 6 percent, rumors that the company had "closed 500-600 outlets" also emerged and the company's Hong Kong-listed shares were dumped by high-profile investment companies like JP Morgan and The Capital Group.
Over the past few weeks, the company's share price fell by almost 19 percent.
The CEO of Li Ning, Zhang Zhiyong conceded that the problems Li Ning have encountered were not unexpected and he repeatedly emphasised that the rebranding of Li Ning is a strategy that the company has already settled on and will continue to stick with.
Zhang believes that high growth levels for sporting brands are a thing of the past, and that the market for sporting goods has entered a new period of more stable development.
Up until 2008, the market had been growing at about 30 percent a year, figures for 2010 show that growth has dropped back to about 15 percent a year.
As long as the market is growing, increasing profits depends on opening new stores, but now the market has changed, it becomes imperative to increase turnover in existing stores. In fact, Li Ning's problems reflect challenges faced by China's entire sportswear industry. Changes to consumers habits and increasing labor costs are forcing Li Ning to make a change. CITATION http://www.chinaleather.org/eng/show.php?itemid=5832
Second quarter orders for 2011 were reported to have fallen by 6 percent, rumors that the company had "closed 500-600 outlets" also emerged and the company's Hong Kong-listed shares were dumped by high-profile investment companies like JP Morgan and The Capital Group.
Over the past few weeks, the company's share price fell by almost 19 percent.
The CEO of Li Ning, Zhang Zhiyong conceded that the problems Li Ning have encountered were not unexpected and he repeatedly emphasised that the rebranding of Li Ning is a strategy that the company has already settled on and will continue to stick with.
Zhang believes that high growth levels for sporting brands are a thing of the past, and that the market for sporting goods has entered a new period of more stable development.
Up until 2008, the market had been growing at about 30 percent a year, figures for 2010 show that growth has dropped back to about 15 percent a year.
As long as the market is growing, increasing profits depends on opening new stores, but now the market has changed, it becomes imperative to increase turnover in existing stores. In fact, Li Ning's problems reflect challenges faced by China's entire sportswear industry. Changes to consumers habits and increasing labor costs are forcing Li Ning to make a change. CITATION http://www.chinaleather.org/eng/show.php?itemid=5832
