Li Ning Company Limited Case Study
Cayman Islands and since 2004 has been listed n the Hong Kong stock exchange. IL Inning specializes in sports shoe and apparel manufacture for what it sees as its five key sports: Basketball, tennis, running, football and fitness. It sells exclusively in The Peoples Republic of China but in 2008, China’s Olympic year, it is trying hard to develop an international identity.
In 2007, 97. Per cent of sales were made using the IL Inning brand with Z-Do, an economy brand selling primarily via hypermarkets and Agile (a Joint venture with the French outdoor brand) making up the other 2. 4 per cent of sales. In 2007 it acquired a controlling interest in the Chinese table tennis many Double Happiness.
IL Inning’s financial performance is very strong.
For the year ending 31st December 2007, revenue was up 37 per cent, profits attributable to equity holders were up by 50 per cent on the previous year[iii].
Unsurprisingly with figures like these shares perform very well on the Hong Kong stock exchange[iv]. However, IL Inning has a problem. It is being out sold by its two big international competitors, Mike and Aids in China and popularity among young Chinese consumers in the big cities is if anything in decline. Chinese students studying in the I-J, (a great source of Information when discussing this case) would much prefer to be seen wearing Mike, Aids or Puma the top three international sports goods brands rather than IL Inning.
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Vet IL Inning sells large volumes of sports goods, especially in Northern and Western China and smaller urban centers, where value for money may be more important to consumers than international brand associations. Aids and Mike are both making big efforts to grow their business in China in view of a predicted 71 per cent growth in demand for sporting goods (between 2007 and 201 Both companies have opened branded stores in many Chinese cities, they nave sponsored Chinese athletes and Chinese teams competing in the Olympics and both are trying to incorporate Chinese influences into designs of products aimed at the expanding Chinese market.
In order to be more appealing to China’s trendy urban youth market, IL Inning has set about creating itself an international identity[vi]. To this end it has started sponsoring international teams and athletes[vii]. The present list includes: The Spanish and Swedish Olympic team uniforms, the American table tennis team, tennis player Ivan Lucia, pole vaulted, Helena Gainsayers and Aquiline O’Neal, one of America’s top Basketball players. This is in addition too range of Chinese teams who Noreen the IL Inning logo at the Beijing Olympics.
He other strategic intentions identified in the 2007 Annual Report are to continue developing new brand identities, opening more retail outlets (increasing market penetration) and continuing to invest in new product development especially focusing on anti-shock footwear products. Rhea multi-brand identity strategy is a potentially interesting development and could see IL Inning following the same route to international growth taken by Leno, the Chinese PC and consumer electronics company that acquired the IBM personal imputer business and Think Pad brand and Chinese car manufacturers who have acquired Rover and MGM car brands.
On the other hand it could be emulating Aids, Inch owns Rebook and Taylor Made sporting brands and Mike, which owns Converse and Umbra. Some I-J and US business analysts are intrigued by the idea of IL Inning using the seining Olympics as a trigger for an international expansion[viii].
IL Inning did not signal any international expansion plans in the 2007 Annual Report, however in laundry 2008, they opened a US based design centre. Questions IL Inning is trying to make itself more attractive to China’s trendy young urban nonusers. Do you think their strategies will work?