Li Ning - Anything is Possible
Sharing Zhang’s belief that a superior level of category leadership was within reach if the Li Ning brand could somehow acquire elements of brand strength equivalent to those associated with the Nike and Adidas names, vice president of marketing Abel Wu was pursuing a marketing strategy aimed at establishing in people’s minds, just in time for the Olympics, a uniquely differentiated position for the Li Ning brand. Chief among Zhang’s concerns at this point was how to integrate Li Ning’s decision-making to ensure that new opportunities could be seized while making the most of the company’s current competitive advantages.
1 Li Ning 2005 Annual Report, p. 18.
Professor Luc Wathieu, Professor Gao Wang, Tsinghua University School of Economics & Management, and Research Associate Medha Samant prepared this case with the assistance of HBS Asia-Pacific Research Center Director Michael Chen. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.
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Zhang wanted to add the qualifier “reasonably” to suggest that Li Ning, in keeping with its motto “Anything Is Possible,” ought to become even more outstanding. Fueled by Chinese consumers’ growing affluence and mounting interest in sports on the eve of the 2008 Beijing Olympics, the sporting goods category was poised for growth. Li Ning’s 33% sales growth, strong relative to other local brands, paled in comparison to the formidable growth rates global giants Nike (56%) and Adidas (46%) had achieved in the PRC. The gap was most dramatic in the “performance” categories (e.g., sports shoes as opposed to apparel; see Exhibit 2).
In January 2006, CEO Zhang Zhiyong reflected on how he was about to characterize the most recent income statement of Li Ning, a leading sporting goods company in the People’s Republic of China (PRC). A quick look at the company’s financials (Exhibit 1), which revealed performance consistent with its original goal of becoming the premier national sports good brand in the PRC, would have corroborated his preferred expression: “reasonably outstanding results.”1 Zhang attributed Li Ning’s performance to a number of competitive advantages related to brand reputation, unique “value” positioning (balance of quality and price), extensive and efficient distribution, and dynamic corporate culture.
REV: MARCH 19, 2007
Li Ning - Anything is Possible
The Prince of Gymnastics
The 1997 Asian financial crisis precipitated a two-year downturn for Li Ning. The company reorganized its operations and human resources. Among the many employees laid off were members of Li’s family. The marketing budget was contracted and a choice made to more tightly link products and marketing campaigns to performance in sports. A shoe-manufacturing center was established in the Fujian province and, early in 1998, the company adopted the formal name Beijing Li-Ning Sports Goods Company. One outgrowth of a period of ambitious new development between 1999 and 2004 was the prioritization of...