Li Ning Company Limited Case Study

Topics: People's Republic of China, 2008 Summer Olympics, Hong Kong Pages: 4 (1033 words) Published: August 21, 2013
Li Ning Company Limited
Philip Warwick, The York Management School

Background

Li Ning is one of the world’s most profitable and biggest selling sports goods companies, yet it remains almost unknown outside China. Few sports enthusiasts or business analysts in Europe, or North America are familiar with the brand[i]. Li Ning takes its name from the company’s Chairman, a triple gold medal winning Olympic gymnast, who founded the sports goods company in 1989[ii]. It has a manufacturing near Beijing, a registered office in the Cayman Islands and since 2004 has been listed on the Hong Kong stock exchange.

Li Ning specialises 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, 97.6 per cent of sales were made using the Li Ning brand with Z-Do, an economy brand selling primarily via hypermarkets and Aigle (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 company Double Happiness.

Company Performance

Li Ning’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 60 per cent on the previous year[iii]. Unsurprisingly with figures like these shares perform very well on the Hong Kong stock exchange[iv]. However, Li Ning has a problem. It is being out sold by its two big international competitors, Nike and Adidas in China and popularity among young Chinese consumers in the big cities is if anything in decline. Chinese students studying in the UK, (a great source of information when discussing this case) would much prefer to be seen wearing Nike, Adidas or Puma the top three international sports goods...
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