Four major problems ridden: Li Ning's struggle

Zhang Zhiyong retired from his post of chief executive officer and announced Li Ning’s failure to rebrand the brand for two years.

In 2010, Zhang Zhiyong took charge of a bold brand reshaping campaign, including replacing the LOGO that had been in use for 20 years, and changed the slogan "Everything is possible" to "Let the change take place," and reinvented the customer base. Positioning, locking "90 after" crowd.

As a result of this campaign, Li Ning’s financial reports became even more ugly. Li Ning’s 2011 annual report showed that the company’s operating income was approximately RMB 8.92 billion, a year-on-year decrease of 5.80%; net profit was RMB 386 million, a year-on-year decrease of 65%. The net profit of competitors such as Anta, Xtep, 361° and Peak were RMB 1.730 billion, RMB 966 million, RMB 1.133 billion and RMB 780 million, respectively. Li Ning ranked bottom.

However, a former Li Ning executive stated that “If it covers up everything with marketing failures, Li Ning will continue to continue along the downward path.” He believes that cost issues, channel construction, rough management, board and management team Four major issues, such as relations, have caused Li Ning's current situation.

In fact, as the founder of the company and the executive group, Li Ning has already foreseen many problems with Li Ning Company. In a recent interview, he said, “Being a company is really subject to many restrictions, but no coffin is not crying. External environment When you oppress you, you will do it. Make small adjustments and not change the underlying problem."

Channel and cost pains The former executives stated that Li Ning’s cost control issue has been a key issue that has constrained the company’s profit performance. This problem has existed for a long time in the interior and has many flaws. However, it has not been resolved for many years.

Li Ning's 2011 annual report shows that Li Ning ranks among peers in terms of costs such as employees and marketing expenses. Taking employee expenses as an example, although the annual revenue is only a difference of 30 million yuan, Li Ning's staff expenses accounted for 8.7% of revenue, and Anta accounted for 8.5%.

It should be noted that the number of employees of Li Ning as of the end of 2011 was 4,180 and Anta was 1,1,500. Although Anta's overall employees include a large number of factory employees, Li Ning's staff costs are significantly higher than Anta's.

In addition, Li Ning has also occupied the top position among domestic counterparts in marketing expenses including advertising and marketing. According to the 2011 annual report, Li Ning's marketing expenses accounted for 17.6% of the revenue, which is 13.7% higher than Anta's.

The former executives stated that from research and development to sales, Li Ning Company has problems with high costs in all aspects of the supply chain. The internal efficiency of Li Ning does not increase and will always affect Li Ning's profitability.

In addition to cost control, channel establishment is considered to be a fatal factor affecting Li Ning's revenue. In the development process, Li Ning Company has always adhered to the “light company” development model with two out-of-the-box, while Li Ning’s main competitor, Anta, has always insisted on the vertical integration to control the production and sales model.

A former staff member of Li Ning Company stated that Anta's model may seem cumbersome, but today's market environment seems that the controllable channels can more effectively cooperate with the company's R&D, production, and sales operations.

After the issue of increasing industry inventories appeared, the issue of Li Ning's out-of-control channels became prominent. When Zhang Zhiyong spoke about the channels in an interview, he was quite helpless. He said that when customers consider an order, they will experience a 30% increase in rent and a 20% increase in employee salaries. Therefore, when purchasing orders, they will become very cautious.

"Superstructure" fails?

Behind the problems exposed by Li Ning, the deeper reasons that affect the development of Li Ning are also highlighted.

A former Li Ning important functional department official said, “Before Li Ning, from the chairman to the staff, all are very ideal, and this ideal can form a kind of cohesion. However, the current Li Ning employees have no ideals, I really do not know."

Another middle-class Li Ning who left the company also said that the feeling of “a piece of the heart is going to make it” has suddenly disappeared after Li Ning in 2010. The inherent appraisal system no longer insists on the contrary, but it is a "moving by people" approach that can determine the company's implementation and promotion.

These evaluations involving corporate culture and core values ​​were summarized by former Li Ning executives as follows: “Although the company has existed for so long, it is still extremely rough in terms of management. The inter-departmental cooperation ability is poor, and at the same time, Everyone's self-responsibility is heavy, which leads to a decrease in work efficiency."

However, there is also a former executive who believes that Li Ning's problem lies in the fact that refined management has gone too far ahead and increased many departments, leading to increased costs. At the same time, it also brought about the dilution of mainstream culture. His departure also stems from this.

In addition, the problem of running-in between the board of directors and the management team also caused management problems for Li Ning. According to the aforementioned Li Ning related person, the company chose to step on the mark, and on the standard Kappa (a clothing brand), is the result of conflict of opinion between the board and management.

In addition, the source disclosed that Zhang Zhiyong had never been able to manage the efficiency of Li Ning, but he had always been eager to improve his internal efficiency. However, because he was not a major shareholder of the company, many things were still constrained by the board of directors. Another former Li Ning employee thinks that the company is strategically correct, but it is not tactically well executed and there is no problem of insufficient authority.

Li Ning also recently commented in Athens: "I'm not an extreme person. I will step back and the team will step back. The advantage of this is that you can calm down and adjust. The bad place is inertia. The bigger is."

Li Ning's struggle "is a defeat for any model," said another former Li Ning employee. "So far, I think Li Ning is a great company." This represents a lot of liking for Li Ning. A view of the employees. Li Ning Company itself is indeed willing to make changes.

Li Ning himself has a clear-cut attitude toward future changes. He said that the direction of the company's adjustment has now been determined, and adjustment will take a year or two.

Regarding specific practices, Li Ning said, “We will regard efficiency as our first adjustment action. Second, we will adjust our business model. The business model will affect the changes in organizational structure, changes in functions, and skills. These things are all from One or two years to go now need to be done.

In fact, in late January of this year, Li Ning Company has exerted its efforts at the capital level in an effort to optimize the composition of its shareholders. At that time, Li Ning introduced a total of 750 million yuan in strategic investment from the US private equity fund TPG and GIC (Singapore Government Investment Co., Ltd.). In February, the organizational structure and human resources were appropriately adjusted to improve the operational efficiency of the company.

On July 5, Li Ning announced that Jin Zhenjun, a partner of TPG Capital, was responsible for internal affairs and operations.

Regarding Li Ning’s reform measures, Jin Zhenjun said that first of all controlling costs can put more money into new sponsorships and investments. Work in this area has begun. Second, it is to rationalize the structure of goods and reduce things that are not easy to sell. The biggest goal of the company this year is to clear inventory.