Li Ning's stock experienced a sharp decline of nearly 16% on December 20 last year, losing HK$3.5 billion in market value in a single day, following a drop in second-quarter orders in 2011. Major brokers were quick to react, which contributed to the recent sell-off and institutional selling pressure. Goldman Sachs highlighted two major risks facing the company: brand risk and sales channel risk.
The year 2011 was a tough one for Li Ning. The sharp drop in orders during the second quarter triggered a significant fall in its share price. This event not only affected investor confidence but also signaled deeper challenges within the company.
Since the second half of 2010, Li Ning has been facing increasing competition from local rivals. Was this downturn due to external market conditions or internal operational issues? Let’s explore the factors that have impacted the brand.
**Overtaken by the "Jinjiang Gang"**
Once considered a national treasure in China, Li Ning had built a strong emotional connection with consumers. However, as global brands like Nike and Adidas entered the Chinese market, they gradually captured consumer attention with their superior branding and product design. Over time, Li Ning’s lack of core innovation weakened its competitive edge.
Meanwhile, the "Jinjiang Gang"—led by Anta and Xtep—capitalized on lower prices, strong distribution networks in lower-tier cities, and aggressive marketing strategies. These brands quickly gained ground, making it harder for Li Ning to maintain its dominance.
In response, Li Ning launched a strategy focused on "brand internationalization and market localization," aiming to differentiate itself from other domestic competitors. It invested heavily in design, technology, and sponsorship deals, including becoming the first Chinese sportswear brand to sponsor foreign Olympic teams.
However, despite these efforts, Li Ning struggled to close the gap with its rivals. While it still holds a strong position in certain sports like gymnastics and table tennis, it faces fierce competition in broader markets.
**Hanging in Mid-Air Internationalization**
In 2010, Li Ning set ambitious goals for international expansion, aiming to become one of the top five global sports brands by 2014 and 2018. But was this strategy wise?
Despite acquisitions like Kason and partnerships with athletes, Li Ning has yet to establish a solid global presence. Compared to industry leaders like Nike and Adidas, it lacks the same level of international recognition and resource control.
Domestically, its channel network is under pressure. While it once dominated second- and third-tier cities, rivals like Anta are now expanding into first-tier cities, narrowing the gap. Meanwhile, Nike continues to penetrate lower-tier markets with affordable products.
As a result, Li Ning finds itself caught between its international ambitions and domestic challenges, stuck in an awkward middle ground.
**How Far Is It From Becoming the National Treasure Again?**
Can Li Ning reclaim its former glory? To understand this, we can look at other globally recognized "national treasure" brands.
Adidas represents German values, while Nike embodies American ideals. In contrast, Li Ning’s focus on internationalization hasn’t clearly defined a unique cultural identity.
Moreover, while Nike sells more than just shoes—it sells a lifestyle and philosophy—Li Ning lacks a cohesive brand culture. Its slogan of “Make It Change†remains more of a tagline than a deep commitment to athlete development.
To truly rise again, Li Ning must invest in specific sports projects, drive innovation, and build a stronger emotional connection with consumers. It should also leverage its historical legacy and cultural symbols to reinforce its brand identity.
Ultimately, the path back to being a national treasure requires more than just marketing—it demands a clear vision, consistent execution, and a deep understanding of what makes a brand truly iconic.
(The author is a senior expert in sports brand marketing.)
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