Li Ning, the founder, is once again in the mountains: it will undergo major changes

On July 5, Li Ning issued an announcement announcing that Zhang Zhiyong retired as chief executive and appointed Jin-Goon Kim, a partner of private equity fund TPG (Taiwan Pacific Investment Group), as executive director and executive vice chairman. Prior to the appointment of a new CEO, the company's business will be led by founder and executive chairman Li Ning and vice chairman Jin Zhenjun. Li Ning will focus on external affairs and Jin Zhen will be responsible for the internal affairs and operations of the group.

The outside world is highly concerned about this issue. On the one hand, Zhang Zhiyong is the eleven-year veteran CEO of Li Ning, and Li Ning, the founder of almost all commercial activities, has once again “outdated”; more importantly, Li Ning has been in trouble for the past two years.” Changing coaches is not a simple move but a signal of major changes.

“Over the past two years, the company’s team has been pursuing change and breakthroughs, but the trade-offs are not clear enough and firm, so we have been embarrassing and have not been able to get out of the predicament. Now we will have greater determination. And this is also a suitable time. Li Ning told China Economic Weekly.

Growth pain

In 1993, Li Ning Company began to make profits, and annual turnover increased by nearly 100%. In 1997, Li Ning took the company to someone else to take care of it and began to “retreat”. He believed that only Li Ning gradually faded out of sight and “Li Ning” would not be forgotten.

In 2009, Li Ning realized a dream-like goal: sales in China surpassed Adidas, and it was only one step away from Nike, another world-class giant.

In 2010, Li Ning, a confident company, proposed a brand remodeling plan that not only enabled new brand identity, but also changed its brand slogan from “everything is possible” to “make change happen”. At the same time, Li Ning also hopes to take this opportunity to start a strategic transformation to attract young consumer groups and bring them closer to international brands.

But everything didn't go well. The brand positioning and product price increase that catered to young consumers have not been quickly recognized, but it has led to the loss of the original customer base, and has also led to a decrease in order quantity and a substantial increase in inventory.

The crisis began to appear at the end of 2010: Orders that had previously been rising at a rate of 20% to 30% suddenly went stagnant, which led to Li Ning’s stock price plummeting by more than 20% between December 20 and December 21, 2010 and 2010. The market value evaporated more than HK$4.5 billion. Afterwards, worsening operating data led Li Ning's share price to go all the way down. The market value of the company was only about 15% of the peak time. And the throne of the top domestic sports brand was also taken away by Anta in 2011.

Li Ning Company started a series of "repair" measures. However, even greater crises followed: negative results such as declining performance, high inventory, sudden drop in profits, and massive store closures. Chief Operating Officer Guo Jianxin, Chief Market Official Shiwei, Lotto Business Department General Manager Wu Xianyong, E-commerce Department Executives Lin Biao and other senior executives have left the company... The company’s market value has also fallen by more than half since its peak, and it has been exceeded by Anta.

For all this, Zhang Zhiyong also did not expect it. “Zhiyong was considering a retirement plan around 2010, but at the time he wanted to resign. The new logo was a new beginning for the successor. But the company immediately had a series of problems. After nearly two years, The struggle has still not been resolved and it is now only possible to leave with regret.” A person close to Zhang Zhiyong told China Economic Weekly.

“The problem of Li Ning Company is not merely the result of brand remodeling and strategic transformation, but the problems that have accumulated over a long period of time have escalated after sudden changes in the industry environment. These problems have existed for a long time, but in the past they were Temporarily covered up." A senior executive who has worked for Li Ning for many years but has now left the company told the China Economic Weekly reporter.