Lining: Reform Of Lining's Continuous Transformation Of Company Model

7 years ago and 7 years later, after falling from the summit, where the company was going to go, Lining There is no difference in the nature of the answer. To be a leading professional sporting goods company, together with sports people, to promote the trend of national fitness in China. And beyond that is just a possible by-product of this goal.

After coming back, Lining's reform revolved around this matter -- continuously transforming the company model, from the traditional wholesale mode to the consumer oriented retail business mode. Returning to that year, it stopped losing momentum and announced a profit of 113 million yuan in its semi annual earnings report in 2016.

For Lining, Online retailers It is not just revenue size and gross profit margin, but a set of operational systems to tap consumer demand.

Lining focused his strategy on sports itself, creating Lining experience from three aspects of product, purchase and movement, in order to get more users and sports fans' recognition.

If it weren't for a listed company, Lining probably wouldn't care too much about the positive and negative signals in the financial statements.

After three consecutive years of accumulated losses of up to 3 billion 100 million yuan and the replacement of two CEO, Lining returned to the same year in 2015 to stop losses and make a small profit of 14 million yuan. Then he announced a profit of 113 million yuan in his semi annual report published in August 2016, proving that the company has a sound and sustainable profitability. This is interpreted by the outside world as a kind of Jobs style return.

Lining himself did not show much emotion about this. In an interview with reporters, Lining denied that he was relieved. "In our traditional industries, it is not too complicated to make profits by the ability of Li Ning Co. This is not our real goal."

Lining was not sensitive enough to cost and trade before he mocked himself. But now he is reborn and has benefited from years of training in sports career. He has a clear goal and the courage and persistence to put all his eggs together in the future.

The Li Ning Co headquarters in Tongzhou, Beijing, is called the "Lining center". It has all kinds of sports venues and looks more like a sports training base. On the wall of Lining's office stood the company's first old sewing machine. On the side of the long desk stood a half man tall statue of Lining in Beijing Olympic Games, while Lining was most concerned about several pairs of shoes on the other side of the desk, including a pair of "Wade's way". Basketball shoes 。

"Put on the table to see solid, if you wear your feet, I will be more steadfast." Lining said, "if China's elite and mainstream people are willing to stay with me and are willing to seek the Lining experience, then I will succeed."

"My goal is to train people."

In 2009, Li Ning Co surpassed Adidas in the mainland and became the second largest brand in the Chinese market. At that time, CEO Zhang Zhiyong complacent and announced the roadmap of the company in the next ten years. By 2018, he surpassed Nike to become the first place in the world and the world's top five sporting goods brand.

7 years later, for reporters' choice of Li Ning Co goals, whether it was Nike ADI or the market share of Anta, which occupied the first place in the market, Lining shook her head and said, "my goal is to be a sports crowd."

Compared with the original cutting edge, Li Ning Co's goal is more pragmatic.

After the 2008 Olympic Games, the Li Ning Co, the biggest winner of the Olympic Games, increased the number of stores from 6245 to 8255 in 2011, or more than 32%. Star company Lining's action also led to a group of domestic sports brand Carnival: 31, PEAK and XTEP shops in succession more than 7000.

It seems that this is the zhe age of sports industry. In 2010, Zhang Zhiyong brought the company to the gate of billions of revenue. Li Ning Co was in the ascendant. At that time, the company even reported "5 years later 20 billion".

Only this year, the sporting goods market began to enter the cold winter. Many people believe that the 2008 Olympic Games in Beijing delayed the outbreak of the cold winter. With the end of the era of shortage economy, the wholesale mode is facing the bottleneck of sales. Almost all Chinese manufacturing enterprises are continuously facing the original pain spot: inventory risk. Lining, Anta, XTEP, XTEP, PEAK and other 42 listed apparel enterprises total inventory of up to 48 billion 300 million yuan.

The shuffle is just around the corner.

The Li Ning Co just chose this time point to start an unprecedented revolution: embrace the post-90s; ten years of "everything is possible" becomes "let change happen", and more importantly, when Lining's brand recognition and operational capability are not yet fully mature, raise the price and positioning of the product, and directly bring the company into the battlefield of ADI and Nike.

This strategy was later regarded as a failure in business history.

The market did not buy it. After 90, the reaction was apathetic. After 70, the 80's were hurt emotionally.

A sharp decline in the situation, a large number of shops were closed, once the "Wan Dian plan" shelved. According to statistics, in the first half of 2012, Lining closed 1200 stores and closed more than 1800 stores throughout the year.

Li Ning Co lost nearly 2 billion of that year, when CEO Zhang Zhiyong resigned.

A few years later, Lining talked about the decision at that time and did not regret it. "During the time of transformation, the action was a little bit heavy and ruthless."

As one of the best athletes in the twentieth Century, Lining has won 106 gold medals in his career and has always pursued "higher, faster and stronger".

When he entered the business world, he brought the competitive spirit rooted in bone and blood into the company named after himself.

As a local sports brand for many years, once in the Chinese market, he exceeded ADI, directly to Nike. It is logical that dreams are magnified infinitely, and they go all the way to the world.

"In 2011, we had more than 3 billion profits. Making this small sum is not too complicated. But where is your core competitiveness and where do you want to go? "

　　 A pioneer or a follower?

7 years ago and 7 years later, the answer to Lining's answer was essentially different from the sudden fall from the summit and the question of where to go.

To be a leading professional sporting goods company, together with sports people, to promote the trend of national fitness in China. And beyond that is just a possible by-product of this goal.

"My goal is to be a sports crowd, and it is my goal to see Chinese sports crowd up."

One of the Asian heroes selected is Lining's label "athlete and explorer", not "businessman". As an explorer, Lining has retained a vision of transforming the existing business structure rather than the impulse to make profits.

"The biggest threshold or bottleneck of domestic Brand Company is whether they have the ability to lead to promote a consumption trend." Lining said, "making a good product and having the ability to push it are two different things. If it is labeled as Nike and Adi, it may become a trend. This is the reality."

Therefore, Lining is more eager for the leadership of brand power and strong brand power.

This primitive impulse determined Lining to be a challenger and pioneer rather than a follower.

An analysis article from global entrepreneur said that clothing brands may be the most challenging category in all Chinese companies committed to building global brands. The reason is that the key to winning is not in terms of low cost and large-scale manufacturing advantage, but also depends on imaginative design, distinctive brand personality, and the history of brand names that can not be shortened.

In China, a country with huge purchasing power, it is a good choice to follow the strategy rather than be a high risk pioneer.

Anta knows this. Ding Shizhong, the founder of Fujian, started off by selling a pair of shoes, and ploughed the three or four line market. He quickly followed up the brand technology and design style of foreign countries, dumping at low prices, and the strategy was stable and accurate. Since its total revenue surpassed Lining in 2012, Anta has become an absolute leader in domestic sports brands. The latest 2016 semi annual report shows that Anta sports revenue in the first half of this year was 6 billion 140 million yuan, more than the 3 billion 500 million Lining's 3 billion 500 million and third 360 degree 2 billion 500 million revenue, and Ding Shizhong even started talking about the next 10 billion plan.

Lining acknowledges that Anta is really excellent in many areas, but he says Anta is not the goal of Li Ning Co. "Lining sells all the products of Lining, and Anta sells other brands. The sale of Anta's own brand should not be different from ours. Scale revenue is on the one hand, and I also pursue brand competitiveness. According to Lining, "the existence value of a company should be to create and create commercial space, and then to create business profits with your value, rather than simply follow it."

Even in the most difficult years, Li Ning Co still guarantees the most powerful design and R & D team in China. An industry observer believes that Lining and ADI Nike belong to the first camp in terms of design capability and still have an unshaken advantage in domestic brands.

Shortly after leaving office, the junior designer, who worked in the Li Ning Co for 7 years, bumped into his boss many times. Usually, the design department is holding a product seminar, and Lining appears. Instead of speaking, he quietly sat down for a chair and listened.

The atmosphere of the meeting will not be broken. Occasionally, Lining will be named temporarily. Unlike the general boss, he will not say "no" directly, but rather from actual experience, and think of how to be better. At this time, entrepreneur Lining is more like an athlete.

As a pioneer, though expensive, but for the goal, Lining never hesitated. He only hesitated to talk about the way to achieve his goal. "If I use my current method, there will be fewer detours."

After the return, Lining's prescriptions seem plain: together with Chinese sports people, "try to communicate with them and create products that they need." With the accumulation of sports knowledge and sports technology, we can finally achieve this business growth.

When a large population of 1 billion 400 million is faced with consumption upgrading, we find this group of users with sports needs to meet their needs.

It is both a goal and a pragmatic road map.

　 Reshaping the retail system

In a wholesale led business model, it is almost impossible to find the target users and meet them with their needs.

For a long time, domestic sports brands, including Lining, are accustomed to the wholesale business mode. Manufacturers are responsible for producing products and distributing them to various channels. In this mode, what is produced, sold, and sold is decided by channel providers rather than consumers.

After coming back, Lining's reform revolved around this matter -- continuously transforming the company model, from the traditional wholesale mode to the consumer oriented retail business mode.

Li Ning Co wants to go closer to terminal consumers through the implementation of single store orders, and monitor the retail situation in real time, as well as the time to fill in the list and launch quick response products. This also means that Li Ning Co needs to form a retail ordering mode of "inertia orders + best seller SKU replenishment + quick response products". This is an important step in the overall retail orientation of the company.

Years of competitive sports training, hardship and difficulties are the instinctive reactions of Lining. As a founder of a company whose sales have been close to ten billion, he must overcome the heavy burden of many years away from gymnastics, and also face the difficulties that must be faced directly in the future retail system: the long-term order pattern that he has been living on, and the transformation of dealer channels under the line, and even the management and operation mode of the whole business. After listing in Hongkong in 2004, Lining did not directly participate in the daily management of the company. He could have done public welfare and golf in Hongkong, but now he came back to watch the reports and meetings every day and strive for the first line.

Lining took the channel team to visit the business super group in Shanghai and Guangzhou, including big Rd., Guang Bai and Shanghai Bailian, etc., and reached a number of channel cooperation agreements such as chain outlets, online and offline integration and sales. A positive sign is that Li Ning Co is gradually resuming its offline expansion and starting to change its channels from all aspects. In 2015, Li Ning Co's sales point increased by 507 to 6133, the first expansion since 2011, and the net sales point of the direct sales point increased by 313 to 35%. Lining wants to raise the proportion of direct battalion to more than 50%.

In the first half of 2016, the average inventory turnover days were 94 days, 18 days less than the same period last year. However, compared with the average stock turnover time of Anta for 64 days, Lining still has a distance. For Lining, the transformation of the retail model must be completed. Otherwise, the Li Ning Co will not be able to create new core competencies.

Inside the company, Lining set up a full channel platform equivalent to the middle stage to ensure online ordering, offline store or warehouse delivery. At present, the number of orders is 1000 per day, and at the same time, the cost of sustainable development needs to be maintained. In Lining's view, the whole channel is an important part of the retail model. The core is to get data on user buying habits.

Within the Li Ning Co, data teams are gradually developing to get data from different channels, such as the sales rate of offline stores, the number of products purchased, etc., through the analysis of online and offline data, to guide the accuracy of daily commodity management. So as to guide the business sector to advance the planning of commodities, to ensure that the goods can achieve accurate and efficient transactions in actual operation, and to achieve the maximum efficiency of commodities, information, logistics and cash circulation through reasonable goods.

Yintai store in West Hangzhou city is Lining direct shop. Its sales performance has doubled since last year. Zhang Ningning, the store manager, said that the Hangzhou branch ordered and managed the goods uniformly, and determined the style and quantity of the goods according to the historical sales and the current popularity of the stores. The store manager looks through the store system every week to see the sales and inventory situation, as well as the time to allocate goods, and so on. The whole information flow and commodity flow are more flexible and transparent.

For the traditional companies whose sports shoes and accessories are the main business, data application is highly regarded by Lining, but this is still in its early stage. The answer given by Lining is also quite sincere: "I am not satisfied with the excitement at present."

After nearly two years of Pro kissing, Lining believes that the transformation of the company is roughly 30%. It will take three years to complete the transformation of the "retail oriented" company.

　 Competition between scale and efficiency

Internet terminals directly connect consumers, and e-commerce capabilities will ultimately affect the structure of Li Ning Co's digital business model in the future.

2016 semi annual report shows that business sales doubled, accounting for 12.8% of total revenue. Since last year, Lining has made clear in many interviews that he hopes to increase the proportion of electronic business to 25%-30% in the next two or three years. Obviously, the growth rate exceeded expectations.

However, in an interview with reporters, his answer changed: "(occupy) does not matter, because I do not want to be too radical, efficiency is also very important."

In early September of this year, Lining deliberately ran from Beijing to an electric company in Shanghai to find the general manager, Feng Ye. What makes him nervous is that the growth rate of Anta Tmall flagship store in the first half year is about 90%, which is higher than that of Lining's 80%.

The atmosphere in the small conference room has reached freezing point. The two men are at arm's length.

Compared to Lining headquarters, the more than 50 person business team atmosphere is more like an entrepreneurial company. As a general manager, Feng Ye is wearing a ponytail with outstanding personality, and it is common for employees to talk with each other. This time, he did not change the way of communication because he was chairman Lining. He still has something to say, and Lining also follows the principle of "do in Rome as the Romans do".

The focus of their debate is whether efficiency is important or is scale important?

"Growth means that Anta sells more products than you do, meaning that more people buy your products. This is certainly stressful. Lining explained to reporters afterwards.

In Feng Ye's view, some competing products may be hidden behind efficiency and structure behind the rapid growth. This is the short-term growth of excessive sacrifice efficiency, market control and user perception, not the pace of healthy development. Moreover, Lining's online scale has always been the first and the most profitable player for the domestic sports brands. Therefore, he believes that it is not for every opponent's short-term growth to catch up, but that the market should be analyzed all over the market.

As early as 2008, Li Ning Co set up an electronic business division and became the first group of brands to enter Tmall platform. At that time, Lining was more like a spectator. Today, Lining personally leads the electronic business team, giving pressure in the general direction, but on the specific business matters, most decisions at the operational level are decided by Feng Ye and report directly to them. The increase in the proportion of electricity supplier sales makes him want to have a deeper understanding of the way of operation. So, a few months ago, there was hardly any hesitation a day. Lining agreed with Feng Ye's suggestion that two people go to Ali together and ask the front line staff responsible for the dress.

In one hour's exchange, Lining took notes seriously and asked questions from time to time. Compared with the helmsman of a listed company, he was more like a student who listened carefully in class. From time to time, he asked about the details of the "electricity exchange rate" and "conversion rate".

"They are more professional than I am. I do not communicate with him. Who do I communicate with?" Lining said. In the first half of this year, Lining went to Hangzhou's Xixi Park twice for Xixi.

For Lining, the meaning of the electricity supplier is not just the scale of revenue and gross profit margin, but the establishment of an operational system to tap consumer demand. Lining explained to reporters: "although the cost of electricity providers is getting higher and higher, there is still room for affordability and development. The core of retail that I understand is prediction, and the electricity supplier can capture potential consumer data through close interaction with users. This is what I value most, but many of the business people, including Lining, have not done enough in this area.

In order to obtain data more directly, since 2014, Lining electric business has begun to adjust the proportion of self run, from the former 40% to 80%, and will still maintain a larger proportion in the future. Lining's self flagship Tmall flagship store 85% of SKU is online and offline. For online dealers, Lining electric business requires all distributors key commodities to be retailing according to the price policy issued by Lining brand, not only protecting the interests of dealers under the line, but also for the healthy development of the market, and the online business lines adjust the replenishment rhythm immediately according to the sales data. "At the beginning of this year, a dealer was fined 200 thousand yuan by Lining for selling at a low price, and the control was quite strict." Lining online dealer, the founder of Lu Yu campaign, who owns many Tmall stores, said Xiao Yi.

Feng Ye disclosed that in the settlement of Lining electric business division, it is estimated that revenue (including tax) can exceed 1 billion 300 million yuan in 2016, net profit after tax is more than 260 million yuan, and the annual efficiency of the division will exceed 5 million yuan.

This makes the electricity supplier look like the whole Li Ning Co's advance force. But self run is very challenging, which involves the whole process of commodity planning, design, pricing and sales, which requires reasonable control of cost and profit calculation. Two years ago, Feng Ye would wake up at 4 and 5 o'clock every morning and keep the sense of crisis of the start-up company at all times.

Businessmen and athletes

Lining was asked this question many times, "are you a businessman or an athlete?"

The answer did not exceed expectations. "I think I am an athlete. Now I am a big bellied athlete. (laughter) Lining is a company founded by athlete Lining. "

Lining, the athlete, originally did not drive micro-blog, because "I was neither good at nor interested in these things before," but now CEO Lining is willing to show his face. He opened micro-blog and became a great uncle in the Internet language. He wants to use the Internet to get closer to consumers.

CEO Lining knows the advantages of athlete Lining.

Sports resources are the core values of sports brands. The international first-line brands have huge sports marketing costs, and have sports stars and sports resources to attract large consumer groups. But with Li Ning Co's current scale of profit, it is a little hard on marketing investment and Nike.

When CEO Lining gets into trouble, Lining always comes out.

On the eve of the Asian Games in Beijing in 1990, retired athlete Lining found the official of the National Sports Commission, and spoke of his distressed heart to wear the foreign brand clothes as an Olympic champion. He defeated the foreign brand of $3 million by winning the bidding of the Asian Games torch relay with 2 million 500 thousand yuan. In 1990, 2 billion 500 million people knew the Li Ning Co created by athlete Lining through live television and the news media.

By the 2008 Beijing Olympics, market rules decided everything. In the competition of official partners of Beijing Olympic Games, Li Ning Co, led by CEO Lining, was defeated by 1 billion 300 million of Adidas.

But Lining again appeared on the opening day of the Olympic Games, and the center of the bird nest flew up and lit the main torch platform of the Beijing Olympic Games after a week. Li Ning Co also won an invaluable sports marketing and became the biggest winner of the year.

By 2016, the business world had become clearer and clearer. It was always the winner's power game.

There is an ADI Nike and a Jinjiang sports brand headed by Anta. The positioning of Li Ning Co is somewhat subtle. To this end, Lining's strategy is to focus the strategy on sports itself, and create Lining experience from three aspects of products, purchase and movement, in order to get more users and sports fans' recognition. "These experiences may be related to price, but not absolute."

Athlete Lining still has his courage. Lining said that as long as the Chinese people began to exercise, the company would have an opportunity. Unlike all other companies, Lining is the only company with Lining. "Movement is rooted in our genes, and is also the foundation of our existence. In the past, we have been accumulating the understanding and resources of sports, whether it is resources of sports competition training or product design and R & D capability.

The design team is certainly willing to put the latest trend and best technology into the product, but Lining, who was wearing various sports equipment from childhood, said, "if you don't understand the sport itself, it will be very difficult for you to make a product that matches this sport."

Lining asked the team to understand the movement itself. Therefore, the current practice of Li Ning Co is to cut off different sports categories such as badminton, basketball and running, and set up different departments, small teams and specialized operations to ensure that designers can always get inspiration from a specific sport.

"Every team has to enter this sport, from which to find out how the product should be designed, what to learn from the industry, and which cross industry technology and material ideas can enter into your product."

In July 15, 2015, Lining and Lei Jun wearing "strong Jun" were photographed on micro-blog. Lei Jun asked: are my shoes nice? On this day, Lining officially released two smart running shoes: the strong runners for professional runners and the red rabbits for the general public. This is Lining's test of water in the digital experience of sports. It is also an attempt by Li Ning Co to produce and sell products under the retail logic.

For Lining, we need not only adapt to the new consumption trend in the Internet age, but also directly connect consumers' needs with technology and data, so as to change the traditional sales mode.

In this cooperation with millet ecological chain company, Lining and Lei Jun have collided. According to the previous "millet mode" play, Lei Jun believes that products should be sold at a surprising low price to achieve a disruptive sale, thereby creating profit margins. Lining did not fully agree with this.

"How can the logic of clothing and electronic products be the same?" Lining asked.

But in the end, Lining still gets some inspiration from Lei Jun's logic. After all, Chinese people are always sensitive to price and need to reduce the acceptance threshold for new products. Therefore, when most people decided to make the red rabbit priced at 200 yuan, Lining insisted that NO would reduce the price to 199 yuan. "Since the product is not made for profit, make a data." The market reaction proved the correctness of the decision at that time. Judging from the sales evaluation, consumers generally agree that there are penetrating prices. Red rabbit products are the sales champion of intelligent running shoes. They sell about 700000 pairs in one year and get the data of these users directly.

In May 2012, Li Ning Co signed the CBA sponsor of the league with a price of 5 yuan and 2 billion yuan. In October of that year, the NBA star Wade was signed for 100 million years in 10 years. "Business is a gamble. Investment is ahead of schedule." Lining said.

In October 2012, Lining signed NBA star Wade for 10 years and 100 million dollars.

Lining started making money again, but the profit situation is even less than 360 degrees, PEAK and so on. Ma Gang, an independent critic of the footwear industry, thinks that this is related to Lining's investment in the camp, including the two marketing costs of Wade and CBA. Lining can do more open source and save money.

In August 2014, Lining ended the strategic cooperation in sports equipment with the Chinese gymnastic team for 23 years. Lining said, sports marketing will still be the main input of the company, but the form is not the same, "the needs of different stages of the enterprise are different. In the past when no one knew, you would invest in the Chinese delegation and receive a prize. Now Lining needs to turn fame into products, purchases and sports experience and put them into practical sports scenes. For example, badminton products, I will stand with badminton groups, marketing is more accurate.

What has been done in the past two years? Lining's answer is that the company's resources are concentrated in some future sports that have market space, such as running, basketball and badminton.

In Lining's view, in addition to the Olympic motto of "higher, faster and stronger", the greatest value of sports should be the spirit of competition. "It is to see a goal, no matter how, everyone is willing to pursue, participate in the whole process of competition, and at the same time stimulate more creativity, courage and motivation."

In addition to the fact that competitors and market environment are not the same today, the opportunities, cost and operation of each step will continue to be challenged. Where will Lining and the company go? Will he feel anxious? "No, there is no anxiety." Lining quickly interrupted our questions, and he blurted out. He described the wind and light, and even half joked: "if you work hard, you will be happy. If you do not work, you will be depressed."

At the age of 53, Lining still liked sports costumes, and he could still see traces of the "Prince of gymnastics". He still keeps a healthy schedule, usually goes to bed at 10:30, and occasionally sends a message to the management at midnight.

Lining's career in Seoul has gone through all kinds of scenery and defeat, kindness and ugliness, from the myth of sports to the defeat of the 1988.