Li Ning Has Sporting Chance at Becoming a Global Brand

Ad Age China's 2009 Marketer of the Year

By Published on .

BEIJING (AdAgeChina.com) -- Li Ning, a sportswear brand most consumers around the world have never heard of, is a leading contender to become China's first truly global brand.

Li Ning has sponsorship deals with four NBA players, including Shaquille O'Neal.
Li Ning has sponsorship deals with four NBA players, including Shaquille O'Neal.
Thanks to the company's impressive 2009 growth in sales, market share and marketing, Li Ning Co. is Ad Age China's first Marketer of the Year. The company was founded by Li Ning, China's greatest Olympic athlete, and opened its first U.S. store this month.

"We've come back strong," said Beijing-based Fang ShihWei, Li Ning's chief marketing officer for China.

During the first half of 2009, Li Ning's revenue grew 32.4% to $593.4 million over the same period the previous year, according to interim results released in August 2009.

Li Ning, a Beijing-based company founded in 1990, is a smart marketer. It has caught up to -- and possibly surpassed -- Adidas, the longtime No. 2 sportswear brand in China.

Now it's closing the gap with market leader Nike at home while working hard to expand overseas.

"Li Ning has taken amazing strides as a local marketer. They are one of the few that truly believe in brand-building, and their business results are really unbelievable, amazing year-on-year growth," said Greg Paull, a principal at R3, a Beijing-based consultancy that tracks the performance of brands in China.

Never heard of Li Ning?

Li Ning ads often feature international athletes like Ethiopian runner Ambesse Tolossa, who promoted a line of lightweight running shoes called ZhuFeng ('Chasing the wind') in 2007.
Li Ning ads often feature international athletes like Ethiopian runner Ambesse Tolossa, who promoted a line of lightweight running shoes called ZhuFeng ('Chasing the wind') in 2007.
Viewers of the opening ceremony of the 2008 Olympic Games in Beijing saw the company's namesake and founder, a national hero who won three gold medals at the 1984 Olympic Games in Los Angeles, light the torch that kicked off the games. (Inside China, marketers called his lap toward the torch a brilliant ambush, as Adidas, not Li Ning, was an official Olympic sponsor.)

That moment of glory also kicked off Li Ning's ambitious five-year plan to become both China's No. 1 sportswear marketer and a global brand by 2013.

"It's a young company, energetic, eager to learn and willing to make changes," said Chen WeiWei, Shanghai-based chairman-CEO of Leo Burnett Group Shanghai, Li Ning's main ad agency.

Concept store in Portland
Li Ning is even making bold moves on Nike's home turf. In early January 2010, Li Ning put a stake in the ground in the U.S. with a concept store in Portland, Ore., less than a mile from Niketown. Two weeks later, Adidas shuttered a Portland store three blocks away.

Two years ago, Li Ning opened a high-tech design center in Portland to tap into that city's sportswear expertise.

"We have 26 employees in Nike's backyard," Mr. Fang said with a hearty laugh. "The innovation center keeps up with trends and helps us stay connected to the outside world. We rotate our staff between Beijing and Portland."

Last year, Li Ning opened its first store outside Greater China in Singapore. It also has a store in Hong Kong specializing in badminton equipment.

The company also has distribution in a few other markets including Spain, the Netherlands, Malaysia and Vietnam, and plans to launch this year in Norway.

Li Ning is catching up to rivals Adidas and Nike.
Li Ning is catching up to rivals Adidas and Nike.
A brand to watch
Li Ning has surprised China's sportswear industry with six years of solid growth selling sports footwear, apparel and accessories, competing against global giants Nike and Adidas with their war chests of marketing dollars and expertise in China.

"Li Ning is the Chinese brand to watch," said P.T. Black, a partner at Omnicom-owned Jigsaw, a youth marketing consultancy in Shanghai. "They have done a damned good job picking up the slack when Nike and Adidas pulled back [in 2009]."

Unsurprisingly, ad spending in China's athletic apparel category dropped in 2009 from an all-time high during the 2008 Olympic year.

Nike and Adidas slashed spending by 75% and 65%, respectively, said Jed Meyer, Nielsen's managing director, media services, Greater China in Shanghai. "By comparison, Li Ning cut spending less, only 37% [to $37.6 million]."

Li Ning has taken on two of the world's best marketers and prospered. Tracking data suggests Li Ning controlled 14.2% of China's sportswear market at the end of 2009, trailing Nike's 16.7% share, but slightly ahead of Adidas' 13.9%.

The Li Ning brand, sold in the company's 7,000 stores in China, accounts for the bulk of the company's sales.

Products are priced slightly below western brands, but created with western design expertise and marketed with endorsements from sports celebrities like the NBA's Baron Davis and Shaquille O'Neal.

One of the latest athletes to partner with Li Ning is Russian pole vault champion Yelena Isinbayeva.
One of the latest athletes to partner with Li Ning is Russian pole vault champion Yelena Isinbayeva.
The company's portfolio includes other brands appealing to affluent urban trendsetters in Shanghai and middle-class teens in rural cities, where incomes remain low.

Li Ning formed a 20-year alliance with Italian sportswear company Lotto Sport in August 2008, giving the Chinese company exclusive rights to develop, manufacture and sell Lotto products in the mainland.

A Li Ning mass-market sportswear clothing and accessories brand called Z-do sells in supermarkets and hypermarkets such as Walmart.

Li Ning hired Interpublic's McCann Erickson, Beijing, to oversee creative for Lotto in China. WPP's Bates Asia network handles advertising for Li Ning overseas. Media planning and buying is done by Publicis-owned Starcom Mediavest.

The company's business "has more than doubled in two years. Key for them has been world-class marketing, above and below the line," Mr. Paull said.

Brand revamp in late 2010
While Li Ning's market share has increased in China, the company is concerned about future growth. A new look for the brand and retail stores will be unveiled later this year.

Fang ShihWei is Li Ning's chief marketing officer for China.
Fang ShihWei is Li Ning's chief marketing officer for China.
"The young generation is still talking about Nike. They think Li Ning is not a brand that belongs to them, it's for their parents. That's not something we like to see," Mr. Fang said. "We want to rejuvenate this brand to give it a fresh look for all consumers."

In the last two years, Li Ning has hired a new senior management team, mostly young, bright, energetic executives in their 30s trained by western agencies or advertisers in China and overseas. Even Li Ning's CEO, Zhang Zhiyong, is just 41.

Mr. Fang, for example, is a Taiwan native who worked at Leo Burnett, Taipei. Abel Wu, who took over as general manager of the Lotto brand in China two years ago, joined Li Ning in 2004. Before that, he spent nine years at Procter & Gamble Co. overseeing brands like Pampers, Crest, Olay, Whisper and Zest for China's largest advertiser.

Unusually for a Chinese company, Li Ning also employs a handful of foreigners from countries like the U.S., Germany and Singapore at its corporate headquarters, a stylish, sprawling campus of low-rise buildings connected by pathways that resemble a running track.

Overseas sales
While updating its image at home, Li Ning is pushing to get its products into overseas markets.

"Our biggest challenge is convincing major distributors because of our newcomer status. When we approach them, they all have major questions for us: How will you build your brand in our market? What marketing resources will you put in this market?" Mr. Fang said.

In new markets, Li Ning sponsors local athletes and teams, and builds events around sports like badminton, table tennis and basketball.

That strategy works in Asia and could succeed in Asian communities in the West, where table tennis and badminton are popular. But it may be a tough sell to American and European consumers.

Logo and slogan
Li Ning has two other problems in the West. To many foreign consumers, its logo looks very similar to Nike's Swoosh.

The Chinese company says its logo was designed in a contest in 1990, and is meant to resemble both the letter "L" and a patriotic red flag.

Li Ning's logo -- too close to the Nike Swoosh?
Li Ning's logo -- too close to the Nike Swoosh?
Also, Li Ning's slogan "Anything is possible" is very similar to Adidas' tagline, "Impossible is nothing." (The Chinese company is often accused of copying, but Li Ning's tagline was created first.)

As Li Ning makes bigger moves overseas, it will have to deal with these issues to build a brand from the ground up.

"Figuring out how to differentiate ourselves from our competition keeps me awake at night," Mr. Fang admitted. And that's not just Nike and Adidas, but also other Chinese brands like Anta that also are expanding quickly.

"This market is overloaded with competition, and it's too expensive," he said. "There's a lot of pressure."

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