Now Li Ning has another way to capitalize on the prestige of foreign brands--a 20-year alliance with Italian sportswear company Lotto Sport. Li Ning has introduced a Lotto collection, including men's and women's clothes, shoes and accessories, and Mondiale 82, a special footwear line for soccer players, and will open hundreds of Lotto stores in China.
The spring/summer collection is the first line introduced by Li Ning since signing a deal with Lotto in August 2008 giving the Chinese company exclusive rights to develop, manufacture, market, distribute and sell Lotto products in the mainland. The agreement also gives Li Ning the right to use the Lotto trademark in China through December 31, 2028.
The agreement is expected to be worth at least $137 million over the next two decades, including licensing fees Li Ning will pay Lotto based on sales. The exact terms of the deal were not made public.
Li Ning also acquired the assets of Lotto Sport's two branches in China. One, in Nanjing, mainly focuses on product design, distribution and marketing in China, while the Shanghai office manages the brand's retail operations.
Li Ning plans to open 260 Lotto stores in China in 2009, said Wu Xianyong, also known as Abel Wu, who has guided the relaunch for the past year as general manager of Lotto in China.
Mr. Wu, 37, joined Li Ning as VP, marketing and international business in 2004. Before that, he spent nine years at Procter & Gamble overseeing brands like Pampers, Crest, Olay, Whisper and Zest for China's largest advertiser.
Mr. Wu hopes adding Lotto to Li Ning's portfolio will provide another defense against the growing market share of the top two players in the market, Nike and Adidas. Both rivals have invested massively in China, with major marketing campaigns and endorsements of local athletes like basketball player Yao Ming and track star Liu Xiang.
Li Ning faces an uphill battle against the competive edge international brands enjoy in China's sportswear category. Li Ning and another local player, Anta Sports Products, are eager to sell their clothing and footwear to the teens and young adults who are curious, trendy and open to foreign influences. Their preference for global brands is so powerful that Li Ning and Anta work hard to make their brands appear more international.
Their advertising often features foreign athletes, not local sports players, and ads are even filmed overseas. Li Ning once shot a TV spot in Africa, a continent mostly unknown to Chinese.
Li Ning is an official marketing partner of America's National Basketball Association and has sponsorship deals with four players: Baron Davis of the Los Angeles Clippers, Shaquille O'Neal of the Phoenix Suns, Damon Jones of the Milwaukee Bucks, and José Calderón of the Toronto Raptors.
Lotto, of course, is far more foreign than Li Ning can ever be. Priced and positioned higher than Li Ning's own branded products, Lotto competes against Nike 360 products, the Adidas Original line and other sportswear brands with Italian heritage such as Kappa and Fila.
The marketing campaign will retain Lotto's international image, said Henry Ho, group business director at McCann Erickson, Beijing, which developed the ad campaign supporting the spring/summer collection.
Advertising for Lotto in China is based on the positioning "Say no to stereotypes," he added. The campaign is dominated by four print ads using the tagline "Different Styles." The ads feature the women's clothing, men's clothing and the Mondiale 82 line.
Teens and young adults in China "hope to grow up in an unconventional way, hence realizing the value of life. They do not want to be stereotyped under the current state of society beliefs. Through fashion, [they can] express their spirit, individuality, teamwork," Mr. Ho said.
Alongside the spring/summer collection debut, Li Ning has introduced Lotto Leggenda, a white porcelain limited-edition toy designed by Wei Xingyu, a popular graphic designer. It is based on carnival masks of Venice, Italy including Lotto's double diamond logo. Collectible toys are popular among Asians, including adults.
Earlier this year, Li Ning also appointed WPP's Bates 141 to handle advertising for its flagship brand outside mainland China. The assignment doesn't affect Li Ning's relationship with Leo Burnett, Beijing, which has developed creative for Li Ning in China since 2002.
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