Can Lining'S Brand Positioning Be Called "China'S Nike"?

Location

The manufacturer of the same name sports shoes and clothing product, founded by gymnast Lining, is headquartered in Beijing. Between 2002 and 2009, the company's revenue increased 9 times and earnings per share increased 10 times.

However, when the shoe brand Lining opened the first American retail store in Nike's base camp, Portland, Oregon, in January last year, the drawbacks of this development formula began to show.

Lining, the shoe maker, has created the largest sports brand sales network in China, with 7748 retail outlets, but only 474 of them are directly managed by Li Ning Co. 60% of the remaining shops are operated by about 2000 inexperienced retailers. They are unwilling to cut prices and clear off the over season stocks, leaving little room for new high priced products.

In June last year, the problem of order weakness remained unresolved. Lining made minor changes to the trademark and launched a new slogan: "Make the change" (let change happen).

But none of this has helped the situation improve.

For investors, they not only sell Lining (since then, their share price has dropped by 42%), but also sell other manufacturers and retailers who have similar distribution problems, such as Anta (Anta), XTEP (Xtep) and 31st degree (361 Degrees).

During this period, the only rise in Chinese sports shoes and clothing stocks was Pou Sheng, whose stock price rose by 37%.

Baosheng is a pure retailer selling large retail stores such as Nike, Adidas (Adidas), Reebok (Reebok) and Puma (PUMA).

To some extent, if you can sell a few percentage points of wholesale discounts to the favored franchisees, shoe brand Lining may be able to rationalize the domestic distribution network in the next two years while maintaining market share.

But Nike, the international shoe giant, will also invest heavily in China, which has easily become its most profitable market.

At the same time, Credit Suisse's data on the consumption of Chinese sports shoes and clothing show the difficulty of Lining's challenge.

When household monthly income exceeds 7000 yuan (US $1000), Chinese consumers' preferences will shift from domestic brands to foreign brands.

Like other big consumer goods, China's market champions in sports shoes and sports vests are far from conquering the local market, let alone other countries.