Chinese sportswear group Li-Ning had a rare bit of good news recently as it released its financial statements from 2013: losses weren’t as bad as the previous year. That this can be seen as “good” news shows just how far the company has fallen since 2008, when founder Li Ning, China’s most famous gymnast, soared above the Bird’s Nest stadium in Beijing to light the Olympic flame – decked out, of course, in his company’s clothes.
So where did it all go wrong?
For a start, the hubris sparked by that iconic Olympic image – which catapulted Li Ning into the global consciousness, to the ire of Olympic sponsor Adidas – gave the company a false sense of security. Sales were booming, the share price spiked and, not content with being the number one sportswear firm in China, the company decided to take on Nike in its own heartland of Portland, Oregon.
That was perhaps its biggest mistake to date. As one New York-based retail expert memorably said about the U.S., “You could break into Fort Knox more easily than break into the basketball market”. Western firms often struggle when attempting to crack the China market, and so did Li-Ning in its attempts to globalize.
Just about everything went wrong. Senior U.S. executives were hired to bring cutting-edge design talent on board, but the U.S.-based staff was soon slashed and the former director of design engineering won USD1.25M in damages from the company for discrimination in a lawsuit that described an “intolerable” workplace. While the basketball market proved impenetrable, the company drew some favorable reviews for its running shoes, but a failed distribution deal with Foot Locker FL +0.7% subsidiary Champs meant that shoes soon had to be purchased online only, and for a new product where look and feel are crucial, that spelt disaster.
Secondly, its branding makeover had questionable upside and was very possibly damaging to the company. Li-Ning’s original logo was widely thought to be too similar to the Nike swoosh – no bad thing in the China market where copycats are expected and accepted in equal measure. It’s not clear if Nike ever threatened to sue, either in China or in the U.S., but a change was made and the new logo now resembles a cross between those of Anta, Kbird and Kinglike – three other Chinese sportswear brands. Meanwhile, the company’s English slogan “Anything is Possible” was launched in 2002 – two years before Adidas rolled out “Impossible is Nothing” – but the company unfairly took more hits for plagiarism and was forced to “Make the Change.”
Read more at Forbes.