Li Ning's strategy for the long term remains intact

18 Jan '11

5 min read

The annual results of the Group for the year ended 31 December 2010, containing the detailed financial information, are expected to be announced in mid March 2011.

Prospects and Strategies
Our strategy for the long term remains intact, while implementation details are subject to fine-tuning to accommodate changes in the market environment

As one of the leading players in the sporting goods industry in China, the Group has been adhering to its core strategy and mission – Focusing on branding and product innovation and competing on differentiation. Through our focus on the essence of sports, we inspire people's desire and power to make breakthroughs. This positioning has been underpinning the rapid growth of the LI-NING brand in the past decade. We will keep it this way.

In response to changes in the market environment, we have conducted a detailed analysis of the trends leading to changes in consumers' needs and developments in the industry value chain. While the trends for some of the external factors were in line with the Group's preliminary assessments, the speed at which these trends were developing was beyond the Group's expectation.

We proactively initiated adjustments of a forward-looking nature in our strategy implementation. During the adjustment and reform process, we will stay firm on our strategic positioning as a sports brand and go the extra mile in improving our brand, products, distribution channels and supply chain to accommodate the trends in the sporting goods industry in China.

Target at the mainstream market
The Group believes that while the sporting goods industry in China will maintain a low double digit growth in the coming years, some changes on the industry's development trends are brewing.

First of all, sports goods share some of the basic attributes of casual clothing and footwear products, such as convenience, comfort and good visual appeal, etc. These attributes have been the major growth drivers of the sporting goods industry in China in the past. If the industry were to continue to rely on these drivers, sports brands will experience difficulties in competing with leisure and casual wear brands on differentiation, making the broader competitive environment more complicated. The Group believes that the core competence of sporting goods rests in their branding and sports attributes.

This competence capitalizes on improvements of some of the fundamentals for the development of sports including growth in the sporting population, increase in the number of sports events, the increasing popularity of sports culture and the building of more venues for sports. While these fundamentals are not improving as fast as they should be, we believe this phenomenon is just temporary.

As the environment in cities in China continues to improve, coupled with the continued increase in number of sports venues as well as the development of community or youth-based sports events, the sporting population is expected to increase, which will lead to a better prospect of the sporting goods industry.

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