Li Ning trying to “Make the Change” one step at a time

February 9, 2011

Chinese Shoe Brands

Post by Jon Pastuszek 

February 9, 2011

Chinese Shoe Brands

Man man lai.  It’s a common saying among China’s practical and long-term thinking population says when talking about various processes, from practical stuff, like learning how to cook, to academics, like learning a language.  It’s used for more serious stuff too, like finding a husband/wife, and is even said when discussing the things that may matter the most to everyone: China becoming the world’s next potential superpower.

Apparently it’s used in athletic apparel company strategy, as well.

True to their slogan, “Make the Change,” the already domestically successful Chinese athletic apparel brand, Li Ning, is making slow, but steady moves in an effort to get more people educated about their brand, change general negative perceptions, and eventually challenge Nike and adidas for the crown of most popular shoes.  Not just in China.  In the world.

Though the last part of the previous sentence seems ridiculous — maybe rightly so — at the moment, dreams of Li Ning becoming a force in the American sneaker market is being treated as a realistic long-term goal for the company by executives: Besides taking small steps such as placing their products in Champs Sports stores and Eastbay.com, the company is investing a modest $10 million U.S. this year in order to expand their American based operations.  And when you read a quote by man who the company is named after, Li Ning, a Chinese gold medal winning gymnast in the 80s, comparing his company to Mitsubishi and Samsung, two Asian companies that eventually etched out large market shares in the States after they conquered their industries domestically, you begin to realize that these people aren’t joking around at all.  Nike and adidas are among those who have already realized Li Ning’s ambitions.

When it comes to basketball and shoes, Sonny Vaccaro doesn’t joke around either.  Which makes his apparent interest in turning Li Ning into a force in the lucrative and controversial amateur summertime basketball circuit as a seriously newsworthy item.   The so called “Godfather of Grassroots Basketball,” who has been employed by Nike, adidas and Reebok at various points over the last 20 years to run their summer-circuits in hope of signing the next Kobe Bryant to lucrative endorsement deals, has influenced the business of basketball arguably more than anyone ever has.  The guy who saw the potential of Michael Jordan as an individual brand before anyone else did was also the guy who put Brandon Jennings and Jeremy Tyler with professional teams Europe as a way to skip college and earn money while waiting to meet the age requirement for the NBA Draft.

It’s been his role in the summer amateur basketball circuit, however, that’s cemented his legacy as one of the most important and controversial figures to ever roam the boardroom.  Starting first when he signed individual coaches and then entire collegiate athletic programs to shoe deals before going down the roundball food chain to provide free travel, clothes, shoes and uniforms to high-school and AAU teams, summer basketball has developed into a unabashed meat market that is intent on getting as many promising youth ballplayers into highly organized and visible tournaments to increase the probability that a shoe company will uncover and get next to future NBA superstars.  The result has been twofold: More exposure for high-school players who dream of playing in the NBA, and more opportunities for shady enterprising youth coaches and team organizers to take advantage of the large amounts of money that pour in from the sneaker companies above.  Vaccaro has been called everything from a father-figure who cares solely about players’ interests to a crooked company man who has permanently torn down youth basketball into a no holds barred free-for-all for those looking to get quick, often illegal cash.

Vacarro has been out of summer basketball for the last three years, instead choosing to focus his efforts on bringing down the NCAA, who is one of those entities who view him as the latter.  But if Vacarro is to hook up with Li Ning, it would put the shoe company squarely on the summer circuit map, which means all of the things the company wants: more exposure, better consumer awareness and ultimately more potential for an exciting young player to sign a professional shoe contract with them.

The effect of all of these small steps, increased investment, more advertising and an entrance into the summer basketball scene, would likely result in Li Ning being relevant in the U.S., giving the brand another source of customers and revenues.  But a respectable presence abroad would also work to legitimize the company to its domestic Chinese consumers, who would view Li Ning’s ascension in America quite favorably.

The Chinese are notoriously self-deprecating when it comes to comparing Chinese brands, products, sports teams, athletes, companies or anything else to the so-called “best of the best.”  If something in China isn’t number one, then it’s not good enough.  It’s why Kobe Bryant and his five rings are more popular than LeBron James and his zero rings, why Nike is still the top selling athletic brand and why Michael Jordan at one point was known to more school children than anyone else in the world, other than Mao Zedong of course.

If Li Ning can develop and grow in the States, and Americans start to wear their shoes and more younger, more exciting, more marketable NBA players start endorsing their shoe, then they can expect a big boost in sales in China as a result.  Getting into America, no matter how subtle, is a similar strategy that Peak and other Chinese athletic apparel companies who buy courtside advertising at NBA games have used to reach people back in the PRC watching Chinese telecasts of games.  Simply, if you’re good enough to have an ad up at an NBA game, you’re more than good enough in the eyes of potential Chinese customers, who view America and the NBA in extremely high regards.

It should be noted, however, that not everyone shares Li Ning’s optimism for the future.  Scared off by a variety of factors, large numbers of investors pulled out in December and Li Ning’s share price dropped 15% amid decreased sales order and growth.  With increased competition from other companies like Peak and Anta and growing customer confusion about who Li Ning’s target audience is, going toe-to-toe with Nike and adidas is hardly going to be a two-handed slam dunk.

For now though, Li Ning seems content with settling for in control pull up 15-foot jumpers.  And that’s just fine for a company who knows it doesn’t have the requisite bulk to challenge the globe’s footwear giants — yet.

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One Response to “Li Ning trying to “Make the Change” one step at a time”

  1. Derrick Says:

    I have a pair of Li Ning that I bought to use for outdoor play since I didn’t want to mess up my Kobe 5′s. I used them a couple of time but they are falling apart. he fit was ok but i was disappointed with the quality. Oppositely, when I was in grade school my canvas Nike’s seem to last forever.

    Reply

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