Li Ning: Brand Growth and Excellence in China

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Case Details:

Case Code : BSTR207
Case Length : 14 Pages
Pages Period : 1989-2206
Organization : Li Ning Company Limited
Pub Date : 2006
Teaching Note :Not Available
Countries : China
Industry : Sports Goods

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"The market landscape is polarized between Li Ning as the volume leader, while Nike and Adidas are the value leaders." ¹

- Nene Leung, Founder of Champion Projects sports consultancy, 2002

"Li Ning is a leading sports brand in China's rapidly growing sports industry and we are delighted to join forces with them to promote the sport of basketball leading up to the 2008 Beijing Olympics."²

- Andrew Messick, Senior Vice President, NBA International, 2005

Introduction

When Li Ning Company Limited (LNCL) entered into a three-year marketing partnership with NBA Properties Inc.³ on January 18, 2005, it became the first sports goods enterprise in China to enter into such an alliance. Under the agreement, LNCL had the right to use the title Official Sponsor of NBA with logos and names owned by NBA in its advertisements. LNCL could also sign up key NBA stars and sponsor NBA-related events and programs for promotional purposes. NBA Properties would provide timeslots to LNCL to air advertisements during its regular season games telecasts by China Central Television.⁴ The deal was a strategic one as it was expected to help consolidate and boost the Li Ning brand in Tier I cities like Shanghai, Beijing, and Guangzhou.

In line with this initiative, in January 2006, it was announced that Damon Jones (Jones), a basketball star player for the Cleveland Cavaliers would sign an endorsement deal with LNCL. Jones was the first NBA player to endorse sports shoes made by a Chinese company. Commenting on his decision to endorse LNCL's products, Jones said, "Li-Ning is a company focused on performance with strong capacities for marketing, research and development. Wearing Asian-styled, Li-Ning products makes me different from others on the court and I am honored to be the first to wear the Li-Ning brand in NBA games."⁵ LNCL, one of the leading marketers of sports goods in China, had established a strong presence in the domestic market against competition from global giants like Nike International Inc. (Nike)6 and Adidas-Salomon AG (Adidas).7

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1] "Li Ning Sports Goods Beat Foreign on China Mainland," http://english.people.com.cn, August 02, 2002.

2] "Li Ning and NBA announce strategic partnership," www.lining.com, January 18, 2005.

3] NBA Properties Inc. is the marketing and licensing arm of NBA (National Basketball Association), the world's premier men's professional basketball league.

4] China Central Television is the major broadcast television network in China.

5] "Li-Ning Basketball Shoes to Debut in NBA," www.hoopsvibe.com, January 09, 2006.

6] Nike is an American sports goods company, established in 1962 in Oregon, USA. Nike was the leader in the global athletic shoe market in 2005. The company also marketed sports apparel and other sport accessories. As on May 2005, Nike reported revenues of US$ 13.7 billion and net income of US$ 1.2 billion. Nike was also the biggest sports goods company in China in 2005.

7] Adidas was established in 1949 at Herogenerauch in Germany. The company's main products are its athletic shoes marketed under the 'Adidas' brand. Adidas was the number two sports goods company in the world behind Nike and also the second biggest sports goods company in China in 2005. As on December 2004, the company's revenues were US$ 8.8 billion with net income of US$ 428.6 million. In August 2005, Adidas announced that it would acquire the US based Reebok International Limited (Reebok) for US$ 3.8 billion.