INSIGHT | WHAT HAS HAPPENED OVER THE PAST 16 MONTHS SINCE "CHINA LI NING" BURST INTO FAME?

Li Ning, China’s leading sportswear brand, was founded by ex-Olympic gymnastics champion Li Ning, and made an amazing appearance at New York Fashion Week last February. The four-character logo of "China Li Ning" became a hot topic on Weibo, WeChat, Instagram and other social media, especially among young hipsters. Li Ning's Hong Kong-listed shares have risen about 208% since February 2018. 

Li Ning's first-half net profit rose to more than 440M RMB as of June 30th, 2019, compared with 269M RMB in the same period last year, a year-on-year increase of more than 160%, according to the company's earnings announcement released on June 25. Driven by the good news, Li Ning's shares were up nearly 20% at one point before the close of the day. On July 2nd, the company's share price hit $19.08 HKD after market open -- their highest price since 2011. This may prove that the success of "China Li Ning" is not a flash in the pan.

So how did the concept of "China Li Ning" come up? And how has it gone from a concept to a new representation of the national wave of sustainable new business that holds on to young people?

China Li Ning SS 2020 Collection

“China Li Ning” did not emerge overnight

Many people know "China Li Ning" from New York Fashion Week in February 2018, when Tmall cooperated with CFDA to hold "Tmall China Day", where Li Ning participated as the only Chinese sports brand.

The buzz from the first show at New York Fashion Week helped make all similar shows hot. In Li Ning’s Tmall official store, all the fashion week style designs were sold out in 1 minute after going live. In addition to the hot sales, social media was also flooded with "China Li Ning". In the 4 days after the product released, the discussion on the topic of # China Li Ning # reached 78M views on Weibo, with 19 popular articles hittnig over 100k views appeared on WeChat.

In fact, the concept of "China Li Ning" has been around for a long time ago before New York Fashion Week. At the end of October 2017, Li Ning came up with  "China Li Ning" on its official WeChat public account, and subsequently created #China Li Ning and #China Li Ning Origin, two topics on Weibo. The #China Li Ning Origin topic mainly cooperated with Tmall Double 11 Shopping Festival, through conversation with Li Ning product designers and staff to introduce a series of products. At the same time, Li Ning launched the "China Li Ning" with the impressive logo for the first time.

When asked about why he put "China Li Ning" logo at the forefront, Li Ning himself said, “I used to attend competitions on behalf of China, and they always introduced me as "China - LiNing", with no other words. So we want to combine Chinese culture with fashion, sports, like a Chinese seal, written with "China Li Ning" will be enough. 

How can "China Li Ning" become a sustainable successful business

The success of New York Fashion Week allowed China Li Ning to accelerate its evolution from concept to sustainable business. In June 2018 and February 2019, Li Ning appeared in Paris Fashion Week and New York Fashion Week, respectively with "China Li Ning" and “Xing” (行, “walking”) as the theme.

In 2018, the total sales of "China Li Ning" clothing line exceeded 5.5M items with more than 50k shoes sold. Over 70% of new products are sold out. Led by the "China Li Ning" series, the retail flow of Li Ning's sports fashion category in 2018 also increased 42% year-on-year, leading all Li Ning's categories (Basketball category growth 29%, training category growth 20%). 

The "China Li Ning" line has become a sustainable business that can be really profitable, even helping build premium value for the whole range of "Li Ning" products

Comparing “China Li Ning" and "Li Ning" -- a "China Li Ning" T-shirt price is around 300rmb, hoodies, fleece, jacket, etc are 500 ~ 900rmb, FW series products are more than 1000rmb. In comparison, a standard "Li Ning" T-shirt is within 100rmb, with most hoodies, fleece, jacket etc are less than 200rmb, "China Li Ning" are more expensive  than “Li Ning”. Zeng Huafeng, CFO of Li Ning, has said that China Li Ning has high profit margins and is clearly driving up the brand’s value, but he has no intention of setting revenue targets for China Li Ning.

Of course, building a profitable business is important. In March this year, Li Ning held its fashion FW 2019 product launch in Shanghai, and put forward the concept of "Li Ning Fashion Line", clearly targeted at the high-end market with sports fashion style market. It said it would open independent Li Ning fashion stores in many core business districts, and open a Tmall Li Ning fashion flagship store. Previously, Li Ning's fashion week collections were completed by teams of designers from different product lines of the brand. Now, the "Li Ning Fashion Line" will be run by an independent team from design, product, merchandise and sales. The "China Li Ning" concept has officially become an important business line for Li Ning group's sustainable growth.

Different ways of playing "China Li Ning" and "Li Ning"

With the popularity of "China Li Ning", many people have begun to wonder, is "Li Ning" a fashion brand or a sport brand? In fact, while "Li Ning" is still positioned as a sports brand, the "China Li Ning" series is an important addition to the high-end "Li Ning" series —— product prices are higher and users are different from the original brand. Most of them are 18 to 25 years old, younger than the traditional customers of "Li Ning" product line. With different positioning and different consumers, "China Li Ning" and "Li Ning" play in  differently markets.

• Product

From a design and production point of view, "Li Ning" is more focused on technology while "China Li Ning" is more focused on design. Regarding the production cycle, "China Li Ning" is shorter, with product lines updated every two weeks vs "Li Ning" products, which are currently updated every month. The China Li Ning fashion line will be closer to a designer brand, highlighting personalisation with unique design concepts. From these four overseas fashion week experiences and various series of products of "China Li Ning", the current concept of "China Li Ning" is based on Li Ning sports gene, integrating Chinese culture and fashion elements, through practical design language, color, silhouettes, and tailoring techniques. 

• Marketing

From a marketing perspective, Li Ning's publicity activities mainly focus on professional sports activities, including signing NBA stars, CBA stars, table tennis players, the Chinese national diving team, the Chinese shooting team, Chinese table tennis team, Chinese badminton team and sponsoring CBA, CUBA, sudirman cup and other events.

Li Ning's campaign for its fashion line is still focused on overseas fashion weeks and has invited numerous celebrities to attend fashion week events, all of whom have a large number of fans born in the 1990s and 2000s. On social media promotion, the Li Ning fashion line has an independent official weibo account and official WeChat public account -- "Li Ning Sports Fashion". Through the cooperation with popular stars, "Li Ning Sports Fashion" social media attention is gradually increasing.

• Retail

In August 2018, "China Li Ning" flagship store was opened in Shenzhen -- this was "China Li Ning" first time showing the completed series after fashion week. Since then, "China Li Ning" will begin to penetrate the offline store market -- its first store will be in in Zhuhai, and also in other secondary cities. For now, there are more than 60 "China Li Ning" independent shops in China. Most "China Li Ning" fashion stores are located in the high-end business circle of first and second-tier cities, such as Sanlitun and SKP in Beijing. In terms of choosing the location, Li Ning fashion stores are generally located in the leisure trend floor rather than the sports floor, close to Adidas Originals and FILA. In terms of the overall design and experience of the stores, Li Ning fashion stores are focused on “Made in China” fashion style, with the store color, material, lighting and props all different from the traditional Li Ning stores.

• Internationalization

China Li Ning may be able to go further than Li Ning in the  international market and brand internationalization. As early as in 1999, Li Ning put "brand internationalization" on the strategic agenda, but its flagship international store closed at the end of 2012. Further, Li Ning Hong Kong outlets and licensees operating stores in Spain have also closed down. This frustration of Li Ning’s internationalization has meant that the company's business is more focused on the domestic market. 

However, with "China Li Ning" and a new attitude on the international stage, "China Li Ning may be able to become the key to  Li Ning company exploring overseas markets. In March 2019, Li Ning fashion line opened a showroom in New York and Paris, cooperating with more than 30 international fashion design stores or online shopping website, such as US fashion stores KITH, Italy fashion boutiques LN - CC and Canadian fashion store SSENSE.