How sports-brand Li-Ning took China’s fashion to the world stage by embracing Chinese culture & cotton
The Chinese sports apparel brand Li-Ning has even furthered its status as a national brand. After Nike, H&M and other foreign apparel companies announced their positions on Xinjiang cotton, Chinese consumers found that Li Ning’s products had been branded with the words “Xinjiang cotton is used in our products”. The discovery sent Li Ning’s share price up 10.64% on March 26 and it has continued to rise. By April 14, the stock had reached nearly 59 yuan per share, up 28% from about 46 yuan before the surge.
Source: Zhihu.com, Li-Ning has printed on its logo the use of Xinjiang cotton
The ups and downs of Li-Ning
Established in 1990 by China’s “prince of gymnastics” Li Ning, Li-Ning has come a long way from a local Chinese sportswear brand to the face of China’s fashion on the stage of New York Fashion Week runway show. As a local Chinese sportswear brand with thirty years of history and face of an Olympic champion, Li-Ning achieved great success and reached its peak in China’s sportswear market around 2010.
However, facing the competitions from global retail giants such as Nike and Adidas in China’s sportswear market and failure to appeal to young consumers, Li-Ning experienced a major fiasco in 2012 following three years of losses. In 2018, Li-Ning managed to engineer a turnaround from 3 billion of losses to today’s “light of Chinese goods” (国货之光) by reconnecting the brand to its Chinese roots.
The Covid-19 pandemic has hit the retail sector of the world economy hard, which caused exits of many retailers, while Li-Ning’s net profit in the first half of 2020 still increased by 12.7%. As the coronavirus gets contained in China and economy gradually recovers, Li-Ning could expect to see a rapid growth in the next half of the year.
How Li-Ning renewed its brand image
Since its peak in 2010, Li-Ning found it quite difficult to remain relevant in China’s sportswear market and often considered old-fashioned. Targeting the post-90s generation consumers, Li-Ning’s management team decided to reposition the brand as fashionable and international but came off as quite the opposite. Li-Ning not only failed to attract young people but also lost its existing consumers from the older generations due to its awkward transition. After several years of struggling, Li-Ning’s founder and former CEO Li Ning took over the company, hoping to boost sales again.
Source: Nipic, Li-Ning embraces traditional Chinese culture
Giving up on having an international appeal and revisiting its pride and confidence in “Made in China,” Li Ning and his team decided to renew its brand image by incorporating more Chinese elements in its design. At the New York Fashion Week on February 2018 and Paris Fashion Week runway show on July 2018, Li-Ning impressed China and the world with its brand-new “中国李宁” (China Li-Ning) logo print and fashion sense. According to Baidu index search frequency data, the search volume for Li-Ning peaked around February 2018. Blending traditional Chinese characters and modern fashion styles into its design, Li-Ning’s comeback show built just enough hype for the reborn of the brand and lead China’s sportswear market into a fashion revolution.
However, this small bump in searches was shadowed by the searches after the Xinjiang cotton controversy.
Data Source: Baidu Index, Search Index for Li-Ning from 2017.07 to 2021.04
Li-Ning’s marketing camapaigns brought the brand back to life
After the success of its huge comeback, Li-Ning has conducted a series of marketing campaigns collaborating with big IPs, brands, and variety shows. In 2019, Li-Ning cooperated with the media department of People’s Daily（人民日报）, one of the oldest Chinese newspaper publishers, and launched a series of co-branding products with retro designs including T-shirts, caps, shoulder bags, etc. Outside the media department of People’s Daily, Chinese young consumers were standing in long queues to purchase Li-Ning’s new products. By reconnecting the brand with Chinese culture, Li-Ning reshaped its relationship with Chinese consumers as well. Today, Li-Ning is no longer considered an outdated Chinese sportswear brand, but a trendy brand young people are proud to wear.
Li-Ning’s digital transformation: from brick-and-mortar to omni-channel
As the concept of New Retail becomes popularized, traditional retailers seek digital transformation to establish a strong online presence. Around 2015, Li-Ning cooperated with Alibaba and built its own “Data Middle Platform” （数据中台）to construct omni-channel data system, which helped Li-Ning dredge the chokepoints of its supply chain and largely accelerated Li-Ning’s digital transformation.
Shifting focus from the number of physical stores to operation efficiency, Li-Ning has shut down over 500 physical stores as of the end of June 2020. According to Li-Ning’s annual financial report of 2020, e-commerce has risen to be the second-biggest channel, secondary to concessionaires, which contributed 29% of the total revenue, up 5% from 24% in 2019. Meanwhile, sales contributed by the retail channel fell from 27% to 23%.
What brands can learn from Li-Ning’s turnaround
There is a fine line between losing brand consistency and rejuvenating the brand when renewing brand image. Li-Ning is a local Chinese sportswear brand with 30 years of history, while it was stuck for several years for positioning the brand as more international rather than local, which in a way contradicted Li-Ning’s original brand image. By looking for fashion inspirations from Chinese culture, Li-Ning found its way to win Chinese consumers back.
For foreign brands, it important to understand the Chinese market and find a balance point where the extent of brand localization is just enough so as to cater to local consumer habits and still maintain its international appeal when entering and rebranding in the Chinese market.