When faced with sales declines in a domestic market, what is a company to do but expand globally? Sales by the Chinese sports-apparel manufacturer Li Ning dropped more than 7 percent in the past year, largely because it tried to be too many things to too many customers. Rather than focusing and paring down though, it is going after the U.S. market.
In general, Li Ning wants to move away from the low end by focusing on premium offerings. It sells the same products abroad as it does in China, though to enter the United States and compete with apparel giants such as Adidas and Nike, it has developed some U.S.-specific products, as part of its $10 million market investment. Currently, it earns 2 percent of its $682 million in sales from the United States; Li Ning plans to increase that amount to $50 million in 2011.
In support of its significant monetary investment, Li Ning already has distribution agreements with Champs Sports and Footlocker, as well as endorsement deals with the NBA stars Shaquille O’Neal and Evan Turner.
These resources are probably necessary, considering the scope of Li Ning’s ambition: It aims to improve relations between China and the United States by showing how Chinese companies help consumers and workers in the United States. In the uphill battle to convince Americans that China is not the enemy when it comes to jobs and outsourcing, Li Ning is promoting its efforts to hire U.S. employees to run its warehouses and staff customer service centers.
- Why did Li Ning cause brand confusion among its domestic customers?
- How is Li Ning improving its brand perceptions among customers?
Laurie Burkitt, “Li Ning Makes US Push,” The Wall Street Journal, January 18, 2011.