Li Ning lifts its game with higher earnings

PUBLISHED : Friday, 27 August, 2010, 12:00am
UPDATED : Friday, 27 August, 2010, 12:00am

Li Ning's plan to transform itself into a high-end professional sports brand appeared to be working as earnings increased in the first half, but it faces intense competition from both domestic and international products.

The company is fighting an uphill battle against international brands as Nike and Adidas, and chief executive Zhang Zhiyong knows it.

'Our apparel market share is very close to Nike's, but our shoes fall greatly behind them,' Zhang said.

In the first half, revenue grew 11.2 per cent to more than 4.5 billion yuan (HK$5.15 billion) compared with the same period last year. Gross profit rose 11.5 per cent to 2.16 billion yuan. The company decided to pay an interim dividend of 22.15 fen per share.

Sales performance remained steady after the company changed its logo in July as an attempt to distinguish itself from Nike's famous 'Swoosh', Zhang said.

For now, the company has managed to establish a leading position in badminton products, and it hopes to create a niche in diving and gymnastic products.

While Li Ning is trying to catch up with international brands in first-tier cities such as Beijing and Shanghai, it faces growing competition among second- and third-tier cities.

Sports brands such as Nike are eyeing the market and planning to lower prices, while other domestic brands have been quick to expand.

Peak, another Chinese sports brand, said that turnover jumped by 33.3 per cent to about 1.81 billion yuan in the first half compared to same time last year.

Zhang said that targeting the low-end market in second- and third-tier cities would be a mistake.

'Soon people in second and third tier cities will want high-end products as well,' Zhang said. 'We can't make the same mistake we made in first-tier cities.'