Li Ning Enters and Retreats: Transformation of Domestic Brands and Internal and Foreign Diplomacy

On June 30, 2010, the sports brand Li Ning released the largest rebranding campaign to the company since its inception in order to solve the problem of aging of the Li Ning brand. For this reason, it even changed the brand that has been used for 20 years and has a strong founder's brand name to express its determination to “make changes happen”.

In the following year, this transformational strategy, which was supposed to be deliberate and step by step, did not win the desired cheers but it caused one after another negative news: First, the channel rebounded and oscillated. Orders were placed for two consecutive quarters. The volume declines; from the performance of the stock market, the share price of this company experienced two sharp declines in the first half of the year. First, due to the decline in distributors’ orders in the second quarter of 2011, the market value of Li Ning shrank by 23%, and the market value evaporated. Nearly 4.5 billion Hong Kong dollars; after the end of May 2011, the announcement of the departure of the three executives triggered the stock price fell 8%.

During the entire year from June 30 last year, the performance shock and internal management problems of Li Ning China Sporting Goods Co., Ltd. have been an interesting commercial image, reflecting that Chinese domestic brands entered the first real sense. The internal and external issues that may be faced during the corporate transformation period: How does the internal growth engine build after the market's natural growth slows down? How does a family company transform into a corporate culture after the founder fades out of day-to-day management? ?

The management problems that were masked by high-speed development have been highlighted after the performance shocks. The psychological balance of insiders has been broken. Suspicion, impetuosity and unfairness are permeated internally. How does questioned management reverse the adverse situation?

Although it has been developing for more than 20 years, brand building has yet to remain in its infancy. Before remaking the brand, the most well-known Chinese “brand company” has not done a systematic and rigorous brand positioning and internalized it into organizational capabilities. Under the background of market decentralization and global consumer polarization, will Li Ning be able to solve the problem of market status through a four-year rebranding campaign?

With these issues, Chinese companies will no longer be able to avoid the following: First, China will usher in corporate succession issues within the next decade. After the founder fades out of daily operations and management, can the company keep its foundation evergreen? Second, from price competition to value competition, whether the company's brand and business model can stand the test? Finally, we must mention Li Ning's transformation case It also has individual specificity—the influence of the personality characteristics of the founder on the organizational culture.

Li Ning is one of the earliest companies in China to try to de-family and dilute the colors of the founders. Around 2000, Li Ning decided to go family-building and create a modern corporate governance system. Since then, Li Ning, the founder, has been almost “hidden” on the board of directors.

As a founder, Li Ning's personal values ​​were partially transplanted into Li Ning's core values: winning dreams, breaking through, and pursuing performance. His generous qualities made him attach great importance to whether the company created a good humane environment for its employees. Most of Li Ning’s employees expressed their knowledge of the company’s core philosophy, but at the same time stated that many times, things would be at a loss as to what to do, such as what is the company’s core brand policy and what is the criteria for employing people. For the company’s current CEO, an overly relaxed environment can lead to the lack of wolfiness needed for the organization’s change.

Jim Collins and Jerry Poles have mentioned in the book “Evergreen” that companies that are far-sighted can formulate individual core concepts into institutions and integrate them into the organizational structure. These factors are not just universal ideals. Or culture exists. Forward-looking companies also have practical and concrete mechanisms to preserve their core concepts and stimulate progress.

In Li Ning's process of diluting the founders' color, it failed to translate the core ideas into concrete and concrete organizational systems and mechanisms that could stimulate progress. After the company enters the period of change, the problem of organizational culture will amplify the shake-up wavelength brought about by changes. It is necessary to adjust the core concepts or strengthen the transformation and improvement of the system. This is a problem that Li Ning can't avoid in the transition.