Li Ning is facing "internal and external problems" and he can only say goodbye to Zhang Zhiyong

Before stopping the one billion threshold, Li Ning chose to let Chen Yihong leave. This time, Li Ning has been entrenched at the entrance to the 10 billion mark for a long time and his performance has fallen into a quagmire. On July 5, Li Ning finally made a decision - the current CEO Zhang Zhiyong retired.

Different from Chen Yihong's departure, this time Li Ning, the leading brand of sportswear, faced even greater crisis. An industry insider who followed Li Ning commented: “Internal and external troubles are now the worst time for Li Ning.”

In the second half of 2010, Li Ning’s financial data began to decline continuously. In the 2011 financial report announced in April this year, Li Ning’s net profit dropped by 65.2% year-on-year, and its net profit was only 386 million yuan, ranking last in the top five sports brands. one.

When Chen Yihong left, he recommended Zhang Zhiyong to Li Ning. Today, Zhang Zhiyong hurriedly left without looking for the next successor. Li Ning’s head of media told reporters that Li Ning, who had been through 60 years of age, will return to Li Ning, and will be responsible for the position of Li Ning’s CEO together with Jin Zhenjun, a former partner of strategic investor TPG.

Li Ning crisis

From the second half of last year, all contradictions began to point to Zhang Zhiyong.

Li Ning's share price shrank more than 60% in the past year. It was farther away from the 10 billion mark that it had hoped to break through. The financial report shows that Li Ning realized operating income of 8.929 billion yuan last year, a decrease of nearly 500 million yuan over the previous year; Without effective control, the total distribution costs and administrative expenses increased by 3% from the previous year to RMB 3.223 billion.

At the same time as the performance declines, various issues within Li Ning's company have been continuously exposed. Channel control is weak, product positioning is not clear, management vulnerabilities are frequent, high-level exchanges, company layoffs ... In the performance decline, the voice of a variety of queries emerged.

The pressure that was actually imposed on Li Ning was a greater part of the competition. The first is the rank of the domestic sporting goods boss after being overtaken by Nike, but also behind Adidas; although through the 2008 Olympic Games to regain an inning, but in the industry development into a bottleneck, Nike and Adidas did not face the domestic sporting goods brand distressed. Relying on a strong brand to stabilize the first and second-tier cities, these two international brands still have the ability to sink into the third and fourth tier cities.

At the same time, sports brands from Jinjiang fought against Li Ning. An Anta internal executive told reporters, "Our greater advantage comes from the improvement of the industrial chain. We can not only control costs well, make products more cost-effective, but also have stronger control over channels." Under Li Ning's operating income, which was still the largest of the local sports brands last year, net profit was less than half that of Peak, and Anta, which had the highest net profit, was 4.48 times that of Li Ning.

Under such "internal and external problems," companies listed in Hong Kong must face enormous pressure from the board of directors and investors - whether from the voice of the media or the doubts of the market, the spearheads are pointing to the cusp Zhang Zhiyong.

Prior to this, Li Ning has experienced a long period of decline in performance. Zheng Meng, a manager of consulting management, pointed out that “Li Ning has implemented a series of measures such as senior staff adjustments, brand tactics adjustment, and the introduction of external capital, but the performance has recovered. Unable to meet market expectations, it is not surprising to replace the CEO."

At the beginning of this year, TPG's management team who had once supported Daphne's management reform and achieved good results entered Li Ning. TPG's accession was also considered to be a cause of Zhang Zhiyong's departure.

Obviously, Zhang Zhiyong seems to have already expected this departure. Zhang Zhiyong once reluctantly expressed in an interview with the media. "If the company's development does not match my ability, I will leave. Today I stay or go. This is not my decision. It is the decision of the board of directors."

At the New Year's Annual Conference of Li Ning Company in 2012, Zhang Zhiyong began to review the internal problems of the company in an unconventional manner. A middle-level Li Ninggang resigned revealed to reporters that at this annual meeting, Zhang Zhiyong admitted that the company’s problems have not been found. Good solution. "The atmosphere of the convention is more pessimistic, and I also know that after the company will change in personnel."

Stop 9 billion

In Zhang Zhiyong’s memorabilia, there were several major events of great concern in 2010. Firstly, Li Ning changed the mark, and at the same time positioned the consumer group as “post-90s” young people; second, successfully entered the badminton program; third, increased the influence in the large and first-tier cities; and fourth, the store expansion exceeded the expected target and reached the current goal. More than 7,000; Fifth, Lotto started its business smoothly.

If the industry is still accelerating, Zhang Zhiyong's actions should be very positive or at least negative. Then, very unfortunately, Li Ning, the leading company in the industry, first felt the slowdown of the industry.

With the overall industry weak, all problems have been magnified.

Rebranding is seen as a strategic layout that Li Ning failed most. "In this tender change, Li Ning not only abandoned the original consumer group, but did not grasp the 'post-90' heart." Li Ning in the process of changing the mark, the product's pricing to the European and American camp Nike and Adidas is on the same page, and then the lack of brand power has made the product not favored by the market.

In addition, entering badminton is considered to be a mistake in judgment. The niche-type badminton as the core of Li Ning cannot support Li Ning's consumers. Moreover, this decision caused Li Ning to lose some of its "territory."

The Anta executives mentioned to the reporter that Li Ning lost the contract for the Chinese Olympic Team’s award service on the one hand, and the role of NBA China’s strategic partner was seized by Peak. "In the industry, these partners all represent potential market shares. What we value in the industry is these pieces."

Independent commentator Ma Gang also pointed out to reporters: “Li Ning's horizontal development is too rapid, the effect is very bad, and it has greatly depleted resources.” Li Ning's multi-brand strategy has no sign of success. As of now, except for Double Happiness is a meager profit. In addition, the lotto business is in the stage of consecutive years of losses.

The reasons for these problems ultimately point to the decision maker Zhang Zhiyong: “Zhang Zhiyong is a huge weakness in brand marketing and channel control.”

Enlargement problem

Zhang Zhiyong’s departure did not surprise many employees of Li Ning. The above-mentioned front of Li Ning revealed to reporters, “There are too many internal changes in the company within the past two years, and there are many voices that question Zhang.”

Zhang Zhiyong has entered Li Ning since 1992. From a financial background, he once served as Li Ning's financial director and was responsible for Li Ning's long-term market-leading ERP system. When he was selected as the CEO in 2001, a former Li Ning executive pointed out that “Li Ning chose Zhang Zhiyong partly because he could identify with Li Ning's culture and at the same time pass on Li Ning's culture.”

Have to admit that Zhang Zhiyong's grasp of the market is extremely in place, after he was promoted to CEO in 2001, Li Ning was once helped to enter the threshold of one billion. Li Ning went public in Hong Kong in 2004 and Zhang Zhiyong was still selected as the CEO of a listed company.

Although Li Ning employees believe that a large part of Zhang Zhiyong’s achievements come from the rapid growth of the sporting goods industry, he cannot erase Zhang Zhiyong’s affirmation. "Li Ning's problems are somewhat over-exaggerated." An old employee who left Li Ning for 10 years told reporters.

The key CEO Zhang Qing pointed out: "The reason why these problems show a very serious consequence is that the sports industry has slowed down. However, it cannot be denied that Zhang Zhiyong's achievements are due to this."

The aforementioned Li Ning middle level pointed out to reporters that during Zhang Zhiyong’s tenure, Li Ning’s R&D center continued to receive resources from high-level sources, and he also controlled five gold medal teams in marketing, and the internationalization process also made some progress.

“The problem of corporate governance is mainly focused on conflicts between many airborne executives and Li Ning’s traditional culture.” Zhang Qing pointed out that “the most important issue Li Ning is now is how to inherit the inherent corporate culture of Li Ning.”

Li Ning still needs a leader who can instill a grand vision for the company and can effectively communicate with the company internally and externally. In addition, it is also important to have the courage and strength to promote major strategic changes. According to Zhu Meng, a manager of management consulting and management.