Don't Know Li-Ning? Ask Shaq

The Beijing sportswear company is giving Nike and Adidas a run for the money on the mainland, and its stock is up close to 300% over the past year

by Dexter Roberts

Not many people outside of China have heard of Li-Ning, but in the country's fast-growing sportswear market, the Beijng company is proving a serious competitor for the likes of giants Nike (NKE) and Adidas (ADSG.DE). While those two behemoths still dominate among Chinese consumers, Li-Ning is in third place, with market share just below the roughly 17% to 18% that Nike and Adidas have. That makes Li-Ning the top Chinese sportswear brand, slightly ahead of domestic rival Anta (2020.BE). The Hong Kong-listed Li-Ning has turned in a strong first half year: Sales are up 39.2%, to $255 million, and net profits surged 52.6%, to $26.4 million. The stock price is up almost 300% over the past year.

While Li-Ning only came in 15th in the BusinessWeek/Interbrand survey (BusinessWeek.com, 10/8/07) when it came to familiarity, it was rated 13th when marketing executives were asked which Chinese brands best serve "as an ambassador for China." (Fujian province-based Anta was not included among the 28 Chinese brands surveyed.)

That put it ahead of car company Chery—rated a top brand that is "already serious and recognizable"—as well as telecom equipment maker ZTE, auto companies Geely and Brilliance, and air conditioner manufacturers Midea and Gree, all rated as "contenders," and expected to become top brands over the next three to five years.

Teaming With NBA Stars

No doubt one reason for that good rating on "ambassadorship" is Li-Ning's successful marketing and branding efforts, mainly focused on sports sponsorship. Li-Ning spends about 17% of revenues on marketing annually, more than most Chinese companies. National Basketball Assn.'s Miami Heat center Shaquille O'Neal is the brand's top star, after having signed a five-year agreement in August, 2006.

While Li-Ning shoes aren't available in the U.S., the company figures that an alliance with Shaq helps to lure the growing number of NBA fans in China who follow the league. Li-Ning also has signed Damon Jones, a guard with the Cleveland Cavaliers. And while the company doesn't have Chinese superstar Yao Ming in its stable, it has signed Yao's Houston Rockets teammate, forward Chuck Hayes. And on Sept. 24, Li-Ning announced it will also sponsor top tennis player Ivan Ljubicic, the Croatian who was ranked No. 3 on the Association of Tennis Professionals tour last year and is now No. 12.

The Olympics figure prominently in Li-Ning's past and future. The Beijing sports company was founded in 1989 by former Olympics gold winner gymnast Li Ning, winner of three gold medals at the Los Angeles Olympics in 1984. Li, 44, continues to serve as chairman as well as head of business development, while 39-year-old Guanghua School of Management MBA holder Zhang Zhiyong now is CEO and runs the company's operations.