Don't Know Li-Ning? Ask Shaq

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Riding the Wave of the Beijing Olympics

Investors include CDH China Holdings, a Beijing-based private-equity firm, and GIC Special Investments, the Singaporean government fund. Li-Ning now is counting on next year's 2008 Beijing Olympics to drive its branding efforts (BusinessWeek.com, 3/14/05). The company is sponsoring the medal-winning Chinese table tennis, diving, gymnastics, and shooting teams. And on June 7, 2007, Li-Ning and the Spanish government announced the company would be the official sportswear provider for the Spanish Olympic delegation at next year's games.

The year-long run up to the world's biggest sporting event clearly is key for Li-Ning. The company plans to add 700 new retail outlets in 2007 to its existing 4,300, and by the opening of the Olympics next August Li-Ning will have 5,600 outlets spread across the mainland. Those include directly-managed shops, concession counters, and franchised outlets. And in April it rolled out a new, lower-end sports brand, Z-do, including shoes, apparel, and sports accessories that retail from around $13 to $40, or about half the cost of its flagship Li-Ning products. Rounding out its brand offerings are products for its joint venture with French outdoor sports brand Aigle that the two companies launched in 2005.

While the Interbrand survey showed more international executives view Chinese brands as "cheap" and "a good value" than any other qualities, "youthful," "dynamic," and "smart" were the next three adjectives cited, all arguably well-suited for a sporting goods company. Indeed, the survey also showed that sporting goods, along with electronics, mobile phones, and automotive, was one of 10 categories where overseas marketing executives predict within five years "a Chinese brand will be a leader outside of China."

Credit Suisse Group (CSGN) analyst Catherine Lim cites in an Aug. 20 research report Li-Ning's "current portfolio of three brands, strong product development and research capabilities, and continued enforcement of control over its franchisee distribution channel and supply chain management," in giving China's sports player an "outperform" rating. Expect to hear a lot more from the nation's scrappy domestic sports brand in the coming year before the world's biggest sporting event opens in Beijing.

Roberts is BusinessWeek's Asia News Editor and China bureau chief.