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LINING fires CEO in development strategy change
Source: Xinhua |
July 5, 2012, Thursday
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CHINESE sportswear group Li Ning Co Ltd today saw its CEO Zhang Zhiyong step down in a major adjustment aimed at regenerating the company's profitability.
"The Board hereby announces that Mr. Zhang Zhiyong has stepped down as the Chief Executive Officer of the Company with effect from 4 July 2012 and has ceased to be a member of the Executive Committee of the Board with effect from the same date," said the company in a statement posted on HKEx website on early this morning.
"The Board and Mr. Zhang agree mutually that it is now the appropriate time for bringing in new leadership for the Group for its next phase of development," said the company, which just inked a two billion yuan contract with China's top flight basketball league for sponsorship.
Zhang's resignation was one of the recent big moves of the company, founded in 1990 by China's gymnastic hero Li Ning, as it is seeking new strategies and development path to solidify its position as top Chinese sportswear supplier.
Less than four weeks ago, the company announced they would pay the CBA two billion yuan in five years in sponsorship after another Chinese sportswear company Anta decided not to renew their contract with the basketball league.
The company, which rejected the league's invitation to link their name with China's professional basketball on just 10 million yuan a year in 2004, then issued a statement to warn a drop of profit this year.
"Based on the trade fair results, the Group's sales revenue for 2012 is anticipated to record a negative growth as compared with that of 2011," it said on June 11. Stockholders reacted immediately at the bad news and LINING's stock price hit a bottom low in six years in the following two days.
Li Ning, however, was confident of his company's future.
"With China's urbanization going on, there still are many domestic needs for sportswear," said the 49-year-old, who is going to involve more in the company affairs following the staff change.
Li's brandname won a global exposure four years ago when he held the Beijing Olympic Games torch to simulate running around the Bird's Nest steel-woven wall before lighting the flame.
The Beijing Games definitely gave the LINING a huge boost and a chance to change its marketing strategies.
A much hyped but not successfully one was targeting its products at youngsters born after 1990 instead of the generations familiar with Li Ning.
Li remains a legend in Chinese sport history with 14 world titles includes three gold, two silver and one bronze from Los Angeles Olympics. He retired in 1988.
"Post 90s LINING has nothing different from, say, Post 90s John. Who will know Li Ning among the teenagers?" questioned financial commentator Liu Ge when he spoke to China News Week magazine.
The company also tried to raise product price in a bid to form a high-end sportswear image to level with international brands like Nike and Addidas but sadly found out that its old customers just didn't buy it.
LINING's overseas market was not that good either.
"LINING did keep consistency. At first, it aimed at becoming the best sports brand in China. Soon after, it turned to challenge Nike on a global level, and then it came back to low price strategy," China Market Research Group general manager Lei Xiaoshan told China News Week.
Now it is time for LINING to seek a new path and it needs to move quickly.
"We plan to carry out reform and adjustments in three years to boost the company's profitability," said the newly appointed executive vice chairman Kim Jin Goon.
"The Board hereby announces that Mr. Zhang Zhiyong has stepped down as the Chief Executive Officer of the Company with effect from 4 July 2012 and has ceased to be a member of the Executive Committee of the Board with effect from the same date," said the company in a statement posted on HKEx website on early this morning.
"The Board and Mr. Zhang agree mutually that it is now the appropriate time for bringing in new leadership for the Group for its next phase of development," said the company, which just inked a two billion yuan contract with China's top flight basketball league for sponsorship.
Zhang's resignation was one of the recent big moves of the company, founded in 1990 by China's gymnastic hero Li Ning, as it is seeking new strategies and development path to solidify its position as top Chinese sportswear supplier.
Less than four weeks ago, the company announced they would pay the CBA two billion yuan in five years in sponsorship after another Chinese sportswear company Anta decided not to renew their contract with the basketball league.
The company, which rejected the league's invitation to link their name with China's professional basketball on just 10 million yuan a year in 2004, then issued a statement to warn a drop of profit this year.
"Based on the trade fair results, the Group's sales revenue for 2012 is anticipated to record a negative growth as compared with that of 2011," it said on June 11. Stockholders reacted immediately at the bad news and LINING's stock price hit a bottom low in six years in the following two days.
Li Ning, however, was confident of his company's future.
"With China's urbanization going on, there still are many domestic needs for sportswear," said the 49-year-old, who is going to involve more in the company affairs following the staff change.
Li's brandname won a global exposure four years ago when he held the Beijing Olympic Games torch to simulate running around the Bird's Nest steel-woven wall before lighting the flame.
The Beijing Games definitely gave the LINING a huge boost and a chance to change its marketing strategies.
A much hyped but not successfully one was targeting its products at youngsters born after 1990 instead of the generations familiar with Li Ning.
Li remains a legend in Chinese sport history with 14 world titles includes three gold, two silver and one bronze from Los Angeles Olympics. He retired in 1988.
"Post 90s LINING has nothing different from, say, Post 90s John. Who will know Li Ning among the teenagers?" questioned financial commentator Liu Ge when he spoke to China News Week magazine.
The company also tried to raise product price in a bid to form a high-end sportswear image to level with international brands like Nike and Addidas but sadly found out that its old customers just didn't buy it.
LINING's overseas market was not that good either.
"LINING did keep consistency. At first, it aimed at becoming the best sports brand in China. Soon after, it turned to challenge Nike on a global level, and then it came back to low price strategy," China Market Research Group general manager Lei Xiaoshan told China News Week.
Now it is time for LINING to seek a new path and it needs to move quickly.
"We plan to carry out reform and adjustments in three years to boost the company's profitability," said the newly appointed executive vice chairman Kim Jin Goon.
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