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Li Ning is latest sport brand to hike prices
By Feng Jianmin |
July 13, 2011, Wednesday
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Print Edition
Print Edition
LI NING Co has become the latest Chinese sportswear producer to announce price hikes as higher production costs start to eat into their profit margins.
From the fourth quarter Li Ning shoes will be 7.8 percent more expensive while its branded clothes will be 17.9 percent dearer, according to a company statement.
The price increases will only affect new products launched in the fourth quarter, said Zhang Xiaoyan, a Li Ning spokesman.
"The increase is due to rising costs of materials, labor, and especially rent," said Zhang. "Besides, there is a trend of rising market prices."
Other major domestic sportswear producers including Anta, Peak and 361 have also, during trade fairs held over the past two months, announced plans to raise prices by between 10 percent to 20 percent.
Prices of foreign sports products such as Nike and Adidas remain unchanged.
Analysts said price increases are inevitable, but added these companies may lose customers to smaller brands and international players.
"Companies are facing rising costs on the one hand and pressure from foreign brands on the other," said GF Securities analyst Ma Tao. "The price gap between domestic and foreign brands are narrowing as foreign brands are trying to appeal to a larger audience especially in smaller cities."
A UBS report said, compared with other domestic brands, Li Ning is facing larger pressure from foreign brands as its focus is on the higher end of the market.
Li Ning Co said it expected revenue for the first half of 2011 to fall with 5 percent.
From the fourth quarter Li Ning shoes will be 7.8 percent more expensive while its branded clothes will be 17.9 percent dearer, according to a company statement.
The price increases will only affect new products launched in the fourth quarter, said Zhang Xiaoyan, a Li Ning spokesman.
"The increase is due to rising costs of materials, labor, and especially rent," said Zhang. "Besides, there is a trend of rising market prices."
Other major domestic sportswear producers including Anta, Peak and 361 have also, during trade fairs held over the past two months, announced plans to raise prices by between 10 percent to 20 percent.
Prices of foreign sports products such as Nike and Adidas remain unchanged.
Analysts said price increases are inevitable, but added these companies may lose customers to smaller brands and international players.
"Companies are facing rising costs on the one hand and pressure from foreign brands on the other," said GF Securities analyst Ma Tao. "The price gap between domestic and foreign brands are narrowing as foreign brands are trying to appeal to a larger audience especially in smaller cities."
A UBS report said, compared with other domestic brands, Li Ning is facing larger pressure from foreign brands as its focus is on the higher end of the market.
Li Ning Co said it expected revenue for the first half of 2011 to fall with 5 percent.
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