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China's Li-Ning plans US inroads
January-24-2011

Chinese athletic shoe maker Li-Ning knew it couldn't "out-Nike" Nike, especially in the sporting giant's own backyard. So the company is going low-budget edgy in its expansion to the United States, using a YouTube video to play up its heritage while taking a lighthearted dig at the company name shared with its high-profile founder.

Li-Ning is among the first Chinese product brands trying to build a following in the US, seeking to grab a slice of its highly coveted market.

China has yet to produce a brand with the global name recognition of the likes of Apple, Sony or Google.

"It's a process of finding out - while staying true to our heritage, our brand - what side of our DNA is going to resonate with the American consumer," said Jay Li, general manager for Li-Ning International. "We're still searching, to be perfectly honest with you. And we're not in a hurry."

Americans might remember Li Ning as the final torchbearer during the opening ceremony of the 2008 Beijing Olympics - the former gymnastics gold medalist who "ran" along the opening in the stadium roof while suspended by wires.

His namesake company is a top domestic brand in China's athletic shoe and apparel industry, with more than 7,900 stores across the country.

Though it has forecast slumping sales and a one percentage point decline in gross profit margin in 2011, CEO Zhang Zhiyong recently told the Wall Street Journal that Li-Ning plans to invest US$10 million in US operations this year.

"Mr Li Ning has always said his vision was never about building China's Nike, it's about building the world's Li-Ning," Li said.

Li-Ning's logo underwent a redesign, but many may still see a resemblance with the Nike "swoosh."

Li would not provide sales figures for the US, where Li-Ning products are sold online and through a few retailers, but said international operations made up only two percent of the company's total revenue.

Expansion into the US is "important for them because if they show they have retail presence in the US, it helps them not only sell there but it helps them sell in their home market in China and wherever else they go," said Ben Cavender, associate principal at Shanghai-based China Market Research Group which has studied Li-Ning.

The US expansion began in 2007 with the opening of a research and development center and design studio in the Portland, Oregon, area, heart of the US athletic shoe industry where Nike is headquartered and Adidas has a regional office.

Li-Ning's US staff includes about 30 people, veterans of companies like Nike, Adidas, Converse and Columbia. In comparison, more than 6,000 work at Nike's headquarters just outside town.

Products sold in the US include equipment and apparel for Asia-dominated sports like table tennis and badminton, niche areas where Li-Ning is an established leader. Its running shoes have debuted in specialty shops, with the aim of attracting runners who are concerned more about performance than name.

But it's with street culture-influenced basketball shoes that Li-Ning may be able to score its breakthrough. Endorsement deals with NBA players like Shaquille O'Neal, Baron Davis and Evan Turner have so far been key to building awareness among image-conscious consumers.

 
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