Growth in the Chinese sports market is slowing
21/01/2011
It offered a new wholesale strategy, leading to lower prices for the manufacturer on many goods, and rising production costs as the main reasons.
Financial analysts in Hong Kong said they though this gloomy news at the start of the year was a reflection of the challenges Li Ning is facing in trying to earn international recognition for itself.
Li Ning spokesperson Zhang Xiaoyan said the sporting goods industry in China is maturing and that his company will invest more in branding. Figures from Li Ning suggest growth in the Chinese sportswear market in 2008 was 30% compared to the year before, while growth in 2010 was 15%, making it difficult for sports brands to keep impressing financial analysts with huge growth figures year after year.
The company started a rebranding exercise in 2010, saying it wanted to appeal more to young people at home and in the international marketplace. Analysts at Goldman Sachs have suggested this could be a mistake, saying that Li Ning could find itself “stuck in the middle” between huge global sports brands and smaller players focused on the domestic market in China.
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