Li Ning'S 28 Year Road To Prosperity And Decline: From Rising To Losing, And Finally Brand Rebuilding

1.1 Introduction to Li Ning: strong domestic sports brand, diversified brand portfolio

Li Ning, the famous Chinese Olympic champion "Prince of Gymnastics", was founded in 1989 after retirement "Li Ning" sports brand of the same name In 1990, Li Ning founded Li Ning Co., Ltd. in Sanshui, Guangdong, and was listed in Hong Kong in 2004. After listing, Li Ning has always been the first domestic sports brand in China, and was surpassed by Anta in 2011, ranking second.

Although the transformation from 2011 to 2014 caused a sharp decline in Li Ning's net profit, since 2015, Li Ning After 28 years of ups and downs, Li Ning, the pioneer of China's famous domestic sports brands, is still in the forefront of China's sports brands.

As one of the leading sports brands in China, Li Ning integrates marketing, research and development, design, manufacturing, distribution and retail. Its products mainly include sports and leisure footwear , clothing, equipment and accessories. The company mainly adopts the outsourcing production and franchised distributor model. As of 2017, Li Ning's sales network has reached 6262, covering 31 provinces and autonomous regions in China.

Li Ning adopts a multi brand strategy. The brand portfolio includes the main brand of Li Ning, which is independently developed and designed, and the franchised or third-party joint venture brands, covering professional sports, sports leisure, sports fashion, outdoor sports, children's clothing and other fields, including Li Ning's main brand, Aigao, Red Shuangxi, Letu, Kaisheng and Danskin.

　 Focusing on the domestic middle and low-end market, positioning the second and third tier cities:

Revenue from Hong Kong and Mainland China is the main source of Li Ning Group's revenue: Li Ning's total revenue in 2017 was 8.874 billion yuan The revenue of the mainland is 8.634 billion yuan, accounting for 97.3% of the total revenue,

Li Ning's positioning in second and third tier cities: Li Ning's channels are mainly distributed in second and third tier cities, and the number of outlets in second and third tier cities accounts for 61% of the total network points.

　 1.2 Growth driving force: Li Ning's main brand and five categories drive Li Ning's revenue growth

The revenue growth of Li Ning's main brand is the main driving force for the group's revenue growth: in 2017, Li Ning's total revenue increased by 11% year on year, and since its listing in 2004 The compound growth rate is 13%; The net profit in 2017 was 515 million yuan, with a compound annual growth rate of 11% since 2004. Main brand of Li Ning In 2017, the revenue was 8.819 billion yuan, up 11% year on year, and the revenue of other brands was 55 million yuan, up - 39% year on year.

Five categories drive Li Ning's income growth: running, training, basketball Sports fashion And badminton are the five major categories of Li Ning brand, driving the growth of Li Ning retail.

　 2.1 Consumption environment: the national consumption capacity has increased year by year, and the growth rate of textile and clothing retail sales has slowed down

The national disposable income and consumer expenditure have increased year by year: China's water consumption level has increased year by year from 2002 to 2017. The growth rate of per capita disposable income in 2002 and 2007 was higher, 13.4% and 12.2% respectively. The actual year-on-year growth rate of consumer expenditure in 2009 was the highest 10.1%, and after 2009, the overall trend was downward.

The growth rate of retail sales of clothing, shoes and hats, needles, and textiles recovered: From 2000 to 2007, the growth rate of retail sales of clothing, shoes and hats, needles, and textiles showed an upward trend, and the growth rate was relatively fast. In 2007, the retail sales of clothing, shoes and hats, needles, and textiles reached a historical peak of 25.5%. After a decline from 2008 to 2009, it rose to 24.8% in 2010. From 2010 to 2016, the growth rate slowed down as a whole. In 2017, it bottomed out, and the year-on-year growth rate was 7.8%.

2.2 Industry pattern: sports shoes and clothing industry has a large market scale and high concentration

The market size of China's sports shoes and clothing industry has gradually increased: from 2012 to 2017, the market size of China's sports shoes and clothing industry has gradually increased, with an annual compound growth rate of 8.79%. In 2017, the size of China's sports shoes and clothing market was 212.148 billion yuan, up 12.5% year on year.

The growth rate of sports shoes and clothing sector is in the forefront of all sub sectors of China's clothing industry: the growth rate of sports shoes and clothing market size has remained stable since 2014, and is in the forefront of all sub sectors of China's clothing industry.

The concentration of China's sportswear industry is rising: the concentration of China's sportswear market is increasing year by year. By 2017, CR5 and CR10 were 53.9% and 68.95% respectively.

2.3 Competition pattern: differentiation of sports shoes and clothing brands in the Chinese market

Differentiation of brand performance: the market share of Anta, Li Ning, 361Du and Tebu declined in 2012. From 2013 to 2017, the market share of Anta increased in the range of 7.0% to 8.0%, while that of Li Ning, 361Du and Tebu remained in the range of 4.0% to 5.5%. In 2017, the market share of Adidas and Nike was 19.8% and 16.8% respectively, while that of Anta and Li Ning, the second and third place, was 8.0% and 5.3% respectively.

3 Four stages of Li Ning's development

Li Ning's development can be divided into four stages:

From 1990 to 2003, Li Ning started its development. In 1990, Li Ning Company was founded. By 2003, Li Ning's revenue and net profit attributable to the parent company were 1.276 billion yuan and 94 million yuan respectively.

In 2004, Li Ning was listed. From 2004 to 2010, Li Ning's revenue and net profit attributable to the parent company grew steadily. The compound annual growth rates of revenue and net profit attributable to the parent company were 31% and 42%. In 2010, Li Ning's operating revenue and net profit attributable to the parent company reached the peak, respectively, of 9.485 billion yuan and 1.108 billion yuan.

From 2011 to 2014, the company was in a transition period, and its revenue and net profit attributable to the parent continued to decline. From 2012 to 2014, the company suffered losses for three consecutive years, with a total loss of 3 billion yuan.

Since 2015, the Company's operating revenue and net profit attributable to the parent company have gradually recovered, with the compound annual growth rate of 12% and 507% respectively.

4.1 The secret of prosperity: four factors shaped Li Ning's rise

High speed development of the clothing industry: China's retail sales of consumer goods and clothing, shoes, hats and knitwear increased rapidly. From 1990 to 2003, the year-on-year growth rate of total retail sales of consumer goods increased from 2.5% to 9.1%, reaching a peak of 30.5% in 1994. In 2003, the retail sales of clothing, shoes, hats and knitwear grew by 13.8% year on year.

China returned to the Olympic Games, and the sports industry turned from a planned economy to a market economy. In 1979, the membership of the Chinese Olympic Committee was restored, and the country put forward a sports development strategy with the Olympic Games as the core. In 1993, the State Sports Commission issued the Opinions on Deepening Sports Reform. Since then, China's sports industry has shifted from a planned economy to a market economy. China's sports industry has gradually moved towards professionalism, industrialization, commercialization and marketization, and the demand for sports shoes and clothing has increased.

Li Ning took the lead in seizing emerging markets and is a pioneer of China's own sports brands: Jinjiang, Fujian Province, China is also known as the "Shoes City", where hundreds of sports enterprises, including Anta, Tebu, 361Du, Jordan, Peak, Hongxingerke, Delhui, and so on, were born. These enterprises are collectively called "Jinjiang Series". In the early days, the "Jinjiang system" focused on the production of sports shoes by the OEM of multinational companies. It was not until the 1990s that a number of shoe factories were established or began to develop their own brands because of the influence of Li Ning brand's successive sponsorship of the Olympic Games across the country.

Take Anta as an example. Anta was founded in 1991, but from 1991 to 1999, it has been taking overseas OEM as the main development direction. It was not until 1999 when Kong Linghui signed the contract as the image spokesperson to start brand marketing that it officially turned to the brand wholesale stage, and Jinjiang sports goods industry also entered the brand era.

However, Li Ning began to print the word "Li Ning" on clothes after it launched its first brand in 1989. Since its establishment in 1990, Li Ning has been taking the "Li Ning" brand as the main development force. Whether it was founded or launched, Li Ning has been ahead of several major sports brands in China, and is a worthy pioneer of domestic sports brands.

Relying on event sponsorship to become a national sports brand: Li Ning has been active in domestic and international sports competitions since 1990. In 1992, Li Ning became the first domestic sports goods brand to appear in the Olympic Games. Since then, Li Ning has become the pioneer of Chinese sports brands. Then Li Ning won the sponsorship of the 1996, 2000 and 2004 Olympic Games, among which the "Dragon Clothes" and "Butterfly Shoes" at the 2000 Sydney Olympic Games were also rated as the "Best Award Equipment". All kinds of event sponsorship at home and abroad have improved the reputation and professional image of Li Ning at home and abroad, making Li Ning a well-known brand of domestic sports shoes and clothing.

Sponsorship of domestic and foreign professional events: Li Ning has sponsored a large number of domestic and foreign events and teams, including basketball, football, tennis, track and field, tennis, badminton, pole vault, javelin, etc., covering Asia, South America, Europe, and Africa. The cooperation with NBA and the signing of NBA stars have further improved Li Ning's position in international basketball competitions.

Take charge of China's gold medal dream team: Until 2009, Li Ning had signed a contract with five Chinese gold medal dream teams - the Chinese table tennis team, the Chinese gymnastics team, the Chinese diving team, the Chinese shooting team and the Chinese badminton team.

The percentage of marketing expenditure in revenue of Li Ning brand is higher than that of domestic brands: before 2017, the percentage of marketing expenditure in revenue of Li Ning brand was higher than that of competitive brands, and reached a peak of 24.2% in 2013.

Expansion and listing trend of domestic sports companies: in 2001, Beijing won the bid for the Olympic Games. In 2004, Li Ning took the lead in listing in Hong Kong, and then Hongxingerke, Anta Tebu, 361du, and Xidelong have been listed in succession. The expansion of domestic sports brands accelerated. In 2008, the domestic sports shoes and clothing market grew by 43.98%, The revenue of Li Ning, Anta, Tebu and 361degree increased by 53.8%, 45.3%, 110.1% and 253.1% year on year respectively. The success of the Beijing Olympic Games Sports brands are optimistic about the future, and all brands accelerate their expansion and opening stores.

Li Ning is still the first domestic sports brand, catching up with and surpassing Adidas again: in the case of accelerating the expansion of the whole industry and foreign brands invading the market, Li Ning It is still ahead of domestic sports brands. In 2010, Li Ning ranked second with Adidas, which accounted for 9.7% of the market and more than 9.5%, lower than Nike, which accounted for 13.8% 4.1%, and the market share of Anta, Tebu and 361 degrees is 8.2%, 5.8% and 6.0% respectively.

The expansion of distribution channels and the growth of the same store jointly drive the growth of Li Ning's revenue: from 2004 to 2010, Li Ning's channel expansion was mainly through the increase of distribution channels, and the number of distribution channels increased from 2272 to 7333, with a compound annual growth rate of 21.6%; The same store income of the distribution channel is much higher than that of the direct channel. The rapid income brought by the expansion of the distribution channel has intensified Li Ning's distribution channel expansion strategy. In 2008, the growth rate of the same store income of the distribution channel and the direct channel reached the peak of 53.1% and 48.4% respectively.

From 2004 to 2010, although the inventory turnover days of Li Ning decreased, the turnover days of accounts receivable increased, and the sales ability of dealers did not increase synchronously with the expansion of distribution channels, which brought hidden dangers to Li Ning's later development.

　 4.2 The lesson of failure: three factors led to Li Ning's continuous losses, which were exceeded by Anta

The growth rate of the industry scale declined: after the Olympic fever in 2008, the growth rate of the sports shoes and clothing industry has declined since 2011, and the industry scale decreased in 2013.

Anta's market share exceeded that of Li Ning, and the market share of foreign sports brands exceeded that of domestic brands. In 2011, Li Ning's market share was exceeded by Anta and has since ranked second. At the same time, the market share of foreign sports brands has been far ahead of that of domestic brands since 2011.

Li Ning has overstocked inventory and contracted channels: from 2011 to 2014, the distribution channels of Li Ning stores had overstocked inventory, leading to a higher proportion of out of season goods. Dealers could only increase discounts, leading to a decline in performance and profitability. The number of distribution channels decreased from 8255 to 5626. At the same time, frequent discounts have pulled Li Ning into the low-end brand position, affecting the brand image. Reasons for the large inventory backlog of Li Ning and other domestic sports brands:

　 (1) The disadvantages of extensive distribution channels are highlighted: Before 2010, most domestic sporting goods companies followed the "light asset" operation model of Nike and Adidas, outsourcing production and sales, focusing on design, research and development and marketing, and expanding distribution channels as a growth mode. Li Ning has long adopted the model of "direct stores+franchise stores" and accelerated the expansion of distribution channels. In 2010, the number of distribution channels increased from 2526 in 2004 to 7333, while the number of direct channels only increased from 351 to 582.

In the absence of effective management of the supply chain and the retail end, this approach, led by distributors, tends to lead to a lack of communication between brands and customers, and it is difficult to respond quickly to market changes.

　 (2) Lack of management and low retail capacity of the dealership: In order to expand, domestic sports brands have adopted the method of vigorously pressing for goods. The sales method is just to wholesale products to dealers, and little attention has been paid to the level from dealers to consumers. Li Ning's dealership image is old, the sales level is low, and the store image and retail ability lack unified planning and guidance, This leads to a lack of competitiveness when the growth rate of the industry scale drops or the tendency of consumers changes.

　 (3) Excessive prediction of sports brands on the market: The rapid growth in 2008 made the domestic sports brands overestimate the market demand and increase excessive inventory.

　 Why do foreign brands surpass domestic brands:

1. The domestic sports brands have strong marketing efforts, less investment in design and R&D, and serious product homogenization: in 2011, the advertising cost of the six major domestic brands reached 4.977 billion yuan, but the R&D cost was only 900 million yuan, far lower than the marketing cost. Adidas and Nike have decades of R&D history and channel experience, Technology and brand reputation are more trusted by consumers;

2. Price war consumes brand image: domestic brands adopt price war and frequent discounts, which affects brand image. It is difficult to get rid of the inherent impression of "cheap but low quality", and even bring brand positioning into the low-end ranks for the purpose of clearing inventory;

3. Domestic sports brands are positioned as third tier and fourth tier cities, while foreign brands are positioned as first tier and second tier cities. It is easy to penetrate from the first tier and second tier down, but difficult to migrate from the third tier and fourth tier up: this is particularly evident in Li Ning, who has experienced brand remodeling. The way of positioning and transformation of domestic sports brands without design, research and development capabilities and good products will not work.

Brand reshaping strategy: In 2010, Li Ning changed its logo into a more flexible new logo based on "Li Ning cross action"; Change the slogan "Everything is possible" from 2002 to "Let change happen"; Positioning consumers as "post-90s" and brands as "fashion, cool and global vision", substantially increasing product prices, with the intention of entering the high-end market; A series of advertisements with the theme of "post-90s Li Ning" were launched, and the theme was infiltrated into the sales channels.

　 Reasons for Li Ning's brand remodeling:

1. The consumption ability of consumers who were attracted by Li Ning's personal image and witnessed Li Ning's glory gradually weakens with age, and the brand urgently needs to attract new generation customer groups;

2. After the vigorous growth in 2008, Li Ning's ambition has become international. In order to achieve this goal, Li Ning needs to improve its brand positioning and price.

Positioning deviation, the brand remodeling strategy failed to achieve the expected effect: Li Ning's main consumer groups witnessed Li Ning's brilliant "post-70s" and "post-80s", abandoned the well-known slogan "everything is possible" and the initial logo, and the overwhelming advertising of "post-90s Li Ning" directly abandoned the loyal customers of "post-80s" and "post-70s", at the same time, because of the "post-90s" The group did not understand the story of Li Ning and Li Ning, and the stiff brand transformation did not attract the "post-90s" customer group;

The substantial price increase also abandoned the original favorable second and third line positioning and cost-effective advantages, and directly competed with Adidas and Nike in price. The quality and reputation of the products could not be compared with these international brands, leading to a large number of consumers' loss. Li Ning, who forced to raise the positioning, did not move towards "internationalization", but put the brand positioning in an awkward position, It foreshadowed the future Waterloo.

　 How can Anta catch up with Li Ning:

1. Anta's channel structure is more flat: Li Ning's dealers extend downward from regional divisions, while Anta is under the unified control of the sales and operation department of the branch company. At the same time, Anta will choose to invest in important franchise stores, and some can even reach the level of 51%, so Anta has stronger control over Canadian merchants and dealers than other domestic sports brands, The response to the market is faster and the retail capacity is stronger. In 2014, the inventory turnover days and accounts receivable turnover days of Li Ning were 108 and 71 days respectively, while those of Anta were 57 and 35 days respectively;

2. Rapid transformation of Anta: Anta took the lead in completing the transformation from a brand wholesaler to a brand retailer, adopting a full value chain management model. Ding Shizhong, Chairman of the Board of Directors of Anta Group, summarized the following four points about Anta's transformation:

First, informatization. Through ERP system and SAP software, the information of most Anta stores across the country is unified;

Second, orders from franchisees in the past were changed to single store orders;

The third is to cover retail standards to every store in the country;

Fourth, return to the entrepreneurial corporate culture, take senior executives to all prefecture level cities in China to promote retail landing and understand various problems of the terminal.

3. The brand positioning of Anta is relatively clear: Anta's own brand has always maintained its popular positioning, and in 2009, it entered the high-end market through the acquisition of Fila. However, the brand positioning of Li Ning has been swinging, especially the transformation of the brand in 2010, which has seriously affected the brand image of Li Ning and confused consumers' understanding of the brand style.

　 Li Ning's response:

1. Optimize the channel structure: CEO Jin Zhenjun adopted the strategy of strengthening direct marketing channels in order to avoid excessive dependence on distribution channels, strengthen Li Ning's perception of the market, and directly contact consumers. The number of direct stores increased from 631 in 2012 to 1202 in 2014, with a cumulative increase of 571, with a cumulative growth rate of 90%;

2. The brand of Li Ning has repositioned itself at the middle and low end, focusing on five core businesses: Li Ning has repositioned its brand to the middle end market with the advantage of high cost performance, and has more than 30% of the market share in the middle end market. At the same time, focus on five major businesses to improve Li Ning's professional image;

3. New quick response business model: In order to improve retail capacity and inventory management efficiency, Li Ning has adopted an innovative supply model and established a quick response retail business platform. Li Ning has optimized the ordering, replenishment and inventory allocation system, predicted demand based on the daily sales of retail stores, and reasonably allocated inventory, And adjust the product development direction and output of the supply chain.

Li Ning improved but still lost money: from 2012 to 2014, the inventory amount of Li Ning decreased by 17%, 15% and 5% respectively. The inventory structure was optimized, the sales of new products and their proportion in total sales increased, and the sales out rate and retail sales also increased year on year. The sales situation gradually improved, but it did not get rid of the loss state. Li Ning still needs to change.

4.3 Reason for recovery: transformation of "Internet+sports life experience provider"

The industry recovered and Li Ning recovered: after the "closing tide" of the industry, the revenue and net profit of major sports brands gradually recovered. The market recovered, Li Ning gradually recovered, and the turnover days of accounts receivable and inventory declined significantly in the industry.

Founder Li Ning returns: At the end of 2014, Jin Zhenjun, a professional manager who failed to reverse Li Ning's situation, resigned. Founder Li Ning returned as CEO. After Li Ning returned, he changed the company slogan from "Let change happen" to "Anything is possible", and set the goal of "providing Li Ning brand experience value", The company transformed from a sports equipment provider to a "Internet+sports life experience provider"; The launch of microblog, closely interacting with consumption, has strengthened user stickiness; Restart the multi brand strategy, obtain the exclusive operation right of Danskin in mainland China and Macao, launch the self operated brand Li Ning YOUNG, and cooperate with Xiaomi to launch a new generation of intelligent running shoes.

The significance of Li Ning's return:

1. Stabilizing the morale: Li Ning, who has experienced continuous losses, urgently needs to stabilize the morale. Li Ning, the founder and soul of the company, is the best candidate;

2. Li Ning has the advantage of being a sportsman: as the former "prince of gymnastics", Li Ning has unique resources and insights as a sportsman;

3. Improve the executive power of the management's decisions: the professional managers who parachute may face the risk of acclimatization in the face of Li Ning, a traditional Chinese local sports enterprise, which makes the professional managers' decisions lack executive power, and it is difficult to ensure the efficiency of the cooperative operation of various departments, Li Ning's founder status and long-term understanding of the company and the industry can improve Li Ning's decision-making execution.

After the return of Li Ning, the company transformed to "Internet+sports life experience provider": with products, channels and retail operation capabilities as the three pillars, supplemented by multi-dimensional marketing strategies, Li Ning is committed to providing experiential value combined with digital.

Take a series of measures to optimize channel structure and improve channel efficiency:

1. Implement the strategy of single store differentiation: Li Ning defined the store classification, divided the store into comprehensive stores and category stores, and provided flexible purchase experience according to category attributes,

2. Strengthen the support and control of dealers: By the middle of 2018, there were 31 key dealers of Li Ning's core brand. Li Ning has grasped the information feedback of distribution channels through the shaping and management of core dealers and made reference for other dealers;

3. Optimize the channel structure: Li Ning closed loss making stores, transformed inefficient stores, promoted store location optimization and expansion rectification, focused on opening large stores with strong profitability and experience concept, and improved terminal operation efficiency;

4. Omni channel layout: develop online sales channels, improve online and offline integrated operation mode, and bring consumers an omni channel shopping experience. E-commerce revenue and its proportion have increased year by year. In 2017, e-commerce revenue increased by 30.7% year on year, accounting for 19.31% of the total revenue.

The optimization of the channel structure and the improvement of efficiency have improved the turnover of Li Ning: from 2015 to 2017, the number of days of inventory turnover of Li Ning has improved from 104 to 79, and the number of days of receivables turnover has improved from 69 to 51.

Create a closed-loop retail operation: strengthen the retail operation structure, and improve the retail operation capabilities in six aspects: commodity planning, product research and development, goods sales portfolio, store sales, tail handling, and cash flow.

Establish a precise and rapid commodity R&D, listing, supply and sales system:

1. Reform the commodity operation mode: combine the market to adjust the long and short life cycle product portfolio, and carry out a series of refined management such as product design, goods assembly, discount, etc. according to the differences between the North and South markets;

2. Strengthen the retail operation management of single stores: improve the accurate and fast supply mechanism, establish a single store ordering mode oriented by consumer demand, refine the operation service standards of category stores, and upgrade the intelligent store management system;

3. Improve the store image and enhance the store display ability: develop stores with different images according to different markets to meet the consumption needs of different consumers;

4. Strengthen training to improve the business ability of terminal sales personnel: improve the sales and service level of "China Li Ning Service+" through the online and offline integrated training mechanism of Li Ning training system.

Optimization of stock age: In 2015, the inventory amount of the company decreased from 1.418 billion yuan in 2014 to 1.129 billion yuan and remained basically stable. From 2015 to 2017, the proportion of the company's inventory of more than 12 months decreased from 28% to 14%, and the proportion of inventory of 7 months to 12 months decreased from 17% to 11%.

Profitability improvement: from 2015 to 2017, the gross profit margin increased from 45.0% to 47.1%, and the net profit margin increased from 0.2% to 5.8%.

The same store and order meeting situation improved: in the first half of 2018, the overall same store sales achieved high single digit growth; Franchised dealers' orders for Li Ning brand products (excluding Li Ning YOUNG) at the order meeting achieved annual growth for 19 consecutive quarters. Li Ning's order meeting in the second, third and fourth quarters of 2018 achieved a low growth of 10% - 20% year on year, and the order meeting in the first quarter of 2019 held in June 2018 achieved a high single digit growth.

Sponsoring sports events improves Li Ning's professional image and gathers consumers: Li Ning has independently held the "3+1" street basketball game to gather young people who love basketball and spread Li Ning's sports spirit. The 2017 Li Ning 10km Road Race League was held in 14 cities, including Guangzhou, Kunming, Chongqing, Shanghai, Ningbo, Xi'an and Shenzhen, with nearly 40000 participants.

The International Fashion Week has brought an explosion of attention to Li Ning, linking labels such as "fashion", "internationalization", "Li Ning" and "domestic products" with Li Ning, changing consumers' understanding of Li Ning in the past, and emphasizing Li Ning's domestic sports brand image.

5. Risk Tips

　　1. Macro environment pessimism risk: domestic sports brand production capacity and market are concentrated in China, which is vulnerable to the impact of rising domestic raw material prices, declining industry scale, etc. The pessimism of the macro environment may affect Li Ning's profitability and growth.

　　2. Market competition risk: domestic sports brands are highly concentrated in the industry, middle and low-end domestic sports brand products are seriously homogenized, and the competition is fierce. High end foreign brands perform far better than domestic brands. The inflow of foreign brands and the competition of domestic sports brands may affect the development of Li Ning.

　　3. Risk of consumer demand transformation: consumer preference is likely to affect the competitive pattern of the sports shoes and clothing industry. Consumption upgrading may lead to consumer demand shifting from low-end products to high-end products. Li Ning has the risk of consumer loss.