Chapter 32 Chapter 10 Competing Princes

In 1990, when "Li Ning" just entered the market, there was already a "first" with obvious advantages in the Chinese sporting goods market: Conway.From the perspective of entrepreneurship, this company founded in 1986 is quite similar to Li Ning Company.The founder of Conway, Li Weiquan, was born as a basketball player. He met a good opportunity and successfully entered the sporting goods industry from becoming a Nike agent, thus accumulating experience and getting the first pot of gold, and then founded Conway.Conway became the market leader from the day it was launched, and it went smoothly until "Li Ning" surpassed it in the mid-to-late 1990s.Afterwards, Conway maintained the second place in the market, still relying on its deep foundation and financial strength, it continued to attack "Li Ning", hoping to regain the first place.

Around 2000, China’s sporting goods industry began to enter a period of explosive growth. Many small-scale and competitive sporting goods companies emerged in Fujian and Guangdong. At the same time, Nike and Adidas also attacked more violently. Granville and "Li Ning" both formed a big impact.Faced with this drastic market change, Conway and "Li Ning" adopted two very different approaches. "Li-Ning" is constantly changing, and Zhang Zhiyong's team is on the stage, trying their best to build brand connotation.At this time, Conway did not seem to realize that the market and competitors had undergone earth-shaking changes, and it was still lagging behind in product development and retailing.At the same time, in terms of the use of funds, "Li Ning" began to seek listing very early, while Conway has always adopted a steady strategy of relying on its own funds for development over the years.

In the end, the conservative strategy led to Conway being completely left behind by "Li Ning" and leaving the ranks of the first echelon of the market. The aggressive "Li Ning" made a successful start. In 2001, the annual sales of "Li Ning" reached 700 million yuan, while that of Nike was only 300 million yuan and that of Adidas was 100 million yuan. It can be said that vitality allowed "Li Ning" to catch up with Conway, the market leader at the time, and surpass it in one fell swoop.Afterwards, "Li Ning" maintained its No. 1 position in the market for nearly ten years.

But then "Li Ning" encountered a company more dynamic than himself. In 2003, "Li Ning" slipped from the first position."Li Ning" felt a little strange when he needed to catch up with the number one again.And, crucially, conditions in the market have changed dramatically. This time the competition for the first throne is no longer the same as it was 9 years ago. Its opponents are no longer small local companies that do not have much advantage at all, but global hegemons: Nike and Adidas.At the same time, Anta, a representative company of Jinjiang shoe industry, which is backed by the largest shoe production base in China, is chasing after it. "Li Ning" has encountered the most intense and severe period of market competition since its establishment.

Its rivals have experienced earth-shattering successes and heart-wrenching failures in their respective markets during their own development.In the entire global sporting goods industry, the development of famous brands is not smooth sailing, and their common feature is that they have to experience at least one huge decline.In the face of this pressure, most companies cannot wait for the day when they stand up again, and a few recover and become stronger.Now, these powerful companies have officially become the opponents of Li Ning Company. Adidas Pyramid German Adi Dassler founded the Adidas company under his own name when he was just 20 years old.From its establishment in 1920 to his death at the age of 78, this lifelong sports lover invented more than 700 patented products related to sports, and created the Adidas sporting goods kingdom.

Adidas first adopted a pyramid-shaped brand building model in the sporting goods industry. This later became a classic sporting goods marketing model that exerts influence at three levels: at the top of the pyramid are national sports teams and professional athletes; in the middle are sports hobbies Consumers, including weekend climbers and amateur athletes, brand preferences gradually penetrated into the general consumer group; the bottom of the pyramid is the general consumer.The core of the pyramid model is "to drive the mass market with the professional sporting goods market".The difference in market size allows Adidas to implement this strategy more effectively and aggressively than its smaller competitors.Adidas, which started in a small town in Germany, has maintained its position as the world's largest sporting goods for decades.Around 1980, the most glorious year, Adidas's market share in major product categories was as high as 70%.Its 24 factories in 17 countries have a daily output of 200,000 pairs.At the time, its success was unmatched.

However, the quiet rise of jogging fever in the United States in the late 1970s became a watershed in the performance of Adidas.Relevant statistics from the United States show that at that time, there were 25 million to 30 million Americans who insisted on walking.As evidence of this craze, magazines aimed at joggers, such as Runner's World, Runner and Running Times, have emerged.But Adidas did not pay attention to this exponentially growing market information.The key point is that Adidas' pyramid brand model began to fail before the new market changes: jogging is not a group or competitive sport, joggers are not in the three levels of the Adidas pyramid model, and Adidas cannot cooperate with any team, club or organization (nor national or global alliances) to make connections.

A survey at the time showed that more than half of Americans had worn Adidas sneakers.It's hard to imagine how Adidas missed the "jogging" opportunity, maybe the "arrogance" factor can explain some problems.According to the book "Nothing Is Impossible - Recreating Adidas"①, the designers of Adidas at that time felt that reducing the requirements for running shoes to design semi-casual jogging shoes seemed to lower the professional level.In fact, they ended up designing a new running shoe.They thought the shoe would give anyone who wore it a limp, so they nicknamed it "The Lame".Adidas' attitude is similar to the German car companies' reaction to the Japanese Lexus: Good cars are for serious drivers who don't need soft seats and teacup holders.

Just after the market growth slowed, the underlying big company disease began to emerge. In 1990, Adidas, dragged down by bloated institutions and weak reforms, was unsustainable, and even reached the verge of bankruptcy.As a result, the mortgage bank had to change hands several times.One of them was only sold for a symbolic 1 euro. In 1993, Adidas was taken over by a French investment company led by Louis Dreyfus, known as the "turnaround master", who served as Adidas' CEO. After the savvy CEO came to power, he regained the deep sportsmanship contained in Adidas itself and carried out various reforms. These measures finally saved it.Adidas regained the creative spirit of "doing for athletes". In 1994, the launch of Adidas "Falcon" series football shoes was called "another truly revolutionary initiative in football history" by the media at that time.The original idea of ​​this pair of shoes was to add a rubber "fake toe" to the football shoe to improve the football player's ball control and steering ability.But when the shoes were designed, their appearance was ugly and their "weight" was not light. Maradona even directly rejected it because of this.

Adidas continued to invest millions in perfecting the design, eventually developing the small piece of rubber "fake fin" design that made the product truly marketable.Later, the Falcon series gradually developed into the core competitive product of Adidas, which laid the foundation for Adidas to maintain the honor of the world's number one football equipment brand.Adidas takes the road of differentiated competition with Nike and Reebok. The product structure is very different from Nike and Reebok. It gradually increases the proportion of clothing it is good at in the product structure. In 1992, its sportswear accounted for 30% of its total revenue 39.3%, accounted for 55.5% of the total revenue in 1996, played an important role in promoting the revival of Adidas.However, the gross profit margin of clothing is lower than that of sports shoes, which is one of the reasons why Adidas' overall gross profit margin is lower than that of Nike and Reebok.

In the rapid innovation and change, Adidas went public in 1995 and maintained a good momentum of development all the way. In 2001, Herbert Hainer, who had worked in the United States for 8 years and entered Adidas in 1987, became the new CEO of Adidas.This "German with an American way of thinking" led the completion of the largest merger in the international sporting goods industry in August 2005: Adidas acquired Reebok.Reebok is the third most popular sports brand in the world after Nike and Adidas, with sales of approximately US$4 billion in the year of the acquisition.Adidas is preparing to take this move to regain the top position from Nike.