Lining Actively Seeks To Change And Return To The Essence Of Sports, Focusing On Core Sports Shoes And Clothing Equipment.

Recently, the market came to Lining to adjust the term of cooperation with Italy sports brand Lotto (Le Tu) franchise business.

Judging from the strategic significance and financial effects of the contract adjustment, this incident may be better able to understand Li Ning Co's strategic thinking of actively changing and focusing on core business in a severe market environment.

Essence of regression movement

Under the overall environment of global economic recession and industry growth, it is one of the most effective ways to take measures to carry out self-improvement.

And the period of cooperation with the Lotto franchise business will be adjusted from 20 years to 10 years. It is regarded as one of the strategic initiatives for Li Ning Co to continuously pform itself and focus on its core business.

At the beginning of this year, Li Ning Co launched a strategic adjustment of "focusing on core business and optimizing organizational structure" and announced that in order to improve operational efficiency, some non core business sectors, such as its sub brands, will be further integrated to focus more energy on core business.

Can it continue to provide professional athletes and sports enthusiasts with professional skills?

It is an important criterion for sports and consumers to measure a sporting goods brand.

As the leader of domestic sporting goods, Lining's focus on core business has been further confirmed at the just concluded Lining 2012 Olympic equipment conference.

Adhering to the idea of "returning to the essence of sports", Li Ning Co has created the professional match equipment "red scale" competition suit and other match equipment for athletes.

If we provide professional matches for China's five national teams, it is the embodiment of Lining's focus on core business. This shortening period of cooperation with Lotto is.

Another strategic move to adjust the sub brand management strategy and focus more on core business at the operational level.

The introduction of Lotto brand was just an attempt of Lining to implement his diversification strategy. Now, in the face of the changing market environment, Lining's timely adjustment of Lotto contract is more flexible.

Focus on the invariable rule of core business operation

Li Ning Co's adjustment to the Lotto contract period is also conducive to improving its financial performance.

This adjustment helps to improve the company's cost structure and maintain a relatively stable overall cost rate.

In July 31, 2008, the Li Ning Co announced that it would award a franchise agreement with Italy sports brand Lotto, and Lotto would grant Li Ning Co exclusive franchise for the development, manufacture, marketing, publicity, promotion, distribution and sale of licensed products in China for a period of about 20 years, and this adjustment advanced to the end of 2018.

This move means that since 2012, the amount of amortization of Li Ning Co's Lotto concession will be greatly reduced, which will help Li Ning Co focus its resources on core businesses.

The market environment is changing rapidly, and companies that can quickly respond to and understand future trends can become the most competitive companies.

Focusing on core business is always the key for a company to survive and create value continuously. Many enterprises even adapt to market changes by selling a non core business or assets to make strategic adjustment.

For example, the blue giant IBM can be invincible, and can not be separated from them according to the market changing and demand adjustment strategy at any time; through the acquisition of computer software business Lotus, the divestiture of network business, and even the sale of PC business to IT service pformation, this technology giant is light and thin, focusing on the core business and reestablishing its market leadership position.

Procter & Gamble, a global consumer goods giant, has been "downsizing" in its focus on the daily core business, improving its financial position by selling non core businesses such as beverages, coffee and chips.

In contrast, the Li Ning Co's adjustment is a small move, but it reflects the same strategy adjustment, focusing on the core business of the same business operation.