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Li Ning is only a microcosm. In the 1990s, a variety of domestically-made sports brands have sprung up. In particular, some famous athletes even named their brands directly under their own names, and a large number of cutting-edge forces have their predecessors. The coastal companies that are contracted for international sports brands use the mature foreign products directly. In 2003, there were more than 40 advertisements on the five sports channels of the CCTV in Fujian. At the beginning of the Year of the Dragon, the aggressive domestic sports brand plunged into a crisis, and the leading leader Li Ning had to announce big layoffs, adjust the organizational structure, and reduce personnel costs because 2011 net profit fell by 50%.
The crisis of domestic sports brands reflects the crisis of Chinese imitation products. We can look at a set of simple data. Anta's research investment in 2010 was 100 million yuan, and Li Ning was 250 million yuan, which is already the top level of domestic counterparts. However, the production of international giants such as Nike and Adidas is handed over to other companies. The biggest expense for these international giants is scientific research and brand promotion. Take Nike as an example, the annual cost of investing in new product research is about 5-10% of sales revenue. According to its sales revenue of US$19 billion in 2010, the cost is about US$1.5 billion, equivalent to nearly 10 billion US dollars. It is 40 times that of Li Ning!
Li Ning is a microcosm of the Chinese business community. More and more products face the choice between life and death in the process of manufacturing from China to China. Compared with the proportion of 5-10% of the sales revenue of the world's top 500 companies, China's innovative companies accounted for only 1.86% of sales revenue compared to sales, and other domestic large and medium-sized companies accounted for less than 1%. After the days of competition with cheap labor, technology innovation will become a significant competitive force. The frustration is that many Chinese companies are short-sighted. It is easier said than done by the lack of innovative companies to grow in an internationalized competition.
Therefore, the "Li-Ning phenomenon" may be just the beginning.
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