Li Ning aims at overseas markets to acquire sports equipment assets

Chinese sporting goods brand Li Ning plans to open the first retail store outside the Asian market in the United States in January. A company’s top executive stated that the move was intended to test the water because the company’s purpose was to become an internationally renowned brand within a decade.

Li Ning’s major competitors in Mainland China include Nike and Adidas. Chief Executive Zhang Zhiyong said in an exclusive interview with Reuters that Li Ning plans to open the first US retail store in Portland, the most populous city in Oregon. The company already has a product R&D center in the area.

The Li-Ning brand is controlled by Li Ning, a former Olympic gymnastics champion. He once lit the flame at the opening ceremony of the Beijing Olympics. The company has retail stores in Hong Kong and Singapore and plans to open 70-100 badminton specialty stores in Southeast Asia by the end of this year.

Zhang Zhiyong stated, “We have an R&D center in Portland, which is very close to our supply chain.” He also stated that the United States will be a major market for the company, especially during the five-year plan period from 2014 to 2018.

The Li Ning brand is determined to become one of the top five sports brands in the world by 2018, when more than 20% of its revenue will come from overseas markets.

Zhang Zhiyong stated that the Li Ning brand is not well-known in the United States, so the goal of opening a store is to "test the water."

Currently, Li Ning’s sporting goods are dominated by basketball, badminton and table tennis. The company plans to accelerate growth and expand overseas market share through its own products or acquisitions.

Zhang Zhiyong said, "In fact, both routes are available. If there are mergers and acquisitions, there is a certain risk of merger, but it is also relatively fast... We believe the equipment market still has opportunities."

Zhang Zhiyong did not disclose what type of sports equipment assets the company wanted to acquire, but he said that the sportswear with "Oriental elements" would be the first products the company launched on the US market with the "Tai Chi" theme.

The high earnings ratio continues

Li Ning's price-to-earnings ratio has remained high and is 22 times the projected revenue in 2010. In contrast, its competitor Anta is 19 times, China's movement is 17 times. The price-earnings ratio of the smaller competitor Xtep is 10.8 times the projected income in 2010, and 361 degrees is 7.8 times.

Some economic analysts rated Li Ning’s rating as “held” because of its high price-to-earnings ratio, and believe that its future growth has been more or less reflected in the stock price. However, Zhang Zhiyong gave different opinions.

He said, "I believe our growth will continue to be the highest in the industry." He had previously expected that China's sports equipment market will grow by 16% in 2010, and Li Ning's brand growth will exceed this expectation.

Zhang Zhiyong indicated that it is expected that retail sales in mainland China will account for about 60% of the company's revenue, because the company opens new stores in Beijing and competes directly with overseas brands.

Although Li Ning's market share in China is not far from that of international brands, it still has a long way to go in terms of brand value. This is because this Chinese company is still more limited to China. This is what Li Ning is hoping to “go out”. the reason.

Since the beginning of the year, Li Ning's stock price has risen more than 1.2 times, which has greatly outperformed the Hang Seng Index's 55% increase over the same period.