Li Ning, China’s largest domestic sportswear brand, not only needs to fend off multinational sportswear giants Nike and Adidas, but also needs to stay ahead of its increasingly savvy domestic rivals, including brands such as Anta and 361°. Such mounting competitive pressure has turned into a major driver for innovation, confirms Guo Jianxin, Li Ning’s chief operating officer.
To keep up, Li Ning is supporting big initiatives to improve its R&D and fuel creativity within the company. In 2008 Li Ning invested in a sports research lab at its new Beijing headquarters, one of the world’s top centres of biomechanics, the science of body movement. Li Ning is also supporting new ideas through a group of initiatives it has dubbed “cross-over”, which aim to tap the creativity of people outside the company by, for example, challenging architects and construction engineers to try their hand at designing shoes. In 2007 the company opened a new research and design centre in Portland, Oregon, where it employs international researchers and designers. Li Ning rotates its Chinese design staff through the centre to give them more international exposure.
Li Ning’s efforts to generate new ideas is part of a national trend. Once mostly imitators, more brands in China are now striving to define themselves to consumers through their own distinct products and designs.
But much of the innovation at Li Ning is going on in a less showy arena—its supply chain management. In 2006 Li Ning formed its Pilot Project Team (PPT), headed by Mr Guo. The team is charged with making the company’s supply chain processes more efficient and to cut costs, which had spiralled upwards owing to China’s rising costs of production and the growing complexity of Li Ning’s organisation. Li Ning also re-engineered its supply chain management to adopt a demand-driven approach, which allows its wholesalers to change their orders quickly depending on how well products sell.
The PPT team consists of about 30 staff from Li Ning and 40 representatives from its suppliers, manufacturers and retail stores. Through its efforts, Li Ning cut average inventory times from 84 days to 61 days, and slashed the amount of time it took stores to receive ordered goods from two months to two weeks. Such improvements took place even as the number of stores selling Li Ning-branded goods doubled in two years.
