Retailers concerned as Li-Ning, “China’s Nike”, holds fire sale to clear stock, offering discounts of up to 80%; Most items on sale were priced between 39 yuan and 79 yuan (US$6-$13)

Retailers concerned as Li-Ning holds fire sale to clear stock

Staff reporter, 2013-04-27

Leading Chinese sportswear company Li-Ning held a 48-hour online sale on April 22, offering discounts of up to 80%, the state-run China News Service reported on its website. Most items on sale were priced between 39 yuan and 79 yuan (US$6-$13), and everything was sold before the sale period ended, said the report. This was Li-Ning’s second 48-hour sale this month aimed at clearing out its backlog of unsold stock. The company reported a loss of 2 billion yuan (US$321 million) in 2012, the first time it had lost money since it began trading publicly in 2004. Yet the poor performance didn’t prevent the company from spending 1.32 billion yuan (US$212 millon) on advertising and marketing, which included the recruitment of NBA star Dwyane Wade to endorse its products for ten years for a fee of US$100 million. Some buyers were critical of the fire sale despite the attractive discounts, with some complaining that many of the products were from 2010 and long out of fashion, while others questioned the quality of the goods because of the low prices. Yan Yaolong, a market analyst with the online store JD, said that while Li-Ning may have thought it was a good idea to offload its inventory, the plan could backfire in the long term, as consumers may now wait for future sales rather than pay full price for its products — or be reluctant to wear the brand if it becomes perceived as cheap. The sales could also hurt the relationship between Li-Ning and its retailers, who complained that the low prices offered online would prevent customers from coming to their stores, said reports.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: