China Sportswear (Part 3: Li-Ning)

China's most recognized brand is also the most hated stock

Li-Ning was established in 1990 by the legendary gymnast Li Ning, becoming China's first well-known sportswear brand. Li was a gymnast who won six medals at the 1984 Summer Olympics, cementing him as one of the most decorated Chinese athletes of all time.

Li Ning himself serves as the Co-CEO and is the largest shareholder of the company, owning 10.3% of the company’s stock through his investment holding company Viva Goods.

Note: to avoid confusion we will use “Li-Ning” to refer to the company and “Mr. Li Ning” to refer to the person from hereon.

Li-Ning is largely a single-brand company today. While management often talks about this as a strategy, a more accurate explanation is that it resulted from the company's previous failures to develop acquired brands.

The company’s attempts to develop a multi-brand portfolio has essentially been a forgotten past. In fact, Li-Ning was early at the acquisition game, acquiring Kappa in 2002, Aigle in 2005 (JV), and Lotto in 2007. Recall, it wasn’t until 2009 that Anta acquired Fila. Lotto was also an Italian brand, and was bigger than Fila at the time. Li-Ning paid one billion rmb to acquire Lotto, three times more than Fila’s acquisition price. But the rest is history, underscoring the fact that while anyone can acquire brands, the money lies in successful execution.