Handing Out Bylines at Customs (Alternatively, "Drop a down payment on that Porsche Cayenne")

First off, I'd like to thank the reader "the NUN" for informing me of the New York Times article last week about Li Ning and Chinese brands as a whole. It's a very interesting look at Li Ning, the top Chinese sportswear manufacturer, but it often appears like this is the writer's first trip to China. I have a feeling that the closer we get to the Olympics, the more these sort of reporters will get bylines and so its going to get even more annoying. It's going to get to the point that when people get off the plane at Capital Airport, they walk through the brand, spanking new Terminal 3 and get handed a byline alongside a stamp in their passports, please, Mr. Nocera and your ilk, do your research!

He starts out giving a history of Li Ning, the athlete and the company, and about their "campus" in Beijing as well as some of the athletes the company has deals with, including Shaquille O'Neal. Then, he goes into the "similarities" between the Li Ning and Nike logo, as well as this line: "The Shaq figure stamped on his branded line of Li-Ning sneakers looked an awful lot like Nike’s Air Jordan figure." First, the Shaq logo looks absolutely nothing like the classic MJ logo. Beyond that, the logo is one that Shaq has been using almost his entire career and has spanned his time with Reebok, Starter, and now Li Ning (and probably a few other brands in between).

The article goes on to discuss how Li Ning, which dominated the Chinese market in the early to mid 90s before Nike and Adidas fully penetrated China, has fallen to number 3 in the Chinese market and has almost zero market penetration overseas. It claims that Li Ning holds 18% of the market, while both Nike and Adidas have over 20%, is this a negative? Where else in the world can a domestic sportswear company fight it out with these major players? It also fails to note that 3rd isn't so bad when you're talking about 18% in a country with 1.3 billion people and the fact that Li Ning is beating out all domestic competition as well as a number of major international players (Reebok, Puma, Converse, Kappa, etc) and doing all this with a marketing budget far less than that of Nike and Adidas.

Li Ning, if it attempts to go overseas, especially in the US and Europe, will have an uphill battle. The problem is that in China, it tries to market itself alongside Adidas and Nike, signing deals with major athletes, national teams, and sports leagues (the NBA and ATP, to name a few). The majority of items in a Li Ning store (including shoes) can be had for around RMB300 or less, the price that much of the clothing starts at in a Nike or Adidas shop. If they go downmarket overseas, they can bring in a ton of money, but will it hurt the brand image domestically?

Other Chinese brands mentioned in the article like Aigo and Lenovo (and some that are not like TCL and Haier) have gone a long way in attempting to enter the foreign market, but none of them are high-end producers, all are mid to low end players. For some, branding has been important, so much has gone into their marketing (for example, Aigo is one of the sponsors of the F1 Ferrari team), for Haier and others, their low, low prices (que Wal-Mart) and large distribution means less is spent on marketing. China's already spreading globally with these mid and low end products, more so than Japan in the 70s, but when and who will be China's first high-end brand to go abroad? This is what everyone is waiting for (often, at least in the west, very fearfully).

And what of the Porche Cayenne that Kanye sings about and I reference in the title? The article commits flaws of horrible research and talks about how Audi's are the height of luxury in China and how everyone wants an iPhone, which aren't even on sale here. Sure, an A6 is considered a "fancy" car, but the majority of people covet BMW's and Mercedes (or the extremely popular Cayenne). And iPhone's not on sale here? Hilarious!

Once more, reporters, please, please, please do your research and know something before coming to China, thank you.

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