A Grand Entrance? Li Ning’s Emergence as a Global, Chinese Brand

Johannes Meuer, Barbara Krug, Tao Yue and Lori DiVito of Rotterdam School of Management on their case, A Grand Entrance? Li Ning’s Emergence as a Global, Chinese Brand.

Alt text Li Ning Co. Ltd. (Li Ning), a Chinese sport apparel, footwear, and equipment company founded in 1989 by the Olympic gymnastics gold medallist, grew from a family business in to China’s number one sporting good brand in less than two decades. The company’s ambition was not confined to the home market and this case looks at the company’s internationalisation strategy.

Why Li Ning?

Li Ning established its first flagship store in a developed market in Almere, Netherlands, a location they chose for its proximity to Europe's largest consumer markets (England, Germany, France). Their opening was accompanied by large and highly controversial media coverage. As researchers focusing on business in China we were intrigued by Li Ning, and a mix of professional and personal curiosity led us to investigate the company’s internationalisation strategy in depth.

Li Ning was the first Chinese company that tried to gain market share abroad by establishing a uniquely Chinese brand, something that seemed highly ambitious to us considering the perception of Chinese brands by the general public in Europe and North America.

After some research, we realised that the issues were more complex than anticipated.Despite the reputation of Chinese products, Li Ning's sports merchandise was received outstandingly well by the Dutch, French and German customers but other issues (eg related to production or the internal politics of Li Ning) represented many more severe obstacles to Li Ning's expansion in Europe. Alt text At the same time the international branding strategy pursued by the company was predominantly intended to compete with other international companies in China, not abroad. These and other aspects made the case of Li Ning not only timely but also relevant for understanding and teaching the complexities of the internationalisation of Chinese firms.

Focus

When writing a case we recommend trying to focus on one main aspect, if the case is good class discussion will unearth many hidden topics. As firm internationalisation is a very broad topic we had several meetings to discuss what to focus on in the case.

The objective of this teaching case is for students to better understand the complexity of Chinese firms international expansion and their response to increasing competitive pressure, in both domestic and international markets. It highlights the importance of objective setting and strategic planning and challenges the participants to view internationalisation holistically including not only the business activities and expansion markets but also the timing, capabilities, political and cultural aspects that influence successful internationalisation.

The case also aims to raise awareness of the emergence of Chinese firms abroad which will become (or are already) an essential competitive element in all markets outside China and show highly idiosyncratic challenges and competencies due to their particular institutional background and their historical emergence.

Alt text

Case writing challenges

There wasn’t much material available about the challenges Li Ning encountered during its internationalisation process and it took us some effort to do research (in both English and Chinese) and gather sufficient information. The timeliness and relevance of the case also meant that not much information was available on Li Ning itself (annual reports had just been published for the past few years and were rather incomplete in their information) or the market for sports products in China.

We contacted Li Ning in the Netherlands, but they were reluctant to talk since they had limited success in the Netherlands. We also contacted the headquarters in Beijing but with over 95% of sales in China, the international operations of Li Ning did not receive much attention at the headquarters. Ultimately, we decided to rely mainly on published sources, which gave us the freedom to describe what is needed in the case and not worry about getting consent from the company. To bring the case to life, we created a fictional character (Wang Wei, the board member responsible for international marketing) and used his perspective to string the story together. In the narration we tried to play with the contrast of ‘Chinese’ and ‘global’ and ‘success’ and ‘failure’, and emphasise the dilemma that Li Ning faced in resource allocation. It worked - tension always works in a case.

Using the case

The case is suitable for Bachelor, Master, and PhD students in China business or strategic management in general. Managers and executives of Chinese firms that consider international expansion are also a potential audience. Participants should have at least an introductory level to marketing and strategy to be able to discuss how theories of internationalisation can be applied to the case as well as to discuss the implications of internationalisation on Li Ning’s price/quality positioning. More experienced or advanced participants can engage in discussion and debate about the capabilities needed to successfully internationalise and the implications on the organisation in developing or acquiring these capabilities. They may also engage in discussion about the cultural fit and the cultural distance between China and the internationalisation markets of choice.

After using the case a few times at the Bachelor and Master level we made some modifications to the teaching note, incorporating our experiences gained in the classroom when using the case. The assignments completed by the students were very helpful in identifying misleading or ambiguous information and in those cases where ambiguity was unnecessary, we provided further information.

Any advice?

It is important to try to excite the readers. Before writing the case try to find the drama, tensions, contrast and dilemma and use them as an action trigger to develop the story. It also helps to follow your own personal interest, if you don't believe the case is interesting or worth writing down, don't do it.

Case details

A Grand Entrance? Li Ning's Emergence as a Global, Chinese Brand
Johannes Meuer, Barbara Krug, Tao Yue and Lori DiVito
Rotterdam School of Management
Ref 310-138-1

Also available:
Teaching note
Ref 310-138-8

About the authors

Johannes Meuer is a Research Associate at RSM Research Centre on China Business, Rotterdam School of Management
jmeuer@rsm.nl

Lori DiVito is a Lecturer at the University of Applied Sciences, Hogeschool van Amsterdam
l.e.d.divito@hva.nl

Barbara Krug is the Professor of Economics of Governance at the Department of Organisation and Personnel Management, Rotterdam School of Management
bkrug@rsm.nl

Tao Yue is a case writer at Rotterdam School of Management
tyue@rsm.nl


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