Li-Ning, a Chinese sports brand that has always claimed to have stuck to consumer-focused core values, has recently caused controversy over some products that are similar to Japanese military uniforms. The resulting backlash caused the company’s share price to plummet.
At the end of last month, Li-Ning held a new product show which incorporated flight elements into its design. However, in the second segment of this show, the design of several new products made some eyes bulge. Several navy green jackets and hoodies resembling Japanese military uniforms appeared to be part of the display. Netizens uncovered that the company’s co-CEO is a Japanese citizen, pushing the discussion to a peak.
Comments about this display have been divided. Some people’s patriotic feelings are churning, saying that “I regard Li-Ning as a Chinese brand with patriotic faith, but Li-Ning regards me as a Japanese soldier.” Some people questioned why this clothing that has been released for nearly a month has become a publicity stunt in recent days. Li-Ning unveiled other products that adopted the hoodies’ design with other color schemes, none of which caused any concern.
Amid the heated discussion, the share price of Li-Ning fell sharply, plunging more than 13% to HK $50.15 on October 17, approaching the lowest level of HK $48.066 on March 15 this year.
On October 19, Li-Ning issued an apology on Weibo. The company explained that the hoodies, which have drawn the most discussion, based its inspiration from ancient Chinese helmets, outdoor protection gear and cotton-padded cap, noting that the products come in a variety of colors and patterns and are wind and cold proof. Li-Ning also responded to one local media outlet, saying that the hoodies have not been produced nor sold at present and will not in the future.
In a screenshot of a post from the general manager of Li-Ning’s e-commerce business, the research background of the controversial new products was explained. The design of ear protection originated from the traditional helmet. But his mockery of consumers’ lack of understanding of Chinese culture has caused public dissatisfaction. Later, he said that he typed the wrong word, which caused the meaning of the whole sentence to change, but still failed to win back netizens.
Before 2012, Li-Ning, like most Chinese sports brands, was mainly engaged in the wholesale business. In 2012, the company’s revenue was 6.676 billion yuan ($923 million), while its competitor Anta Sports’ revenue was 7.623 billion yuan. Since then, the gap between the two has widened.
New York Fashion Week has boosted the promotion of Li-Ning’s national popularity. In October, 2017, Li-Ning’s official WeChat account took “China Li-Ning” as a new promotion slogan for the first time. In February 2018, the company appeared during New York Fashion Week and attracted praise from the industry. Subsequently, it frequently showed products at other fashion weeks and saw its stock price rise.
The company’s financial report shows that in the first half of 2022, Li-Ning achieved revenue of 12.409 billion yuan, up 21.7% year-on-year, while the net profit was 2.189 billion yuan, up 11.6% year-on-year. Its revenue from the international market in the first half of 2022 only accounted for 1.5% of the total revenue, while the Chinese market accounted for 98.5%.
By contrast, Nike’s financial report for the fourth quarter of fiscal year 2022 showed that the revenue from the Chinese market decreased by 19%. In the second quarter of this year, Adidas’ revenue in Greater China dropped by 35% year-on-year.