"We think we have a respectable competitor from the United States. They have a good image. They have a lot of sports stars as sponsors," said Wu, Li Ning's marketing director. "However, we know how to survive in these tough conditions."
Part of that survival hinges on the company's roots. It was founded in 1989 by one of China's biggest sports heroes, the namesake gymnast who won three Olympic gold medals at the 1984 Los Angeles Summer Games.
For The Record
Los Angeles Times Wednesday December 29, 2004 Home Edition Main News Part A Page 2 National Desk 1 inches; 39 words Type of Material: Correction
Li Ning -- A photo caption with an article in Saturday's Business section about Chinese shoe manufacturer Li Ning Co. failed to credit the photographer. The photo of Li Ning marketing director Abel Wu was taken by Cherilyn Parsons.
"Many Chinese people take pride in him" not only for his athletic exploits but also because of his business success, said Ding Jingli, a local ad executive.
Like Mao, the company has forged its strongest bond with the heartland, where it has most of its 2,600 stores and retail outlets. Li Ning's primary targets are low- to middle-income consumers living in rural areas and provincial cities largely passed over by the economic boom. Overall, China still has a per capita annual income of only $1,100, about 5% of the U.S. level.
That presents a hard financial reality for customers like Wei Lin, 20, who dreams of owning $170 Air Jordans but ends up shopping for Li Nings, which go for closer to $50.
"Adidas and Nike are better than the Li Ning brand, but I have economic limits," said Wei, as he recently tried on the cheaper shoes in downtown Xian.
That sentiment is not lost on Li Ning executives. Although they've vowed to remain committed to their less-than-affluent customers, they've also been busy retooling the company to move beyond its one-style-fits-all image and capture a share of the high end.
With Nike breathing down its neck, Li Ning overhauled its management in 2002 and brought in top officers from companies such as Avon Products Inc., Proctor & Gamble Co. and DuPont Co.
The company created an international design center in Hong Kong, pumped up its marketing budget and struck deals to sponsor China's 2004 Olympians, as well as other high-profile squads such as Spain's Olympic men's basketball team, which defeated China in Athens.
Li Ning also had a $76-million initial public offering in June, then invested a portion of the money on promoting and selling a new line of high-performance basketball shoes intended to snag serious weekend warriors.
"Our objective is to ensure our product can match Nike in 2007," Wu said. "If my product is the same as Nike and my price is 70% of Nike's, then I have a competitive advantage, right?"
First out of the box: a basketball shoe introduced in July called the Free Jumper, made for professional players and featuring the company's first stab at sneaker high-technology. The model uses materials to give extra bounce on the ball of the foot and extra cushion on the heel.
Within three months, the company sold 16,000 pairs, priced at $68 and $83. More designs are on the way, Wu said, and eventually Li Ning wants to sign an NBA star to promote its basketball line as part of its plan to go global within 10 years.
For the most part, though, its focus remains on its home court. "Probably in a year or two, we will lose our lead," Wu said. "But our target is definitely to be No. 1 in China."
