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In second and third-tier cities, competitors Nike and Adidas were still fairly weak, while local sporting goods companies cannot compete with Li Ning, given its ability to open additional franchise stores, we should focus more on these geographic market.
Li Ning will open 1500 more stores adding to its present strong networks, customers in second- and third-tier cities can be accessed, and for university students in mega and first-tier cities, more outlets should be opened.
4. Level of competition
Main competitors Adidas and Nike are slow to penetrate second- and third-tier cities (we asked Vice president of Adidas on this point last week, he mentioned that Adidas is cautious on penetration into China??s second and third-tier cities due to sophistication of business environment in those cities), Li Ning can continuously dominate those markets; while in mega and first-tier cities, university students are price-sensitive to buy Adidas and Nike due to much higher price (30-40% higher), as well as their loyalty to Chinese own sporting brand (based on Li Ning??s marketing campaign incorporating more Chinese elements in branding), Li Ning can enlarge their market share on this segment, meanwhile, they can possibly keep brand loyalty on Li Ning after they graduate from university...
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