“If you come to our office in Beijing you will see it,” said Li Ning CFO and executive director Tan Wee Seng.
That one shoe cost thousands of dollars, because the mold had to be built from scratch – Li Ning doesn’t make shoes that size for mass production. Indeed, as long as the company is focused on China, it doesn’t make economic sense to produce anything over a size 44.
“The most expensive investment in a pair of shoes is the mold,” Tan said. “I suspect even the international brands they wouldn’t bring these sizes [to China]. When you go abroad you have tens of thousands of customers out there, so you can create the mold, no problem.”
This is the type of cost-benefit analysis that the company is wrestling with as it looks to leverage a carefully orchestrated Olympic presence into a global brand name.
An international brand requires a global supply chain and global market access, as well as a significant portion of revenues – more than 40% – from abroad. In 2006, 0.9% of Li Ning’s turnover came from overseas markets.
According to Charles Li, an analyst with First Shanghai Securities, it may be some time before Li Ning can expand globally. “It lacks the channels and talents to explore overseas markets at present.”
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