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Li Ning: Lighting a Match in a Dry Forest

When we hosted our call in early January discussing our Top 10 ‘Predictable Unpredictables’ (events that we assign a better than 60% chance of happening, but the consensus is not focused on) for the global softlines supply chain for 2010, we discussed the Chinese Import factor.  We’re not even through February and we’re already getting confirmation.

What kind of risk? (for those of you that did not participate in our call).  No, it’s not COGS. The consensus finally caught up to that one. Yes, we did discuss changes in the free trade environment in Asia, and the dollar falling out of favor with Asian factories. That’s definitely a concern. But the risk I’m referring to here is Chinese content/brands transplanting themselves onto US soil. Yes, Reebok has all but gone away, and Adidas is weakening. But a brand like Li Ning or Anta could come along and gain a couple of points of share of the $20bn athletic footwear market at the drop of a hat.

Well folks, Li Ning has just opened its first US showroom in Sneaker Valley – otherwise known as Portland, OR – where just about every viable player in the US athletic market has established a presence to attempt to raid Nike’s talent.

Li Ning is launching a press event on Monday focused around the launch of the ‘BD Doom’ game shoe, which is designed for LA Clippers’ star Baron Davis.  As a point of reference, other Li Ning NBA athletes include Shaq, Jose Calderon (Raptors) and Hasheem Thabeet (Grizzlies).

As a sidenote, this is either really good timing, or really bad timing for Li Ning. Nike is going on offense again, and the BD launch surrounds an athlete who is at a critical and questionable tipping point.

No one would accuse Davis of being in good form these days. And with Mike Dunleavy stepping down as the Clippers’ coach last week, Davis lost his last ‘loser’ excuse on a coach who is a control freak.

In his own words “I got to go out and get back to being my old self now. [Interim] Coach Kim is going to allow me to be a little bit freer and play off instincts. So, I just got to get back to that mentality. From there, I think everything else will take care of itself.”

You better, BD. Li Ning is betting on you.

Regardless of Davis fate, this move by Li Ning won’t be the last. I actually think that this is very good for the industry. The ONLY time the US athletic footwear industry could be accused of being healthy is when there was someone stepping up to challenge Nike. Under Armour will do so in 2010, and some foreign content will keep Nike on edge. That’s when it performs the best. All these things add up to better product, and better comps for retail. It turns out to be less about market share and more about growing the market. As I’ve been saying, I have a high degree of confidence that we’ll finally return to growth in the footwear market in 2010.

Li Ning: Lighting a Match in a Dry Forest - shoe

Li Ning: Lighting a Match in a Dry Forest - shoe2