Last week, while waiting for a Portland State University men’s basketball game to start, I surveyed the court, very interested in which Player Edition footwear Nike had bestowed upon my alma mater’s team.  From a sports marketing point of view, a company says a lot about themselves and the players and teams they sponsor by the shoes supplied.  In this case, it was a bit of a mish-mash:  2009 models, 2008 models, team shoes, customized iconic shoes, shoes with different technologies and heights.  I tried to figure out who the superstars on the team were by what they were wearing (I couldn’t).

My friend, Terry, and I started discussing global marketing strategy, specifically U.S. companies operating in other countries, until we landed on Li Ning, the industry-anointed “Nike of China.”

Li Ning was a gymnast who won six medals (three gold) in the 1984 Summer Olympic Games, then went on to start his namesake footwear and apparel company in 1990.  They are the largest competitor to the foreign brands (Nike, adidas, Reebok, New Balance, although in their internal market share computations, they call it the “Luxery Sports Market”, effectively eliminating the local brands, such as Li Ning).  Li Ning dominates the poorer Tier 3-6 cities in China, their quality is notably poorer than the foreign brands, and they operate on essentially a copycat marketing strategy, in terms of design, corporate logo (it looks a lot like a swoosh) but also in terms of office placement.

Looking for brain drain from Nike and adidas, Li Ning has had a design office here in Portland, Oregon for about two years (officially, they opened the office in January 2008, but they have been hiring designers away from adidas and have had teams from Beijing visiting the city for over two years now).

Last week, Li Ning opened their flagship retail store next door to their Portland office, a Badminton Store – their first in the U.S., their third globally (after Hong Kong and Singapore).  I dropped by yesterday just for a look, and two things struck me:  First:  the Pearl District is a trendy area of converted warehouses to upscale lofts and apartments, scattered with bars, restaurants, as well as high-priced law and real estate offices, and not much of a shopping destination.  Is this really the right place for a badminton store?  Second:  I have been to many of Li Ning’s retail doors in Shanghai, Beijing, Wuhan and Guangzhou, and the quality of the product in the store seemed to be much improved. Maybe there is some hope for them yet to break out of that “cheap brand” image.  Not if they don’t fix a few of their major problems first.

First of all, I get that it’s cheaper to operate a purely experimental retail store right out of the U.S. office – it’s cheaper.  And I also get that it’s very important to hold true to brand positioning and open a Badminton Store (they sponsor numerous International Badminton teams).  But did they not do their research?  I bet I could count on one hand the number of badminton players who live in the Pearl.  Within 10 blocks are two major gyms, a 24 Hour Fitness and an L.A. Fitness – neither has badminton courts, but both have basketball courts.  They also sponsor national basketball teams Argentina (’04 Olympic Gold Medal winners) and Spain (’06 World Champions).  The front page of Li Ning’s English website highlights their NBA sponsored athletes, Baron Davis, Shaquille O’Neal and Jose Calderon.  Their message seems to be somewhat disjointed.  It seems that as a company, Li Ning has invested quite a bit to be associated with basketball (the most popular sport in China).  They couldn’t leverage this as they entered the U.S. market?  Is Badminton going to be the hot sport of 2010?  I don’t quite think so…..

Aside from this, the layout looks like a sporting goods store – not cool, not trendy, not a destination.

So, how should Li Ning enter the U.S. market?  The consumers in China and the U.S. are very, very different.  The perception of Chinese goods do not have the same stature as, say, Italian brands would have in the eyes of Americans.  And there is such a high number of competitors facing Li Ning in the US on the price-sensitive level, such as Vans, Puma, LA Gear, private label brands, that whatever they do will require long (long, long) term planning.

I know from talking with company employees from Beijing that Li Ning doesn’t actually believe they can walk into the U.S. and make a serious dent.  It would seem, though, that someone didn’t tell that to those who opened the Portland Badminton store.  It looks like Li Ning’s first public step in entering the U.S. market may prove to be their last.