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Li Ning to lower costs, improve effeciency

(Global Times)

15:41, February 07, 2012

Shares of Chinese sportswear retailer Li Ning Co jumped almost 5 percent yesterday after the company reaffirmed it would carry out reforms in organizational structure and cut operational costs this year.

A public relations staff at Li Ning told the Global Times yesterday on the condition of anonymity that the company aimed to reduce day-to-day expenses and cut staff costs as a percentage of revenue by 0.5 percentage points this year.

Zhang Zhiyong, CEO of Li Ning, said in a statement released last week that the adjustment is beneficial to the company's long-term development, which helps to enhance operational efficiency and reduce headcount-related expenses.

"Cutting staff is helpful for the company to reduce cost in a short term, but the sportswear maker should focus on brand reorganization and invest more in research and development," Wei Guangju, a senior consultant at Adfaith Management Consulting, told the Global Times yesterday.

The sportswear maker said in an announcement released in January that the revenue would likely fall 6 to 7 percent in 2011 compared with the previous year, due to "the flat growth in orders" and "repurchase of some inventory from distributors."

"The sales revenue for shoemakers is declining because of furious competition. Besides, consumer loyalty to domestic brands is quite low compared to international sportswear brands, which caused a loss for Li Ning last year," Wang Xianqing, director of the Institute of Economics at Guangdong University of Business Studies, told the Global Times yesterday.

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