Li Ning closes its only Hong Kong store

Li Ning Co Ltd said on Sept 11 that it has closed its only shop in Hong Kong to focus on its mainland business.

The Hong Kong shop was set up in 2009 under a two-year leasing contract by the leading mainland sports brand.

Challenges in management, differentiation of consumer demand and dominance from established international brands have all hindered the development of the company in overseas markets.

Industry analysts said that internationalization is no longer a priority for Li Ning because its home market is declining.

The company said that its international businesses including those in Hong Kong are still in an exploratory phase, with cost control and risk control measures. At present its strategy is to focus on the domestic market.

The pullout from Hong Kong comes amid the company's declining profits and lackluster performance in its home market.

The company is among many Chinese sportswear brands that have encountered obstacles when trying to expand to overseas markets.

"Domestic brands have been faced with increasing challenges to penetrate markets in Europe and the United States where mainstream sportswear brands have established their presences for years," said Zhang Qing, an industry analyst.

Whether the shift of market focus will be a turning point to Li Ning's business depends mostly on how it improve inventories, analysts said.