Li Ning Sports USA, Inc., had an intriguing start four years ago in Portland, opening its North American headquarters in the backyard of Nike, Adidas America and other footwear brands. It was a coup for Portland to become home for the company sometimes called "the Nike of China."
Today, however, the company's Pearl District staff has shrunk by half, from about 30 employees last year to about 15. A deal with Champs Sports, a division of Foot Locker, Inc., that was intended to give the brand its biggest reach yet into the American retail market, is kaput. And a line of running shoes designed in Portland has a squishy future.
The state of parent Li Ning, Co., the Beijing-based company founded 20 years ago by famed gymnast Li Ning, appears to be in equal flux.
Sales for the first two quarters have been disappointing. Three of the company's top executives resigned on Tuesday. And the stock value has fallen more than 10 percent this week. That decline was steep enough to prompt the Board of the Hong Kong Stock Exchange issued a news release Wednesday saying it did not know why the stock had dropped.
Regardless, Li Ning remains committed to Portland, said Jay Li, general manager of Li-Ning Sports USA as well as the company's fledgling international division. "We're still extremely happy we're here," he said Tuesday. "This is obviously where the talent pool is," referring to product design.
But with shedding of staff and other setbacks, Li said the purpose of the Pearl District headquarters -- which features a retail outlet -- has changed.
It's "a learning center based in the U.S. to understand the U.S. market and advance accordingly," Li said.
Last August, the company appeared poised to make the Portland office even more than a learning center. It announced its Champs deal, placing "BD Doom" shoes and apparel in about 70 stores, primarily on the West Coast. BD Doom is the signature line of Baron Davis, then of the Los Angeles Clippers.
Days before the start of the 2010-11 NBA season, none of the products could be found at the Lloyd Center Champs. A store employee said the product supply had been returned to Li Ning. A Champs spokesperson has not responded to several requests for comment. Li confirmed Li Ning products are no longer in Champs.
Li said the local office and Beijing headquarters remain interested in finding other ways to attract American consumers to its basketball brand.
"Having an association with a few NBA stars is far from enough," he said, noting that in addition to Davis, Evan Turner, the number two overall pick of the Philadelphia 76ers in the 2010 NBA draft, is another Li Ning endorser.
It's a long shot for any company to make a dent in the mature U.S. basketball market, which is dominated by Nike, said Marshal Cohen, chief retail analyst of the NPD Group in Port Washington, N.Y.
"You could break into Fort Knox more easily than break into the basketball market," Cohen said.
Behemoth brands dominate store shelves as well as on-line sites and any brand must have a huge supply available to meet potential demand, Cohen said.
Of the $12.3 billion U.S. athletic footwear market, about 12 percent is basketball sales, according to The NPD Group, Inc./Retail Tracking Service.
Last September, the Li Ning USA office also was seeking to break into the U.S. specialty running shoe category. Its local staff designed a handful of shoes to be manufactured in China for the U.S. market.
Several specialty retailers carried the first shoe, the "Fremont," named for the bridge in Portland, and placed orders for subsequent shoes aimed at the red-hot lightweight shoe category. Fit Right Northwest, the athletic supply shop in Northwest Portland and Vancouver, was the first specialty retail store to carry the Fremont.
But a Li Ning representative informed Fit Right Northwest that "everything is shutting down here in the U.S.," said store co-owner Robb Finegan. "I don't have any support from them as far as a sales rep."
Fit Right had planned to partner with Li Ning for running events this summer, but that's canceled. Li Ning was a key sponsor of the Eugene Marathon, but, days before the May 1 event, informed its partner, the Eugene Running Company, that it was pulling out of the running business.
An inventory of thousands of running shoes, much of it stored at a warehouse near Jantzen Beach, must now be liquidated. Finegan marked down his remaining Fremont supply by 30 percent on Tuesday.
Li, however, said Li Ning still plans to launch its two lightweight shoes. The "Liede," named for a bridge in China, and the "Broadway," named for the Portland bridge, will be released this summer. It's not clear, however, where the shoes will be sold.
"Following that launch," Li said, "we are working to restrategize the next steps to differentiate Li-Ning products for the U.S. office."
The Portland office also awaits word on the role of a Chicago marketing firm, the Acquity Group LLC, in a joint venture to shape Li Ning USA's future.
The partnership was announced in January, not in Portland, but in Beijing. And it was announced by Zhang Zhiyong, the Li Ning chief executive.
