Deal missing and annual loss haunt Li Ning

Beijing-based sportswear manufacturer Li Ning's hopes of securing Kenya to brand its logo at the 2015 World Championships failed after the country opted to stick with Nike from USA.

In 2010, Athletics Kenya (AK) had agreed with Pamodzi Sports Marketing, a company IAAF had agreed to market the sport in Africa and Asia, to sign with Beijing-based Li Ning, but maneuvers by the government and sports administrators led to a still birth to the deal.

Instead, AK used the negotiations with Li Ning to improve their bargain and renew their contract with USA Sports Apparel Nike.

Dakar (Senegal) based Papa Massata Diack, the CEO of Pamodzi Sports Marketing, said in a statement received in Nairobi on Wednesday that his firm lost a lot of money after the deal collapsed.

"In 3 months, we were successful to find an agreement with Li-Ning (China) Sports Goods Ltd for a deal over 10 million U.S. dollars for six years, 2011 to 2016. The deal was signed by AK President, General Secretary and Treasurer in July 2010," said Diack, who is a son to IAAF President Lamine Diack.

Li Ning, which is backed by the U.S. private equity firm TPG Capital and the Singapore sovereign fund GIC, posted a net loss of 781.5 million renminbi, or $125.4 million, for 2014, compared with a 391.5 million renminbi loss a year earlier.

The retailer warned in January that it expected to post a loss for 2014, partly because of the costs of its transformation plans, and the result was in line with analysts’ forecasts.

Li Ning said full-year revenue rose 16 percent to 6.73 billion renminbi, while its gross profit margin came in at 44.6 percent, compared with 44.5 percent in 2013.

The company, which recently teamed up with the Chinese smartphone maker Xiaomi to produce a new generation of “smart” running shoes, operated 5,626 retail stores in China as of the end of December, 289 fewer stores than a year earlier.

In the AK case, the signing on fee of 200,000 dollars was paid by Oceans Marketing representing Li Ning and Pamodzi and later reimbursed to Oceans Marketing when AK decided to terminate the agreement unilaterally. Nike offered a counter signing on fee of 500,000 dollars.

"With investigation going in Kenya over the deal, I do understand that we have been used to re-negotiate the agreement with Nike and if there are problems arising from that, the only persons to be blamed are AK officials," he said.

Source:Xinhua, Reuters