Li Ning Partners with HongShan to Establish a Joint Venture

HONG KONG, Oct 22, 2024 - (ACN Newswire) - Li Ning Company Limited (“Li Ning” or the “Company”; together with the subsidiaries, the “Group”; stock codes: 2331 (HKD counter) and 82331 (RMB counter)) announces today that LN Co, being an indirect wholly-owned subsidiary of the Company, entered into the Subscription and Shareholders’ Agreement with Founder Co, HongShan Venture, HongShan Motivation and the JV Company in relation to the formation of the JV Company in the British Virgin Islands and subscription of JV Shares by each of the JV Parties. The purpose of the JV Group shall be to develop and operate the Li Ning Brand business (including the sale of products carrying Li Ning Brand) in the Territory[1] on an exclusive basis.

Immediately following Completion, the total share capital of the JV Company shall be HK$200 million, of which the LN Co, Founder Co, HongShan Venture and HongShan Motivaton shall contribute HK$58,000,000, HK$52,000,000, HK$62,728,000 and HK$27,272,000 in cash respectively, accounting for 29%, 26%, 31.36% and 13.64% of the total share capital of the JV Company respectively.

The Group has been adopting the core strategy of “Single Brand, Multiple Categories, and Diversified Channels” to leverage its competitive advantages in the industry, and has achieved impressive results in the highly competitive Mainland China market. Having said that, the development of overseas markets, especially in the Belt and Road regions, is also part of the Group’s long-term development strategy. At the same time, the Group is aware of the uncertainties in the overseas markets. The business models in the overseas market also differ substantially from the models in the Mainland China market. The Group has considered that expanding into international markets requires collaboration with a partner which possesses extensive multinational resources. This requires the establishment of a new framework with an independent team, rich in overseas resources and experience, to take responsibilities of developing the international business operations with clear business and financial objectives.

HongShan has accumulated extensive investment experience since its establishment in 2005. It has a strong team of professional investors with deep industry insights and cross-border investment networks that may provide resources and services to portfolio companies, deploy key resources to enterprises that engage in transnational businesses during their development stage, and provide them with services such as business empowerment, talent development, digitalisation support and media management.

The formation of the JV Company leverages on the appeal of the Company’s founder, Mr. Li, to provide leadership in the positioning and direction of the Li Ning Brand’s development in the Territory. Moreover, the Company and Mr. Li together will hold 55% of the JV Shares, enabling the Company to effectively safeguard the reputation of the Li Ning Brand and to maintain sufficient influence over the JV Group. On the other hand, by bringing in HongShan, the JV Group may enjoy HongShan’s transnational resources and business experience which are expected to help the JV Group to accelerate its development effectively. In this joint venture, LN Co has the option to acquire all the JV Shares from HongShan Co in the future (subject to compliance with the relevant Listing Rules requirements), so as to realise the Company’s control over the JV Company.

The JV Parties can complement each other’s strengths and leverage on their respective reputations, brands, channels, talents and other resources in this joint venture, in order to empower the JV Group to be competitive and flexible in its business operations, and be more effective in risk management of the markets in the Territory. In the short term, the Company will prioritise its operations in Mainland China market to further increase the market share of its core business and to enhance the competitiveness of its brands in the key business segments.

[1]means any jurisdiction apart from Mainland China (that is, the Territory includes Hong Kong, Macau Special Administrative Region and Taiwan)