Research On The Corporate Performance Of Sport Goods Companies Under The Asset-Light Operating Model

The Chinese sporting goods industry has been severely affected by the new crown virus epidemic,not only due to the rising cost of raw materials and labor,but also from foreign big-name sporting goods companies.Furthermore,the consumer market has undergone a drastic transformation in recent years,leading to intense competition within the industry.In this context,many domestic sporting goods companies are facing the actual situation of inventory backlog and lack of sales,and the reason for such a situation is that many domestic sporting goods companies are still mainly using the traditional business model,that is,less investment in research and development,focusing on production,sales,focusing on third and fourth-tier cities,with agency stores as its main point of sale,in order to reduce their own operational risk.The existing domestic market necessitates a transformation and upgrade of the company’s traditional business model,in order to alter the prevailing trend.The asset-light operating model stands out from the traditional one due to its emphasis on brand marketing,product development,and customer development,which bring greater value and yield higher returns with less investment,thus leading to superior financial performance.Li Ning Sports Goods Co.,Ltd.(hereinafter referred to as Li Ning Sports),the premier domestic sporting goods company,has been a market leader for many years since its inception.However,its gearing ratio was as high as nearly 70% in 2012,with increasing financial risk that greatly affected the company’s growth.Since then,Li Ning Sports has been actively transforming and upgrading its business model,hoping to solve the financial crisis by increasing investment in R&D and marketing and using an asset-light operation model,so that Li Ning Sports can get out of the predicament and gain new development.This paper mainly adopts a case study approach to study Li Ning Sports performance under A model of operation that is asset-light.Firstly,the research background of the article and its significance are introduced,while the research on light assets and financial performance in domestic and international literature is introduced,as well as the theoretical basis and concept definition of the article are determined;secondly,the basic introduction of the case company is made in the context of the market situation of domestic sporting goods industry;then,the financial data of Li Li Ning Sports for nine years are analyzed and studied based on traditional financial indicators,economic value added and non-financial indicators.The impact and effect of the asset-light operation model on corporate performance is explored;finally,suggestions and insights are provided,and theoretical support is offered for other companies in the industry to transform and upgrade their operation models in the future.The study finds that under the background of the transformation of the asset-light operation model,Li Ning Sports did not have a positive impact on the company’s performance due to the negative impact of the market environment in the early stage of the transformation.However,with the passage of time and the improvement of the market environment,this model can bring positive impacts to the company.The light asset operation model is a feasible path for the development of sports goods companies.At the same time,it is also important to consider that its model is also flawed,and the company should conduct a lot of research and transformation programs in the pre-reform period to find out the path that is in line with its own development,combine its own characteristics,and choose a suitable operation strategy.Finally,this paper also provides suggestions from four perspectives: sales channel construction,brand building,research investment,and segmented market.It is hoped that this paper can provide ideas and perspectives for the subsequent development and reform of other sports goods companies.