Chen Yihong was a talented table tennis player in his youth, picked up by a local sports academy in Tianjin. While his love of sport would dictate his career path, he wouldn’t make it as a ping pong player. After a five year stint in the army, he moved into the sportswear business in 1980.
In 1991 he joined Li Ning’s fast-growing sportswear business (see Red Star WiC17 and China Consumer WiC47). Chen quickly rose through the ranks from manager of the Guangdong shoe department to running the Beijing operation and by 1997 became general manager of Li Ning Sports Good Corporation. After a restructuring in 1998 he gained a 3.53% stake in Li Ning.
In 2001 Chen – by now 43 – witnessed a further reshuffling within Li Ning, and viewed it as a demotion. So the following year, he did a deal with Li Ning to exchange his equity stake in the firm for a 20% stake in Beijing Dongxiang Sports – of which Li Ning held the other 80%. Dongxiang had the rights to market Italian brand Kappa in China and Macau. A little-known brand in China at the time, Chen saw the potential, particularly as Kappa products enjoyed a 57.5% gross margin – higher than Li Ning’s own margins. By 2004 he’d turned around sales, which hit Rmb105 million, with a net profit of Rmb5.7 million.
A good run
In 2005 Li Ning agreed to sell Chen its controlling stake in Dongxiang for Rmb45 million.
At the time, the Italian owner of the Kappa brand wanted to sell permanent ownership of the right to use the marque in China – which meant Chen needed to raise a further Rmb300 million. He sold a 20% stake to Morgan Stanley for $38 million. By focusing on Kappa as a ‘fashion’ sports brand – targeted at affluent 18-35 year-olds – he propelled it into the top three ‘international’ sports labels in China. In 2006 profit surged to Rmb180 million.
The next year, Chen’s net worth expanded with an IPO in Hong Kong, that saw Donxiang valued at Rmb29.8 billion. Expansion has been rapid. There are now 3,511 Kappa retail outlets in China and by 2009 sales had reached almost Rmb4 billion, with profit attributable to shareholders hitting Rmb1.45 billion. Chen has bought the rights to Kappa in Japan, as well as purchasing Phenix, a Japanese skiwear brand.
He ranked 46 in the 2009 Hurun rich list with assets of Rmb14.5 billion.
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