Nike Struggles in China as Local Rivals Gain Ground

Nearly half a century ago, Nike co-founder Phil Knight traveled through China by slow train, envisioning a massive future market for sneakers.

 China has become Nike's weakest-performing global market. (Photo: Nike Facebook)

He famously described the opportunity as “One billion people, two billion feet,” according to a report by Inti Pacheco and Jon Emont for The Wall Street Journal.

By 2010, China had become one of Nike’s most lucrative markets and a model for US companies hoping to benefit from China’s economic rise. Today, however, Nike’s business in China is struggling amid intense domestic competition and growing nationalist consumer sentiment.

Nike’s revenue in China over the past three quarters was 28% lower than during the same period five years earlier, despite continued growth in China’s sportswear market.

The company has replaced longtime China executives, reduced staffing, and acknowledged “structural” challenges in what has become its weakest-performing global market.

Executives recently warned investors that revenue in China and Taiwan could decline by roughly 20% year over year in the quarter ending May 31. The forecast pushed Nike’s stock price to its lowest level in more than a decade.

Nike later announced plans to cut approximately 1,400 jobs, or about 2% of its workforce.

The company is among several major American brands facing difficulties in China as slower economic growth and rising geopolitical tensions dampen consumer demand for foreign products.