The BBC published a story on Saturday regarding comments made by Nike CEO John Donahoe concerning the connection between Nike and China:
Chief executive John Donahoe said “Nike is a brand that is of China and for China” in response to a question about competition from Chinese brands.
Mr Donahoe was speaking during a call with Wall Street analysts about Nike's latest earnings report.
“Of China and for China.”
Well, okey-dokey. We can see just where Nike places its loyalty.
I recall back in the day that Nike was this little shoe company started in a rural area of Oregon by a couple of guys who poured rubber into a waffle iron to create a uniquely cushioned bottom for Japanese manufactured running shoes used by track athletes at the University of Oregon.
But it seems like that little company has grown up to be in a co-dependent relationship with the killers of millions around the world — members of the Uighur ethnic minority in Xinjiang, and a pretty decent number of people among the population of the planet via a virus.
Thank God Nike hit its quarterly projections for earnings and revenue, otherwise those problems with embracing a totalitarian dictatorship responsible for millions of deaths might have hurt the stock price and the value of the unexpired options held by senior Nike executives.
Not to mention LeBron and the rest of the NBA.
Mr Donahoe made the comments during a discussion on Nike's fourth quarter earnings, which showed revenues had doubled to a better-than-expected $12.3bn (GBP8.8bn) for the three months to the end of March.
That helped it bounce back to a $1.5bn profit, from a $790m loss during the depths of the pandemic a year earlier.
The figures also showed that revenue in China rose to more than $1.9bn, but missed Wall Street expectations of $2.2bn.
The problem for Nike — and LeBron and the NBA as well — is that they know the Chinese Communist Party is not “all bark and no bite.”
They have so much of their future financial well-being tied to the Chinese Communist Party's rule in China that they cannot risk this kind of retribution by offending their Chinese Masters:
At the start of the 2019 NBA season, with teams in China to kick off the season, the Houston Rockets' General Manager Tweeted: “Fight for Freedom. Stand with Hong Kong.”
This was the very moment in time when protesters in Hong Kong were battling with Chinese government police over the protesters' demands for greater democratic freedoms for Hong Kong consistent with its historical status as a protectorate of the United Kingdom. Consistent with long-held attitudes in China, any comment that contradicts the official party message is treated as a threat to China's national sovereignty. The Chinese Consulate in Houston was quick to react:
“We are deeply shocked by the erroneous comments on Hong Kong made by Mr. Daryl Morey, general manager of the Houston Rockets. We have lodged representations and expressed strong dissatisfaction with the Houston Rockets, and urged the latter to correct the error and take immediate concrete measures to eliminate the adverse impact,”
Chinese broadcasters canceled contracts to broadcast NBA preseason games.
Morey was forced to apologize — by the NBA — for his defense of democracy.
“I have always appreciated the significant support our Chinese fans and sponsors have provided and I would hope that those who are upset will know that offending or misunderstanding them was not my intention,” Morey tweeted on Sunday. “I have had a lot of opportunity since that tweet to hear and consider other perspectives.”
But the ripples from the rock thrown by Morey into the China pond rapidly expanded outward to other companies, including Nike.
The NBA has a lot to lose if it were to be shut out of China — one analyst estimates the country contributes 10% of the league's revenue. But its corporate partners, including Nike, are also counting on China to lift their bottom lines.
Nike brought in $6.2 billion in revenue from the Greater China region last year, up 21% from the prior year compared to just 7% growth in North America. China has been Nike's fastest growing market for the past two years.
Last October Nike (and Coca Cola) lobbied Congress to NOT pass legislation that would have made it more difficult to import goods and materials from the forced labor of the Muslim minority Uighur population in the Xinjiang Provence of China.
A few months ago, Nike did issue a statement saying that it would not use cotton from China's Xinjiang region.
“We are concerned about reports of forced labor in, and connected to, the Xinjiang Uyghur Autonomous Region. Nike does not source products from the XUAR and we have confirmed with our contract suppliers that they are not using textiles or spun yarn from the region.”
For that, it received a quick rebuke from its Chinese masters.
In response, the Chinese government and Chinese citizens have decided to boycott the company from the Chinese social media platform Weibo, thus limiting Nike's ability to reach Chinese customers.
Shortly after Nike issued its statement, people in China began posting videos of themselves burning Nike Air Jordans. Weibo was also full of expletive-laced comments about Nike. It is not clear to what extent such comments and actions in China are organic and to what extent they are astroturfed by the government.
Nike got the message and ceased its anti-China activism. Now Nike's profits are up and sales are booming in China.
Now, just to make it official, according to the CEO, “Nike is a brand that is of China and for China”