Nike in China

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EXCERPTS

SCALING THE GREAT WALL

Philip had always thought China was a market which held huge potential for Nike. In the 1970s, when Nike started a subsidiary in Taiwan, it was given Nike’s original name ‘Blue Ribbon Sports’. This was because Philip was not keen on using the name Nike in Taiwan, as China considered Taiwan to be a renegade province. Nike started manufacturing in China during the 1970s. Philip visited China in 1980, when the country was emerging out of the Cultural Revolution. At that time, Nike’s sales were US$ 150 million and the company was all set to go in for an IPO. At that time, China had not yet become the manufacturing hub for the world and was nowhere close to becoming the fastest growing market in the world. Philip, however, felt that China offered several opportunities, with its low wages and talented manpower. He was of the view that with some up gradation, the factories would be able to produce what Nike wanted. Within a year he started negotiating with the Chinese Communist party. At that time, the government was moving slowly toward economic liberalization. Deng Xiaoping, who succeeded Mao Zedong was looking at doubling China’s GDP by the end of the 1980s...

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NIKE FOR CHINESE

Nike’s consumer presence in China started in the 1980s. In 1981, it opened a small marketing office in the country with six employees. It started to make its presence felt in the market by sponsoring several sports related events, including professional leagues. Nike launched professional sporting leagues, and was instrumental in building the American ‘streetball’ culture in China...

NIKE GROWS WITH CHINA

In 2000, top officials of Nike China met to decide on their strategy for the Olympic Games of 2008. At that point, Beijing was competing with other cities – Toronto, Paris, Istanbul, and Osaka – to host the Games. Earlier, Beijing had lost out to Sydney in its bid to host the 2000 Games, and the Chinese government was determined to succeed this time around. This required the International Olympic Committee to select a host city. Each member of the IOC had one vote. The members voted for the cities and several rounds were conducted until one city received a majority of the votes (The city that received minimum votes in each round was eliminated)....

THE FALL

After the Olympic Games of 2008, there was a growing demand for athletic gear and athletic footwear. Several brands invested heavily anticipating high sales, but the demand was short lived, and several companies were forced to close down their stores. ..

THE REJIG

In 2013, Nike adopted the ‘Reset’ strategy in China in order to achieve profitable and sustainable growth and reposition the brand in the market. Under this strategy, Nike applied the insights it had gained from the ‘Category offense’ strategy it had used in the North American market in the Chinese market. This was a part of Nike’s plan to translate its key strategies into locally relevant executions. ..

LOOKING AHEAD

Experts said Nike had managed to turn its fortunes around by repositioning itself as a high-end brand targeting the upper middle class, instead of a mass market brand. They said with the changes in the Chinese economy, those companies that catered to the mass market were struggling, whereas high-end products were gaining ground by finding acceptance among the consumers...

EXHIBITS

Exhibit I NIKE, Inc. Consolidated Statements of Income

Exhibit II Nike Quarterly Financial Data

Exhibit III Initiatives by Nike to Popularize Sports in China

Exhibit IV China – GDP