Why Chinese Customers Are Running From Nike

Summary

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Podcast Summary: Why Chinese Customers Are Running From Nike

The Journal (The Wall Street Journal & Spotify Studios)
Date: May 20, 2026
Hosts: Ryan Knutson & Jessica Mendoza
Guest/Source: John Eamont (Asia Reporter)

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Episode Overview

This episode explores how Nike went from an iconic success story in China to facing massive declines and fierce competition. The hosts and Asia reporter John Eamont examine Nike's early entry into China, its heyday of explosive growth, and the challenges that have led to its current struggles—including geopolitical backlash, rising local competition, and shifting consumer trends.

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Key Discussion Points & Insights

1. Nike’s Early Bet on China and Explosive Growth

• Phil Knight’s Vision: Phil Knight saw potential in China decades before most Western companies. His mantra: “1 billion people, 2 billion feet.” (John Eamont, 00:13)
• Early Entry into China: Nike began by making its shoes in Asia, first in Japan and Korea, and by the late 1970s, China became the new frontier for both manufacturing and, eventually, as a consumer market.
• Building the Brand: Knight’s team made grueling visits, traveling by train for 16-18 hours in China’s sweltering heat to get a feel for the place and build relationships. (John Eamont, 05:06)
• Dual Strategy: Nike’s aim was to use China as a low-cost manufacturing base and develop it into a future market for its products.
• Cultural Savvy: Early strategies included making Nikes aspirational and foreign, from sponsoring top Chinese athletes to hosting exclusive sales that traded on the allure of “foreign-ness.”
  • “If I say you have to have a foreign passport to go, that's just going to make this seem like super exclusive and super foreign... and Chinese people are going to really dig that. And he said it worked like wonders.” (John Eamont, 07:03)

2. Controversies and Criticisms Along the Way

• Documentary Critique: Michael Moore challenged Nike’s commitment to American jobs in his documentary “The Big One.” Knight argued that Americans didn’t want factory jobs. (Michael Moore & Phil Knight, 08:56; 09:15)
• Labor Issues: Nike faced global scrutiny for labor practices but denied child labor in its history, while publicly raising minimum working ages in its factories.

3. Nike’s Peak and Decline in China

• China’s Olympic Moment: Nike was front-and-center during the 2008 Beijing Olympics, sponsoring teams and cementing its status.
• Astronomic Growth: From 2008–2019, Nike saw 20 consecutive quarters of double-digit revenue growth in China—a run few companies achieve. (John Eamont, 10:43; 11:00)
• Manufacturing Shift: Rising wages in China pushed Nike to move manufacturing to Vietnam, marking China’s transition from producer to lucrative consumer.

4. The Trouble Begins: Backlash, Local Rivals & Market Changes

• Geopolitical Backlash (2021): Amid Western criticism of human rights abuses in Xinjiang, Nike (and other brands) pledged not to use Xinjiang cotton, triggering a fierce nationalist backlash and viral videos of burned Nike shoes in China.

  • “Chinese nationalists... took great offense... Chinese customers were furious about Nike's boycott... posted videos online burning Nike sneakers." (Ryan Knudson & John Eamont, 13:23–13:47)
  • “It just showed how it was becoming much harder to both succeed in the US and the west and succeed in China at the same time.” (John Eamont, 14:07)

• Rise of Domestic Brands:

  • Anta’s Strategy: Once a contract manufacturer, Anta became a major competitor, offering good quality at lower prices, marketing its “Chineseness,” and innovating rapidly.
    • “Our goal is not to be the Nike of China. Our goal is to be the ANTA of the world.” (John Eamont, quoting ANTA CEO, 15:56)
  • Homegrown Innovation: Local brands used strong materials science and even signed NBA stars, matching Nike on quality and cachet.

• Digital-First Shopping Culture:

  • New Chinese retailing happens via social media livestreams, with seamless e-commerce built into platforms like Douyin (Chinese TikTok).
  • “It's somebody holding up a shoe, often talking about how the shoe's really good... and Anta certainly didn't have [hesitation about social trends].” (John Eamont, 16:16, 17:12)

• Nike’s Missed Beats:

  • Slow to adapt to Chinese digital retail trends compared to nimble domestic competitors.
  • Reliance on legacy products (like Air Jordans) failed to appeal to younger Chinese customers unfamiliar with the Michael Jordan legend.
    • “Younger Chinese, I mean, they don't know much about Michael Jordan... a cousin coming up to him and saying, wait, Michael Jordan, he's dead, right?” (John Eamont, 17:25)

5. Consequences and Broader Implications

• Double-Digit Declines: After years of surging growth, Nike is now seeing steep revenue drops in China—a reversal that's dragging down global results.
• Generic Global Troubles: Customers see Nike as lagging in innovation globally, not just in China.
• A Difficult Road Ahead:
  • "Nike's peak in China was so high... It's really hard to imagine ever ascending... to those Olympian heights again." (John Eamont, 20:04)
  • The Chinese market now demands speed, digital savvy, and no guarantees for global brands.

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Notable Quotes & Memorable Moments

• “1 billion people, 2 billion feet. So he understood very early on that this was a huge market.” (John Eamont, 00:13)
• “China is definitely its biggest challenge right now. But if it can't figure out China... will it be able to figure out everywhere else?” (John Eamont, 01:17)
• “If I say you have to have a foreign passport to go, that's just going to make this seem like super exclusive... and it worked like wonders.” (John Eamont, 07:03)
• “Our goal is not to be the Nike of China. Our goal is to be the ANTA of the world.” (John Eamont quoting CEO of ANTA, 15:56)
• “Younger Chinese... they don't know much about Michael Jordan.” (John Eamont, 17:25)
• “Nike's peak in China was so high and the company was so successful and so dominant, it's really hard to imagine ever ascending... to those Olympian heights again.” (John Eamont, 20:04)

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Timestamps for Key Segments

• Nike’s Foundational China Bet: 00:05 – 07:46
• Cultural Strategy & Exclusivity: 07:03 – 08:21
• Controversies and Criticism: 08:21 – 09:35
• China Market Becomes Major Revenue Source: 09:58 – 11:21
• Backlash & Geopolitics – Xinjiang: 13:07 – 14:18
• Rise of Anta & Local Competition: 14:18 – 16:01
• Digital Retail Trends (Livestreaming): 16:01 – 17:12
• Nike Stumbles with Young Consumers: 17:12 – 17:54
• Broader Pain and Future Prognosis: 17:54 – end (20:44)

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Takeaways

Nike’s plunge from dominance in China isn’t a story of a single misstep, but of massive market change, growing domestic innovation, and the challenges of navigating geopolitics. Brands that dominated for decades now face agile, digital-first rivals and a younger consumer base with different tastes.

John Eamont's concluding note: “There's not a single brand I think could really attain that same level of dominance from the market that Nike had.” (20:34)

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Transcript

[Ryan Knudsen]

50 years ago, when few American companies were thinking about China, Phil Knight, the founder of Nike, saw an opportunity.

[John Eamont]

He had this vision, and the vision was called 1 billion people, 2 billion feet. So he understood very early on that this was a huge market.

[Ryan Knudsen]

That's our colleague John Eamont, who covers Asia. He says that Knight's vision turned out to be prophetic. How big of a success was China for Nike?

[John Eamont]

An extraordinary success. I mean, just this awesome cash cow. They had a very strong quarter, mainly

[Ryan Knudsen]

driven by strength in China and emerging markets. Shares of Nike reached an all time high on Friday.

[Narrator/Announcer]

Nike continues to shine, beating bottom and top line, punctuated by 22% revenue growth this quarter.

[Ryan Knudsen]

And the company became a model for Western businesses looking to break into China. But now what's happening to Nike in China is looking more like a cautionary tale. Like many American brands, Nike is now struggling there and it's dragging down the whole company. This quarter, Nike is projecting a 20% decline in revenue in the region.

[John Eamont]

The last four years have seen really significant deterioration in the brand. Sales have been dropping fairly precipitously. China is definitely its biggest challenge right now. But if it can't figure it out, China, there's a reasonable question, will it be able to figure out everywhere else?

[Ryan Knudsen]

Sounds like Nike's soles are worn down. There's maybe a hole in the toe.

[John Eamont]

Yeah. The shoelaces are tied together.

[Ryan Knudsen]

Yeah. Welcome to the Journal, our show about money, business and power. I'm Ryan knudsen. It's Wednesday, May 20th. Coming up on the show, how Nike lost its footing in China.

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[Ryan Knudsen]

Phil Knight's big idea, which he came up with as a student at Stanford, was that you could manufacture shoes cheaply in Asia and sell them for a big profit in the US in the 1970s, he started making Nikes in Japan and South Korea.

[John Eamont]

And these places were getting expensive and so he was looking for a new place to make them. And China seemed like it had potential, right?

[Ryan Knudsen]

In 1978, China began opening to the west.

[John Eamont]

But it was just emerging from the Cultural Revolution and it was not a place on most American businessmen's to do lists.

[Ryan Knudsen]

Knight wanted to get into China at first just to make shoes. But the trick was figuring out how.

[John Eamont]

It wasn't easy. You know, it's not like today where you can just get on a plane to China and you know, now it's extremely easy to do business in China. It simply wasn't done. And so he asked people he knew, influential people, how do you get into China? How do you, how do you go about doing this? And he, he discusses in his autobiography the nervous drinking that went on before they went to China. They just really didn't know what they were getting into.

[Ryan Knudsen]

Nike ended up hiring a China Expert. And in 1980, Knight and a team of executives made their first big visit to the country.

[John Eamont]

He insisted that all of his executives, they get in the country and they travel by train. So they weren't just flying places. They, they got on, I think it was like a 16 hour train ride from.

[Ryan Knudsen]

They didn't jog everywhere.

[John Eamont]

I mean that would have been almost as fast at that time. I mean now we think of China as this place of high speed rails where what I think China, it's Shanghai to Beijing it's something like four hours. But then it would have been like 16 or 18 hours and there was no air conditioning. And it was the summer and China gets hot. And so everyone was just wandering around kind of in their underwear. And he said that some of his executives decided to just strip it too. That's how hot it was.

[Ryan Knudsen]

By the time of this sweaty business trip, Knight had developed a playbook. Nike would open factories in East Asian countries that were just starting to industrialize. Eventually as people got wealthier and could command higher wages, Nike would move on. And John says that eventually the country that used to make the shoes would instead start buying them. So Knight went to China with two goals.

[John Eamont]

One was the turning it into a global manufacturing hub for Nike. But then there was the other part, which is actually turning this place into

[Ryan Knudsen]

a market to pull that off. Nike set out to make the brand cool in China from the very beginning. As it was setting up factories there in the 80s, it also struck deals to put its shoes on prominent Chinese athletes.

[John Eamont]

Olympians, pole vaulters, racers, and. And they were wearing Nikes from well before. The vast majority of China's population could have really afforded Nikes. And I think it definitely generated goodwill and it. And it associated Nike with. With the tenacity of China's top athletes.

[Ryan Knudsen]

Nike also understood that it had something going for it. Foreign brands were cool, so the company leaned into that. One former Nike employee told John a story about how that helped the company weather the Asian financial crisis of the late 1990s.

[John Eamont]

My source of Nike had gotten orders to basically try to sell a lot of Nikes fast. And so we had to think hard, how can I just get these things out the door? And he set up an event where you'd be able to buy discounted Nikes, but you had to have a foreign passport to go. And his thinking was, if I say you have to have a foreign passport to go, that's just going to make this seem like super exclusive and super foreign and. And Chinese people are going to really dig that. And he said it worked like, wonders. I mean, that sort of just shows how, you know, in those years how much cachet came from being foreign and, you know, the perception that if it's a foreign product elite and if foreigners buy it, it's cool.

[Ryan Knudsen]

I mean, it's also interesting. That shows sort of two things. One, this executive understood how to create a buzz in a way that people would like. You know, I mean, that sounds like in a different context, people might be offended by that. I mean, did you try that today? That might not work very well.

[John Eamont]

No, I don't think so.

[Ryan Knudsen]

But then two, just also to your point that, like, American brands at this time were extremely popular in China.

[John Eamont]

Totally. At that point, foreign brands were seen to be a very high quality and was everything you'd aspire to.

[Ryan Knudsen]

As Nike's success in China was taking off, its strategy there also created controversy. Filmmaker Michael Moore made Nike the subject of a scathing documentary called the Big One, where he challenged Knight to open Factories in struggling American towns like Flint, Michigan. Rather than continuing to invest in Asia,

[Michael Moore]

I want the people of Flint, who would like to work, who would like to have a job at Nike, to come here and stand in front of city hall. I'll have my film crew here dress warm and show him that the people of Flint, if they had an opportunity to work, would certainly work.

[Ryan Knudsen]

In the documentary, Moore talked to Knight, who said he didn't think Americans really wanted to work in shoe factories. Nike also faced allegations of poor working conditions in its overseas factories, including the use of child labor. Here's Knight responding to those allegations and announcing reforms. In 1998.

[Phil Knight]

We have raised the minimum age of all footwear factories to 18. In all apparel and equipment factories, the minimum age is 16, the same as it is in the United States. And I really do have to add this, that there has never been a time in Nike's history where child labor has been a problem.

[Ryan Knudsen]

Still, none of this seemed to stop the company's momentum in China. In 2008, Beijing hosted the Olympics for the first time. It was a huge moment for China and Nike sponsored many of the country's Olympic teams. Around that time, the country transitioned from being a Nike manufacturing base to, to being a big buyer of its sneakers.

[John Eamont]

From about 2008 to 2015, period. That's when two things started happening. One, China was just growing quite fast for a lot of that period. So China was becoming just a major market for, for Nike in terms of selling its shoes. And also at the same time, Nike was getting antsy about wage growth in China. And so it was actually shifting its manufacturing to Vietnam. So it was around that period that we started seeing a lot of the China market first use just explode.

[Ryan Knudsen]

So Phil Knight carries out this strategy. He steps down as chairman of the board in 2016. And so at the end of his tenure, how big and how important had China become at that point?

[John Eamont]

I would put the peak at around like just pre. Covid. Ish, early Covid. You know, it was, it was huge. So in 2019, for example, the company announced 20 consecutive quarters of double digit growth in China.

[Ryan Knudsen]

Wow, that's double digit growth.

[John Eamont]

I mean, I imagine that, right? How often do you get that in business? So it's not only that China is just so, so huge in terms of what it's bringing in for the company, but it's also just growing so fast. So if you think about yourself as an investor, you're thinking like, wow, this is like, this is incredible.

[Ryan Knudsen]

But Nike was about to hit a gray wall. That's next.

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[Ryan Knudsen]

The first hint of trouble for Nike in China started on social media around 2021. There was a lot of global attention on Xinjiang, a region in western China where a lot of companies source cotton and where the US Accused China of human rights abuses.

[John Eamont]

Companies like Nike announced that they were not going to source from Xinjiang, and around 2021, Chinese nationalists sort of cottoned on to what these western brands had been saying and took great offense to it.

[Ryan Knudsen]

Chinese customers were furious about Nike's boycott and posted videos online burning Nike sneakers.

[John Eamont]

They took a big hit in sales and they just had to put their head down for a while.

[Ryan Knudsen]

It was almost like Nike got Nike was trying to make a statement to the American market that they were not going to be perceived as supporting these allegations of human rights abuses. And then they got almost canceled in China for making a statement that a lot of American brands did.

[John Eamont]

That's right. So it just showed how it was becoming much harder to both succeed in the US and the west and succeed in China at the same time.

[Ryan Knudsen]

Meanwhile, homegrown Chinese athletic shoe companies were starting to eat into Nike's business. One of Nike's main Chinese rivals is a company called Anta. It was started in 1991 and was originally a factory for Western companies before striking out on its own.

[John Eamont]

ANTA was making, you know, decent quality athletic shoes and was able to, was able to advertise to the Chinese market that we're a Chinese shoe brand. And they were able to sell shoes rather inexpensively. Right. I mean, Nike did have large markups. Right. That's why China brought in so much profit.

[Ryan Knudsen]

Price was one way ANTA started beating Nike, but its quality was also making huge leaps.

[John Eamont]

China's got really good material scientists, right. I mean, it's just this global manufacturing hub at this point. They figured out how to make, you know, really good foam. And, you know, they had their own recipe that they developed with Chinese scientists they worked with. And pretty soon they were making, you know, quite good running shoes.

[Ryan Knudsen]

And then they also signed NBA players like Klay Thompson. Yeah, and then Kyrie Irving.

[John Eamont]

Yeah, yeah, that's right. And Li Ning has the way of Wade shoes because of, you know, from Dwyane Wade. And so they were taking Nike on, right? They were going right into Nike's backyard, essentially. And, and they were really gutting for Nike Spot and pretty openly the CEO of Avanta said, you know, our goal is not to be the Nike of China. Our goal is to be the ANTA of the world.

[Ryan Knudsen]

And ANTA was quicker to jump on trends in Chinese shopping culture.

[John Eamont]

So China's retail market, especially in the past few years, has just gotten hyper competitive. So the Chinese shopper is very online. They're really looking for deals.

[Ryan Knudsen]

Lots of sales are happening not just online, but on social media via live streams.

[John Eamont]

It's a bit like the shopping network stuff that we sort of grew up with. It's somebody holding up a shoe, often talking about how the shoe's really good, how you could wear it, what it's good for, the price is right, you know, stuff like that.

[Ryan Knudsen]

Bro, I am over here on Chinese TikTok watching the Chinese live streams.

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[John Eamont]

It was hard for, for Nike executives. So how much they should embrace Chinese social media trends? You know, do you, do you jump in on the short form video app Doyen, or do you have to be a bit cautious about it? And so I think there was a lot of hesitation about how to approach some of these new sales platforms and new ways of selling, but Anta certainly didn't have that. So Anta, you know, brags about how they have AI avatars that are doing this live streaming and live selling. Right. They're future forward.

[Ryan Knudsen]

Nike, on the other hand, has been criticized for relying too much on its past. For instance, younger Chinese customers wanted variety and innovation, but Nike was still leaning on its classics like Air Jordans.

[John Eamont]

You know, younger Chinese, I mean, they don't know much about Michael Jordan. So like, for example, I spoke to one person in, you know, an employee in Nike in China, a former employee in Nike China. He remembers a cousin coming up to him and saying, wait, Michael Jordan, he, he's, he's dead, right? It's like, no, no, no, the legend still lives is what, it's what the guy told him. But so, so Nike is still rolling out, you know, through the old hits, but younger people in China aren't, aren't as interested.

[Ryan Knudsen]

All these factors have created real pain for Nike's business. After years of double digit revenue growth in China, the company is now seeing double digit declines. Nike said it's working hard to turn its business in China around by writing off unsold inventory and revamping its stores. Executives said in March that sales of running products were growing. As we've covered a lot on the show, Nike is also struggling everywhere, including in the U.S. so how much do you think this is a product of Nike just slipping across the board versus Nike struggling specifically in China?

[John Eamont]

Yeah, it's a really great question. And I suspect folks in Nike are trying to get to the bottom of this one too. This is part and parcel with Nike's broader global struggles. There's this feeling among consumers that they have dropped the ball on innovation, that their products are not as good as their competitors, that they're just not leading the pack anymore. But then there are these major China specific issues. They didn't have too much competition in China for so long, and so the fact that they were sort of caught sleeping on the innovation front is hitting them even harder in China where there are these domestic brands who have been innovating, who are cheaper and who are very popular.

[Ryan Knudsen]

Nike isn't the only American brand struggling in China right now. A lot of US companies are having a hard time there these days. American brands that once dominated are facing new competition from local ones. And John says it shows that China isn't quite the same opportunity it was when Phil Knight first showed up there on that sweaty train ride.

[John Eamont]

American companies, they have to be prepared to move much faster, embrace digital tactics that maybe don't feel right or don't feel necessary, necessary elsewhere. To not think that just because you are huge and seemingly dominant in this market that that's necessarily going to be the case two years from now?

[Ryan Knudsen]

How difficult will it be for Nike to turn things around in China?

[John Eamont]

Nike's peak in China was so high and the company was so successful and so dominant, it's really hard to imagine ever ascending, getting to those Olympian heights again. They're working hard on recovering, and it's certainly not for me to say that they won't have some success. But it's going to be really tough to get back to where they were. And that's in part just because of they were so smart and so early getting into China. But it's a much more competitive environment right now, and there's not a single brand I think could really tain that same level of dominance from the market that Nike had.

[Ryan Knudsen]

Before we go, we have a question for you. Are you about to graduate or did you just graduate? If so, how are you feeling about AI in your career? Hopeful? Annoyed? Excited? Anxious? Why? We want to hear from you college grads. Send us a voice memo to thejournalsj.com and we might include it in an upcoming episode. That's all for today. Wednesday, May 20. The Journal is a co production of Spotify and the Wall Street Journal. Additional reporting in this episode by Inti Pacheco. Thanks for listening. See you tomorrow.