U.S. sportswear maker Nike is struggling to pull out of a prolonged slump in China. Growth of domestic brands, weaker consumer spending and repeated discounting have hit both revenue and the company's premium image at the same time.
Domestic brands advance as spending weakens
Nike said on the 24th that revenue in China for the first quarter of fiscal 2027, covering June through August 2026, came to $1.18 billion on a currency-neutral basis. That was down 26% from a year earlier, the steepest quarterly drop for the China business in the past nine quarters. Global revenue over the same period fell 4% to $11.21 billion.
In China, domestic brands such as ANTA and Li Ning have emerged as competitors to Nike. ANTA, launched in 1991, has broadened its customer base by operating brands including FILA and Descente alongside its own reasonably priced products. The brand founded in 1990 by Li Ning, a former Chinese gymnast, and named after him has also won over local consumers by combining traditional cultural motifs with contemporary design.
The "guochao" boom, a preference for products reflecting Chinese culture, is also weighing on global players. Analysts say local companies have quickly read consumer tastes and reflected them in their products, while Nike failed to respond nimbly to shifts in the market.
Worsening consumer conditions are another drag. With the economic slowdown and a property market downturn prompting more consumers to tighten their spending, the price competitiveness of Nike's relatively expensive products has weakened, analysts said. Repeated discounting to clear inventory has also cut demand for full-price purchases and blurred Nike's distinctiveness as a premium sports brand, critics said.
Distribution overhaul and localization aimed at rebound
Nike plans to restructure its sales channels to restore profitability and its brand image. From January 2027, it will limit online sales rights for major wholesalers and concentrate its selling capacity on official online stores. The aim is to narrow price gaps across distribution channels, reduce reliance on constant discounting and raise the share of full-price sales.
Still, it is hard to rule out additional pressure on near-term results if the role of existing sales channels shrinks during the overhaul of the distribution network. It remains uncertain whether changing the online sales structure alone can reverse the loss of consumers.
Nike is also stepping up product development aimed at local demand. The plan is to strengthen the merchandising and development capabilities of its China organization and roll out footwear and apparel that reflect local consumer preferences. How quickly it can bring out products suited to the Chinese market is seen as key to restoring its competitiveness.
The company is pursuing company-wide cost cuts in parallel. Nike has set a target of saving about $2.5 billion by fiscal 2031. Some observers say spending cuts alone will not win back market position lost to local rivals. A turnaround in the China business will likely require simultaneous improvements in pricing policy, product competitiveness and responsiveness to consumer tastes.