“Just Do It”

– Gary Gilmore,
leaving a lasting impact with his final words

Ever wondered why Nike is so successful?

Steve Jobs, Apple’s founder, asked himself the same.

Jobs cited Nike as the source of inspiration for his “Think Different” campaign, which is now regarded as one of the finest advertising initiatives in history.

“The best example of all, and one of the greatest jobs of marketing the universe has ever seen is Nike,” Jobs explained. “Remember, Nike sells a commodity. They sell shoes. And yet when you think of Nike, you feel something different than a shoe company. In their ads, they don’t ever talk about their products. What does Nike do? They honor great athletes, and they honor great athletics. That’s who they are, that’s what they are about.”

Want an example?

Nike x Ronaldinho. It is the first YouTube video to reach 1 million views. The debate continues as to whether the clip is real or fake.

This reminds me of my football youth. I wore the same shoes and we had to hit the crossbar from the penalty box line after every practice to end the day. Of course, with the same shoes as Ronaldinho, that was a piece of cake.

By the way, if you were still wondering, the “Just Do It” slogan was in fact inspired by Gary Gilmore, a convicted felon.

China: The Path to Big Growth for Brands

Nike’s success in the Western world propelled its entry into the Chinese market. By sponsoring the 2008 Beijing Olympics, Nike recognized the importance of China and tailored its product offering to the promising middle class.

Nike’s recent quarterly earnings report, released on June 28th, 2023, drew significant attention to its sales and growth rates in greater China.

While Chinese sales contribute only 16% to total brand revenue, the country’s 1.4 billion population offers substantial growth potential. Conquering the Chinese consumer market is crucial for consumer-oriented brands aiming to compete on a global scale, but ethical and moral challenges are also part of the equation.

Chart 1: Nike’s China sales as % of total sales are on the rise

The Rise of “Guochao”

Nike faces new challenges in winning the Chinese market, as demonstrated by recent trends. In 2022, Anta Sports, a Chinese sports brand known as “China’s Nike,” surpassed Nike’s dominance in greater China.

Ever heard of them?

Next to its house brand Anta, they own well-known brands like Fila, Peak Performance, Solomon and Wilson. In total global sales, they are still behind Nike (6x larger) and Adidas (3x larger). But no longer in Greater China itself.

Chinese consumers, particularly Gen Z, favor local brands due to a trend known as “Guochao” or “the national wave”.

Why is that?

This preference is politically driven, with Chinese consumers boycotting foreign brands over the Xinjiang Cotton incident. 90% of the cotton from China comes from the province of Xinjiang. Western companies no longer buy Chinese cotton because of concerns about forced labor.

This makes it difficult for brands like Nike, Adidas and Puma to improve their brand value in China. In theory, they could simply use cotton from Xinjiang and enjoy excellent growth and profits.

However, Nike and other Western brands must navigate difficult waters because growth at any cost or adopting Nike’s motto of “just do it” is not an option…

Chart 2: Xinjian Province as the Main Cotton Growing Area

_{Source: Map by Sofiya Voznaya}

arvy’s takeaway: Nike’s success lies in forging emotional connections with consumers, going beyond the image of a mere shoe company. Despite challenges in China due to “Guochao” and ethical concerns, Nike sees significant growth potential in the country’s expanding middle class and growing interest in sports. Balancing ethical considerations while tapping into the vast Chinese market is crucial for Nike’s continued success. Then China is too big to ignore.

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