Nike is 'a brand of China and for China', CEO says

Nike CEO says sports giant is ‘a brand of China and for China’ in earnings call defending position in country after concerns over human rights

  • This week, CEO John Donahoe conducted his quarterly earnings report
  • He was asked about the company’s plan in China by an analyst 
  • ‘We’ve been in China for over 40 years, still invested significant time and energy in China in the early days and today we’re the largest sport brand there,’ he said
  • ‘We’ll continue our long-term investment in China,’ Donahoe later added 
  • During the earnings call, it was revealed that Q4 revenue in the country rose 9 percent on a currency neutral basis 
  • Additionally, the company saw double-digit growth in the country for the seventh consecutive year 
  • Despite the growth, sales in the Greater China area actually failed to hit Wall Street expectations this past year 
  • The comments come months after the sportswear apparel company was embroiled in controversy over alleged human rights abuses in the country 

The CEO of Nike said the company is a ‘brand of China’ during a recent earnings call, defending the company’s position in the country.

The comments come months after the sportswear apparel company was embroiled in controversy over alleged human rights abuses in the country.

This week, CEO John Donahoe conducted his quarterly earnings report for the company. He was asked about the company’s plan in China by an analyst.

‘We’ve been in China for over 40 years, still invested significant time and energy in China in the early days and today we’re the largest sport brand there and we’re a brand of China and for China,’ Donahoe responded, according to a transcript published by Nasdaq.

‘We’ll continue our long-term investment in China,’ Donahoe later added.

During the earnings call, it was revealed that Q4 revenue in the country rose 9 percent on a currency neutral basis.

President and CEO John Donahoe made the China comments during a recent earnings call

Additionally, the company saw double-digit growth in the country for the seventh consecutive year.

Despite the growth, sales in the Greater China area actually failed to hit Wall Street expectations this past year.

Revenue in the region rose 17 percent year-over-year to $1.93 billion, but analysts were expecting that number to be around $2.25 billion, Fox Business reports. 

In total, Nike reported a 96 percent rise in total revenue from last year, up to $12.34 billion. The bet income for the company was $1.5 billion.

In North America, sales rose 141 percent year-over-year, reaching a record of $5.38 billion on the continent.

The positive financial results for the company led to a 15.38 percent rise in shares on the stock market on Friday.

Shares closed the day at $154.35, a new record for Nike.

While China no longer appears to be the driving force in Nike’s COVID-19 recovery, analysts don’t believe sales growth will slow much more in the region.

‘Nike is a long-term outperformer in our view,’ said UBS analysts Jay Sole and Mauricio Serna. 

People walk by a Nike store in Beijing, China. The CEO of the company recently said Nike is ‘a brand of China and for China’

Earlier this year, Nike was among the companies accused of getting supplies from factories using forced labor in a report on China.

The UK’s Conservative Party Human Rights Commission report said that tens of thousands of Uyghur Muslims had been transported to factories across the country to work.

The report noted that one of the ‘most shocking new developments’ in the last five years was that forced labor was now used ‘throughout China in factories which are part of the supply chain of major international corporations.’

It went on: ‘Under conditions that strongly suggest forced labor, Uyghurs are working in factories that are in the supply chains of at least 83 well-known global brands in the technology, clothing and automotive sectors, including Apple, BMW, Gap, Huawei, Nike, Samsung, Sony and Volkswagen.’

Vicky Xiuzhong Xu and Nathan Ruser, who were authors of a report by the Australian Strategic Policy Institute (ASPI) about the forced labor of Uyghurs, gave evidence to the Commission in an online hearing.

They said they had discovered in 2019 that Uyghurs were being transported from Xinjang to other provinces to work.

Xu and Ruser said ‘it is a policy of the central government’ that resulted in ‘tens of thousands of people pushed out of their homes every year and sent to eastern provinces to work in the supply chains of international brands.’

They added that in the factories workers were subjected to the conditions of forced labor, having to work ‘under heavy surveillance’ and in the few hours of free time were ‘compelled to attend Mandarin Chinese language classes and political indoctrination classes’.

ASPI identified 27 factories in nine Chinese provinces that are using Uyghur labor transferred from Xinjang since 2017.

‘We’ll continue our long-term investment in China,’ Donahoe (right) added during the call

Nike responded: ‘We are concerned about reports of forced labor in, and connected to, the Xinjiang Uyghur Autonomous Region (XUAR). 

‘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.

‘The Nike Code of Conduct and Code Leadership Standards have requirements prohibiting any type of prison, forced, bonded or indentured labor, including detailed provisions for freedom of movement and prohibitions on discrimination based on ethnic background or religion.’

The controversy was not addressed during the earnings call, according to the transcript. 

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