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Nike bets on China, despite downturn

News, 12 January 2016

SHANGHAI: Sportswear giant Nike is on track for huge growth in China despite economic headwinds, recent data suggests.

As China's wellness mega-trend continues, health-conscious consumers have seen fitness, sportswear and healthy food brands making strides in the world's most populous country.

Research from IBIS World, published in the Wall Street Journal, suggests that gym and health-club revenue in China has nearly doubled since 2010, and is expected to total more than $5bn in 2016.

For Nike, China's booming wellness market offers an opportunity to grow global market revenues, despite concerns about a spending downturn in the country. The brand has aggressively targeted the market in the past 12 months, and buoyant sales appear to have weathered the economic storm.

Women are leading the charge, embracing personal fitness – and purchasing the clothing to match.

Nike now holds an estimated 12% market share, nudging $1bn in China sales in Q2 of 2015 – up 24% in just one year, according to figures published by Fox Business – even as other retail competition struggles. Nike's footwear sales in China grew 30% in just one year to reach $600m in sales, while apparel revenue jumped 15% to more than $300m, Bloomberg reported.

An investment in the rising popularity of basketball in China, where an estimated 300m Chinese will play the sport by 2025, has seen the brand's iconic Air Jordan sneakers become ubiquitous across China's major cities even as casual wear, with the shoe considered a status symbol of wealth among up and coming middle classes.

Nike is capitalizing by pushing basketball superstars Michael Jordan, Lebron James, and Kobe Bryant as brand ambassadors. Sales remain strong, despite a much higher purchase price than the US market.

Nike has set an ambitious target of $50bn in global revenue by the 2020 fiscal year.

Data sourced from Wall Street Journal, Fortune, The Star; additional content by Warc staff