Adidas, Nike feel financial effects of taking stance on Chinese internal affairs

Adidas and Nike are the latest western brands to feel the effects of China’s attacks on companies that criticize reported human rights abuses against Uyghurs in the country’s Xinjiang region. 

The two sportswear giants’ online sales have plunged following attacks on their criticism by state-controlled media, celebrities and social media. There have been widespread calls for a boycott of Nike and Adidas, along with H&M and Burberry. The reaction highlights the tension foreign brands face between speaking out, on the one hand, as their domestic customers increasingly demand, and, on the other, risking commercial damage by offending Beijing.

The details

• Morningstar analysts calculate that sales in the Adidas store on Alibaba’s Tmall, which is China’s largest business-to-consumer platform – plummeted 78% last month compared to a year ago, while Nike’s sales were down 59%. Sales of Fast Retailing’s brand Uniqlo, which was also the hit by the boycott, were down 20%.
• Consumers switched instead to domestic brands, with China Lining, being the biggest beneficiary. It saw sales on Tmall shoot up more than 800% last month, Morningstar said.
• Overall, however, sportswear sales on Tmall fell 11% per cent in April compared to the same month last year. That’s compared to over 30% growth in Q4 of 2020, Morningstar said, adding that this might indicate some consumers are sitting out the boycott rather than dropping brands all together.

Key quote

“As there aren’t renewed attacks from state media, consumer boycotts against Nike and Adidas should most likely fade over the next months.” Morningstar equity analyst Ivan Su.

Sourced from SCMP, Morning Star