Nike's New Strategy in China: Tackling Discounts and Winning Back Consumers
By Casey Hall and Danielle Kaye
Nike's Approach to Reviving Sales and Brand Image in China
SHANGHAI, July 23 (Reuters) - After eight successive quarters of falling sales in China, Nike is pulling online sales rights from some of its biggest retail partners in a high-stakes bet that tighter control over pricing and distribution can revive its fortunes.
Analysts largely agree that measures announced this week by Nike's Greater China general manager Cathy Sparks will help the sportswear giant address rampant discounting and brand erosion in its third-largest market.
Less clear is whether parallel efforts to localise product development will have enough impact to solve what is arguably the company's biggest challenge in China: convincing consumers that they want what Nike is selling.
Nike's Distribution Shakeup
Sparks, a 25-year Nike veteran who took charge of the China business earlier this year, said on Tuesday that from January, key sportswear retailers in China will no longer sell Nike clothing and footwear online. Products will almost exclusively be available via Nike-branded digital storefronts.
"This is the right thing to do, especially at this moment," said Wei Kan, founder of sports and lifestyle brand strategy consultancy Conduit Asia and a former brand director at Nike Greater China. "Otherwise, the consumer will always expect the discounted Nike product."
Expected Timeline for Results
Still, any payoff will likely take three years to materialize as the company faces macroeconomic and self-inflicted pressures, said Mari Shor, senior equities analyst at Columbia Threadneedle Investments, which holds Nike stock.
Nike expects progress in China to come in stages, a spokesperson said, adding that the company has already seen an uptick in full-price online sales over the last two quarters after taking steps to limit discounting.
Leadership and Shareholder Sentiment
CEO Elliott Hill, nearly two years into his tenure at the helm of the company, has pushed to refocus on sports, rebuild wholesale relationships in North America and introduce new products. But shares have fallen about 34% so far this year as investors grow impatient with his progress.
'Total Chaos' in Online Pricing
Nike's downturn underscores how China's sportswear market has become less forgiving. Domestic sportswear groups Anta and Li Ning have capitalised with nimble supply chains, aggressive expansion and products tailored to local consumers, while fast-growing international challengers such as Deckers-owned Hoka and On have increased pressure at the premium end of the market.
Against that backdrop, Nike's efforts to restore growth have been hampered by discounting, excess inventory and an increasingly difficult battle to justify its premium pricing.
Challenges with Distribution Channels
The high volume of Nike products sold through a range of company-owned and wholesale channels in recent years has created "total chaos" in online pricing, said Ben Cavender, managing director at Shanghai-based China Market Research Group. The confusion has made it difficult for Nike to restore the "coolness" of the brand, he said.
Impact on Distributors
Brian Fenn, senior director of product for Nike Greater China from 2018 to 2022, said regaining control over "constant discounting and grey-market inventory" from third-party distributors has long been a goal for the company. But new restrictions will come at a cost.
"Cutting distributors like Topsports and Pou Sheng will pressure sales volume before it helps," he said. "They move a lot of product."
Nike reported $5.85 billion in total China sales in fiscal year 2026.
Local Control Test
Sparks also said Nike has appointed its first Greater China Vice President of Local Product Creation, acknowledging criticism that the company has fallen behind rivals in developing products that resonate with Chinese consumers. To start, the sportswear giant is designing two lifestyle collections for the holiday season, she said.
Autonomy and Speed in Product Development
But the success of those efforts will depend on how much autonomy the local team gets to operate at the speed and scale needed to compete with fast-moving rivals.
"The times we won were when the local team could move fast," Fenn said. "Anta and Li-Ning win as much on speed and reading the culture natively as they do on design."
Consumer Preferences and Competitive Landscape
Chinese shoppers are used to hunting for discounts on popular e-commerce platforms like Tmall and Douyin, said Ivan Su, equity analyst at Morningstar. Nike's competitors — domestic companies as well as foreign brands with localised strategies — offer appealing products at lower prices.
"Consolidating into official storefronts only works if the product justifies the price," he said of Nike's new online restrictions.
(Reporting by Casey Hall in Shanghai and Danielle Kaye in New York; Editing by Nia Williams)
