Since 2021, Nike's business in China has contracted by 30%, and its annual revenue for the year ending May 2024 hit an eight-year low. Industry experts point to deep-seated challenges: the rise of domestic brands, stronger local competitors, and shifting aesthetic preferences among younger consumers. Nike, however, denies losing its cultural appeal in China, stating it is deepening its roots in local sports circles to win over young buyers.

On August 28, 2019, workers installed a Nike sign outside the Wukesong Arena in Beijing. Logically, Nike should have been experiencing rapid growth in China. According to GlobalData, the push for healthy lifestyles has boosted sports consumption, making sport-related goods the fastest-growing consumer category in China. Participation in fitness activities has reached a multi-decade high, and the overall sportswear market has surged by 51% over the past five years. Other data shows the market size has doubled in the last decade. Yet, amid this national fitness boom, Nike's performance in China has declined instead of rising. The company has reported a year-on-year drop in revenue for eight consecutive quarters. Overall sales have shrunk by 30% since 2021, and by the end of May, full-year revenue fell to its lowest level in eight years.

China was once Nike's fastest-growing region, prized by investors for its high profit margins and long-term growth potential. Now, it has become Nike's smallest market, dragging down the company's global recovery. Many Wall Street analysts believe Nike's turnaround is too slow. Some US analysts predict that once the North American business stabilizes, the Chinese market will recover. However, experts based in China argue that Nike's problems there are more deeply rooted and fundamentally different from its struggles in the US.

The rise of the "Guochao" trend, or national wave, has led young Chinese consumers to favor domestic brands over expensive foreign ones. They expect products tailored specifically for the local market, not the same items sold in the US. Meanwhile, Nike is overhauling its distribution system in China, which critics describe as overly complex and reliant on discounting.

Jiang Yaling, founder of consumer research firm ApertureChina, noted, "To some extent, Nike has gradually lost its appeal. Young people struggle to recall any exciting new products Nike has launched recently. In contrast, they can name several highlights from Adidas, like pet-themed clothing or Chinese-exclusive jackets."

During a recent earnings call, outgoing Nike CFO Matt Friend could not provide a timeline for a return to growth in China. He told analysts that short-term revenue trends would remain weak, with profitability bottoming out first, followed by a gradual recovery in sales.

In January, Nike CEO Elliott Hill appointed Kathy Sparks, a 25-year veteran, as Vice President and General Manager of Greater China, reporting directly to him. In an exclusive interview, Sparks said Nike is taking targeted steps to reconnect with Chinese consumers. "Over the past six months, I have truly realized that Chinese consumers have changed. They have higher expectations for product experience and brand interaction," Sparks said. "We are confident that by creating casual and performance sportswear that truly meets Chinese consumer needs, we can boost full-price sales."

Nike officially denies that the brand has lost its appeal in China, attributing the shift to young consumers seeking deeper local connections. The company says it aims to engage with local events and cultural trends. "Nike has been in China for over 40 years. We have always started with local consumer insights and turned them into creativity, product innovation, and brand stories to drive sports enthusiasm," a Nike spokesperson said.

How the National Wave Reshaped the Sneaker Industry

In the mid-2000s, Nike positioned China as a key growth market, replicating its global strategy by assuming that hit Western products would be equally popular in China. This approach worked well initially. An anonymous retail consultant in Shanghai, who has worked with brands like Deckers and Adidas, recalled, "Back then, the only high-end sportswear brands available were Nike. They had more stylish designs, higher prices, and a strong brand image. In the early 2000s, affluent consumers valued external style and wanted the trendiest items, and Nike was the top choice."

At the end of fiscal year 2021, Nike China's annual revenue peaked at $8.29 billion. But the tide had already turned. On July 22, 2026, a photo showed a Nike store in Guangzhou. Nike announced it would shut down all online channels in mainland China by January 1, 2027. In March 2021, an old Nike statement about alleged forced labor in Xinjiang resurfaced, sparking a massive consumer boycott in China. Many netizens posted videos of burning Nike shoes. Actor Wang Yibo ended his endorsement deal with Nike, while domestic brands Anta and Li Ning seized the opportunity to promote Xinjiang cotton, using the incident to boost nationalist marketing. This controversy affected several foreign brands and further fueled the pre-existing Guochao trend.

The Guochao trend, initiated years ago by top Chinese leaders, aims to boost pride in domestic products, support local brands, and reduce reliance on foreign ones. Jiang Yaling explained, "From 2010 until the pandemic, many people subconsciously felt it was less stylish to wear domestic brands. The cultural confidence campaign completely changed this mindset. Policy guidance led e-commerce platforms like Taobao, Tmall, and JD.com to set up special Guochao sections. Consumer attitudes shifted, and more people began to believe that owning locally designed products was cooler than buying foreign brands."

Tracy Dai, Operations Director at consulting firm China Skinny, which specializes in foreign brands entering China, noted that many young consumers now have a stronger sense of identity with brands like Anta and Li Ning than with high-end foreign brands like Nike. "A few years ago, if you asked high school students what sneakers they wanted, most would say Nike or Adidas. Now, the answers are mostly Anta or Li Ning. Nike is no longer seen as a symbol of trendiness among young people," she said.

Nike responded that all sportswear brands in China face intense competition and increasingly discerning consumers. The company believes its restructuring plan for the Chinese market is on the right track and will win back customers.

The Battle of Price and Value: Beyond Sentiment, Falling Behind on Value and Hard Power

Beyond changing consumer sentiment, Nike's struggles in China also involve value for money. Over the past two decades, domestic brands have upgraded their production techniques, marketing strategies, and brand building. Kan Wei, who worked for Nike and Converse in China and Taiwan for 15 years and now runs consulting firm Conduit Asia, said Chinese consumers are now more pragmatic and rational. They prioritize practicality and product innovation over blindly following big brands. As niche fitness categories emerge, products with greater functional specialization are gaining popularity, while Nike's existing product lines are less competitive. "Nike is still a global mass-market brand covering all categories, but its new product launch speed is slower than local competitors. Chinese consumers today are much more mature than they were five or ten years ago. The ultimate question is always: what value does a consumer get from a pair of sneakers?" Kan Wei said.

Adidas Recovers While Nike Lags: Localization Creates a Gap

While domestic brands dominate the Chinese market, some foreign brands have bucked the trend. Lululemon's same-store sales in China (excluding new stores) rose 20% in fiscal 2025, while Adidas China's revenue grew 13% over the same period. Adidas also experienced a sharp downturn in China but recovered by developing local products, delegating decision-making, and empowering its Chinese team. This year, Adidas's Chinese team independently designed a Chinese-style track jacket for the Lunar New Year. It went viral, selling out in 27 minutes. Many overseas consumers flew to China to buy it or purchased it at high prices on resale platforms like StockX. Adidas's localized marketing has also been adept; when a translation error appeared on a jacket on its website, the brand turned it into a T-shirt, using the mistake to generate buzz.

Industry insiders say Nike will find it difficult to replicate Adidas's localized products and creative marketing. Jiang Yaling noted that Nike's marketing during the World Cup was highly similar to its campaigns a decade ago, lacking innovation. Analysts point to a core issue: Nike's Greater China team has limited authority, with new products and marketing campaigns requiring approval from the headquarters in Portland, Oregon, making it hard to quickly implement local solutions.

Kan Wei, who left his role in brand marketing for Nike and Converse in Greater China in November 2024, said, "The vast majority of designs are decided by the global headquarters. The local team has very little room to design products tailored for the Chinese market. This is the most obvious shortcoming perceived by Chinese consumers."

When asked about the centralization of power at headquarters, Sparks acknowledged the criticism but denied that strict approval procedures hinder the local team. "Since I arrived in China, I have felt that the local team has full autonomy, as long as they adhere to the brand's core principles. The marketing and store renovations we are implementing now reflect this. In the future, the designs delivered by the local team will truly fit China's local conditions and meet the needs of the people."

Last week, Sparks announced the creation of a new vice president role for local product development in Greater China, dedicated to building a product line designed, developed, and targeted at Chinese consumers. The brand will roll out the plan in phases: first, launching two local theme series for Nike casual and Jordan streetwear during the holiday season, followed by performance sportswear and sneakers. "Over the next 18 months, we will complete our full localization capabilities. Local innovation will complement global R&D, with specific adjustments to sizes, colors, and styles for China. We will run a dual-track system of global solutions and Chinese customization," Sparks said.

Channel Overhaul: Restructuring the Distribution System, Short-Term Pain for Long-Term Health

During the pandemic, Nike allowed offline retailers to open online sales channels without authorization, creating a tangled and chaotic distribution network. Sparks is now working to clean up this mess. "When the pandemic ended and consumption returned offline, we didn't straighten out the channels in time. The market was fragmented, and the consumer shopping journey was confusing. It was difficult for the brand to clearly communicate the value of product innovation," Sparks explained.

Nike has decided to shut down unauthorized online stores run by retailers to fix its channel ecosystem in China. Laurent Vasilescu, a securities analyst at BNP Paribas, estimates that this channel adjustment could reduce Nike's annual revenue by up to $1 billion, or about 17% of its total Chinese sales. Sparks responded that the channel contraction will inevitably lead to a short-term sales decline, but the brand can compensate by focusing on full-price sales and improving the consumer experience. "Channel reform is necessary. If we let the channel chaos continue, long-term performance will only worsen. We believe the pain is only temporary, and long-term operational quality will steadily improve," he said.