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Nike is rebooting its troubled China operations, betting that offering fewer places to buy its sneakers will help sell more of them.
The sportswear giant said it will cut off more than 1,000 third-party vendors who sell its products online in China as of Jan. 1, funneling most e-commerce sales instead into roughly a dozen official flagship stores on the country’s top e-commerce platforms and Nike’s own Chinese-language website and app.
The announcement marks a step in Nike’s effort to reverse a two-year sales decline in China, its third-largest market, a stretch in which the country has gone from one of Nike’s most reliable growth engines to one of its most troubled operations. The effort is being spearheaded by Nike veteran Cathy Sparks, whom Chief Executive Elliott Hill tasked with the turnaround when he appointed her to run the apparel giant’s China business this spring.
Nike’s consolidation in the region is an attempt to simplify a marketplace that Sparks said has become “too fragmented,” hobbled by counterfeits, inconsistent pricing and poor brand presentation. Sales of Nike products at online stores run by other retailers will be phased out “with some exceptions,” she said, not to reduce consumer access but to present a more consistent brand experience across China’s crowded digital retail landscape.
The more than 1,000 digital storefronts that currently sell Nike products online in the country have created “an overly complex and fragmented consumer experience,” Sparks told The Wall Street Journal. By pushing Chinese consumers toward Nike-owned digital storefronts on top e-commerce platforms such as Tmall, JD.com and Douyin, the company will have more control over pricing, inventory and brand presentation, Sparks said.
Many of the digital storefronts are operated by retailers that also sell Nike products in bricks-and-mortar locations. The biggest of these is Topsports International, China’s largest sportswear retailer with more than 5,000 stores across the country. While Topsports will continue selling Nike products in its physical stores, it will be among the sellers whose e-commerce platforms will be barred from selling Nike as part of the strategy shift. Shares of Topsports suffered a record drop, plunging as much as 30% in Hong Kong.
A Nike memo on the shift posted on the company’s website included a comment from Topsports Chairman and CEO Yu Wu, who said the changes “will bring some short-term pressure to our business. But we firmly believe that, over the medium to long term, this direction will help promote a healthier, more orderly, and more sustainable retail ecosystem in China, while further improving consumer experience and product appeal.”
As part of its reboot in China, Nike also plans to open new types of stores, develop more products designed specifically for Chinese consumers, and deepen sponsorships of regional Chinese sports teams. The company already operates three stand-alone stores for ACG, its technical outdoor-apparel line, with more planned, and is developing a dedicated store format focused on running.
Nike’s headwinds in China date to 2021, when the company said it wouldn’t source cotton from Xinjiang, citing human-rights groups’ allegations of forced labor in the region—a stance that triggered nationalist backlash in China, where such allegations are disputed by the government. Chinese consumers boycotted the brand, and celebrities who had endorsed Nike cut ties, including pop star Wang Yibo, who signed with rival Anta.
Homegrown sportswear labels such as Anta and Li-Ning closed the gap on quality and innovation while leaning in to “guochao,” a cultural movement in China that celebrates domestic brands.
Nike was also slow to embrace China’s livestreaming-driven shopping culture, not opening an official flagship on the TikTok-like app Douyin until 2024, years after its local competitors. Livestreaming accounts for nearly 32% of total e-commerce sales in China.
Laurent Vasilescu, an analyst at BNP Paribas, warned investors that the move appears to echo Nike’s failed direct-to-consumer push in Western markets in 2020. Deployed under former CEO John Donahoe, the “Nike Direct” strategy sidelined wholesale partners in favor of company-owned channels, ultimately leading to excess inventory and opening the door to competitors like Hoka and On Running. By the end of 2023, Nike reversed course on the direct-to-consumer strategy—and announced roughly $2 billion in restructuring charges.
“This strategy opened up shelf space for competitors and ended poorly for Nike,” Vasilescu wrote in an investor’s note in June, after news of the coming move by Nike was leaked in a Chinese media report. “We believe the same could happen if it takes the same approach in China.”
A Nike spokeswoman disputed the comparison. “This is not a pull back,” she said. “This is not a retreat from digital commerce or wholesale…This is recalibrating the marketplace in China for the current, unique landscape.”
Sparks said the China plan is narrower than the Nike Direct strategy since it targets online distributors specifically while leaving bricks-and-mortar partnerships, including with Topsports, intact. Hill has repeatedly emphasized that rebounding in China won’t happen overnight.
“We are taking action to clean the marketplace, tighten execution across digital and physical retail and rebuild the brand locally through sport,” Hill said in a March earnings call. “It will take time, but we remain confident that serving 1.4 billion potential athletes in China is one of the most powerful opportunities in sport.”
Write to Hanna Krueger at [email protected]