China’s decision on NBA likely to hurt Nike’s interests

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The ongoing tussle between National Basketball Association and China could hurt top sports apparel brand Nike that has ties to both the NBA and China. Mainland China along with Taiwan and Macao has been the fastest growing consumer base for Nike since a year and the firm is continuing to grow sales momentum overseas for its Jordan branded products and other gear. During fiscal year of 2019 Nike managed to garner $6.21 billion in sales at China that signified growth of 24 % as per financial reports. The fears of problems for Nike have already arisen as both Tencent and Chinese state media has said that they will suspend broadcast of NBA’s preseason games in China after a tweet by GM Daryl Morey of Houston Rockets, wherein he showed his support for anti-government protests in Hong Kong. Though the tweet was deleted it drew strong condemnation across China.

Further fuel was added to the fire when NBA Commissioner Adam Silver defended Morey’s comments on social media. NBA is the exclusive provider for NBA’s on-court apparel as it signed an eight year deal in 2017-18 after replacing Adidas. An analyst has already issued a note to clients saying that Nike’s profits will not suffer any adverse impact of this fallout as the issue is overblown by media.

Nike’s brand in China remains very strong and it is associated by local customers as just a global retail brand which is not associated with any nation or part of the world. Since Nike began selling its products in China the company’s management has adopted a philosophy of “of China for China” instead of acting as a US brand and this philosophy has helped the brand thrive in China. Nike’s chief fear now that consumers in China may not be keen on purchasing NBA branded gear or merchandise or may not want to be seen wearing gear that represents NBA.

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