Why Nike and Adidas no longer dominate in China
By Carl Samson
February 22, 2022
Chinese consumers are no longer patronizing Nike and Adidas like they used to, a trend that is purportedly driven by nationalistic rejection of forced labor accusations against the country.
The insight comes from a new analysis by Bloomberg, which pointed to the Xinjiang cotton crisis in early 2021 as a “watershed moment.”
The controversy centered on the alleged use of forced labor to produce cotton in the autonomous region, which is home to China’s Uyghur communities and other ethnic minorities.
In the last few years, China has faced accusations of human rights abuses in the region, with critics claiming that the nation’s “re-education” centers are actually prisons in practice.
In January 2021, former President Donald Trump banned all cotton imports from Xinjiang, as well as products made from the material, and declared that China was committing a “genocide.”
Later in December, an independent tribunal in London ruled that China was guilty of genocide, describing how some Uyghurs have died as a result of being subjected to excessive work or physical exertion.
Based on the in-depth analysis by Bloomberg, the cotton controversy, as of last March, appears to have escalated based on both resurfaced and new statements made by several Western brands, which all denounced the alleged forced labor in Xinjiang to varying extents. Those brands include H&M, Nike, Adidas, Converse, Burberry, Zara, Hugo Boss and Gap, to name a few.
“We are concerned about reports of forced labor in, and connected to, the Xinjiang Uyghur Autonomous Region (XUAR),” Nike said in a statement. “Nike does not source products from the XUAR and we have confirmed with our contract suppliers that they are not using textiles or spun yarn from the region.”
Adidas also put out a statement, saying, “In 2019… on learning of allegations against several companies sourcing from Xinjiang, China, where ethnic minorities were reportedly subject to forced labor in spinning mills, we explicitly required our fabric suppliers not to source any yarn from the Xinjiang region. Adidas has never manufactured goods in Xinjiang and has no contractual relationship with any Xinjiang supplier.”
The new analysis shows that the fallout — at least for Nike and Adidas — was instant, as both brands lost the largest shares in China’s sneaker market to local competitors.
Anta Sports Products Ltd. and Li Ning Co., which published statements in support of Xinjiang cotton, took over the market, capitalizing on the nationalistic outrage against the Western brands.
Bloomberg noted that by the end of January 2022, Li Ning and Anta composed 28% of the market share, while Nike and Adidas trailed at No. 3 and No. 4, respectively.
China, for its part, has vehemently denied all allegations of human rights abuses, which led several countries to declare a diplomatic boycott in the weeks leading up to the 2022 Beijing Winter Olympics.
“The US, Australia, Britain and Canada’s use of the Olympic platform for political manipulation is unpopular and self-isolating, and they will inevitably pay the price for their wrongdoing,” Chinese Foreign Ministry spokesperson Wang Wenbin told reporters in December, as per the Hong Kong Free Press.
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