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Nike China's income fell or was overtaken by Li Ning
Nike Greater China encompasses three key markets: Mainland China, Hong Kong, and Taiwan. According to Nike's financial report, the region generated a total revenue of $820 million during the six months from June to November this year. A representative from a domestic sports goods company told CBN that it is anticipated that Nike’s sales in the mainland market will decline from 10 billion yuan in previous years to between 7 billion and 8 billion yuan this year. Meanwhile, Li Ning’s revenue for the first half of the year has surpassed 4 billion yuan, raising the possibility that it could overtake Nike as the top brand in the Chinese market.
Can Nike break out of the “quagmire� Despite some signs of improvement, Nike’s performance in the Chinese market still shows a downward trend. In its latest quarterly report, Nike Greater China reported revenue of $404 million for the period ending November 30, representing a 3% year-on-year decline. Footwear revenue dropped by 1%, while apparel revenue fell by 7%. Sports equipment revenue also declined by 2%. At the same time, rising operating and administrative expenses contributed to lower profit margins, with EBIT decreasing by 7% to $126 million.
However, the rate of decline has slowed compared to the previous quarter. From June to August, Nike Greater China recorded revenue of $416 million, a 16% drop compared to the same period last year. The more recent quarter saw a smaller decrease of just 3%. Looking at order trends, there are indications that the market outlook for Nike in Greater China may be improving. Orders for the region are expected to rise by 4% year-on-year from December 2009 to April 2010, compared to a 6% decline during the same period in the previous year (June to August).
As competition intensifies, especially from local brands like Li Ning, Nike must adapt its strategies to regain momentum in one of the world’s most competitive markets. With shifting consumer preferences and growing demand for locally branded products, the challenge for Nike is not only to maintain its position but to innovate and connect more deeply with Chinese consumers.