Nike continues to lose ground in China market

Nike is still struggling in China, where sales of western brands have cooled.

A wave of patriotic buying, fuelled by the Xinjiang cotton controversy, is helping shares of Chinese sportswear makers outperform global peers.

Chinese consumer support in response to the alleged human-rights issues in Xinjiang region has boosted at least one local trainer maker by some 250% since the controversy escalated in late March. And while Nike shares popped after earnings last month, they are only up 20% since March.

Rising geopolitical tensions over accusations of forced labour in Xinjiang have become a serious threat for global companies trying to operate in China. 

Local firms like Anta Sports Products and Li Ning, which have supported using materials from the contentious far-west region, have gained market share as the Chinese switch away from foreign brands expressing concern.

While Nike shares posted better-than-expected results recently as sporting events and consumer spending ramp back up, the $250bn (€210bn) US juggernaut is still struggling in China, where sales of western brands have cooled. The shift in local preference to Chinese products may get a further push in the run-up to the Beijing 2022 Winter Olympics, for which Anta will be an official supplier.

“The sentiment to buy homegrown brands will continue,” said Steven Leung, executive director at UOB Kay Hian (Hong Kong). 

Anta, which owns rights to the Fila brand in the region, has climbed to a series of record highs, pushing its market value to over $60bn.

Li Ning, a company founded by a gold-medal winning Olympic gymnast, has seen its shares jump more than 84% since March.

• Bloomberg