Consumers' Research: Nike’s ‘woke’ stands clash with reality of dealings with China

Brands
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Revenue from greater China for Nike amounts to nearly one-fifth of its sales. | Unsplash/Danilo Capece

Nike has made billions by advising people to "Just Do It." The short slogan, accompanied by the shoe and sportswear giant’s trademark swoosh logo, has been imprinted on the world’s consciousness for more than three decades.

Nike also has campaigned for social and political issues the company’s leaders believe in, including promoting sports for girls and women.

In 2018 Nike championed Colin Kaepernick, a talented quarterback who could not find a team to sign him after he made statements about police targeting black people and kneeled when the national anthem was played at games. Despite having led the San Francisco 49ers to the Super Bowl after the 2012 season, and completing nearly 60% of his passes in his career, with 72 touchdowns against 30 interceptions, Kaepernick has been without a team since 2016.

Nike built a campaign around him, signing the erstwhile QB to a multiyear deal. For some of its customers, that went beyond "Just Do It" and became just too much. 

A politically conservative organization, Consumers’ Research, has targeted Nike, along with Coca-Cola and American Airlines for their progressive public statements, saying they don’t match the companies’ private actions.

While Nike salutes Kaepernick, it has been accused of having shoes made in China by the Uyghur people, who live in Xinjiang in northwest China. The Uyghurs, Kazakhs and others are primarily Muslim and their history, culture, language and faith differs from most of China. There is an even a dispute over the name of the region, with residents preferring to call it East Turkestan.

On Jan. 19, as the Trump administration was wrapping up, Secretary of State Mike Pompeo accused China of committing genocide by placing people in prison and forcing others to work while carrying out mandatory sterilization and oppressing speech, religion and movement.

Consumer Research asks. "How does Nike explain supporting 'woke' causes in the United States while being heavily invested in China, where a single party has long ruled the nation and its 1.44 billion people? The Communist Party of China continues to centralize authority and stifle dissent, all in the name of “reform.'”

Consumers Research wants people to see these ads and contemplate the discrepancies. Executive Director Will Hild said the nonprofit group will spend up to $13 million to run the ads on national cable news programs and “in local markets where the companies are headquartered.”

“We are giving consumers a voice,” Hild said in a May 17 statement when the ads were released. “These companies should be putting their energy and focus on serving their customers, not woke politicians.”

Nike CEO John Donahoe is mentioned in the ad about his company. It says Nike didn’t hire Americans, instead choosing to have oppressed Chinese workers produce its shoes.

On June 24, Donahoe reiterated Nike’s longstanding ties to China during an earnings call. He did not mention Xinjiang.

“We’re confident about what we’re seeing in China as we drive long-term growth, and we have a long-term view about China,” he said. ”We’ve always taken a long-term view. We’ve been in China for over 40 years, still invested significant time and energy in China in the early days, and today we’re the largest sport brand there. We’re a brand of China and for China.”

In a statement, Nike said it is “committed to ethical and responsible manufacturing and we uphold international labor standards.”

The company said it was “concerned about reports of forced labor in the Xinjiang Uyghur Autonomous Region (XUAR). 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.”

Citing its code of conduct and code leadership standards, Nike said it will not use “any type of prison, forced, bonded or indentured labor, including detailed provisions for freedom of movement and prohibitions on discrimination based on ethnic background or religion” and told its suppliers they must comply with those codes.

“We have been conducting ongoing diligence with our suppliers in China to identify and assess potential forced labor risks related to employment of Uyghurs, or other ethnic minorities from XUAR, in other parts of China,” the Nike release stated. “Based on evolving information, we strengthened our audit protocols to identify emerging risks related to potential labor transfer programs. Our ongoing diligence has not found evidence of employment of Uyghurs, or other ethnic minorities from XUAR, elsewhere in our supply chain.”

However, Nike, along with Coca-Cola and Apple, lobbied against the Uyghur Forced Labor Prevention Act, which would prohibit the importation of items produced in China’s Xinjiang region. Its stock prices have tumbled in the wake of this controversy.

Nike was founded in 1964 by University of Oregon track and field coach Bill Bowerman, who wanted to create a better shoe for his athletes. He called it Blue Ribbon Sports, but by 1978 it had evolved to Nike Inc., adopting the name of a shoe brand it launched in 1972. Phil Knight, who had run for the Oregon Ducks under Bowerman’s leadership, was a co-founder but he had assumed primary control of Nike.

By 1980 it was mass-producing shoes in China as it saw the massive nation as a market ready to be tapped.

“There are 2 billion feet out there,” Knight told his top executives. “Go get them.”

By 2020 revenue from greater China amounted to nearly one-fifth of Nike’s sales. However, as Nike joined a boycott of cotton and other materials produced in Xinjiang, sales dropped markedly.

Controversy and political involvement is nothing new to Nike. The company is based in Oregon but has had a strained relationship with the city where it built its empire.

NIke’s world headquarters are in Beaverton, Oregon, but are not part of the large Portland suburb. Its property is in an unincorporated part of the city and Nike resisted annexation in 2005. It filed a lawsuit and lobbied for a bill that passed the Oregon Legislature to prevent it from being added into Beaverton for 35 years. The city spent $1 million on the failed annexation effort, and then-Mayor Rob Drake found himself pitted against Nike.

Nike and Knight contributed $175,000 to challenger Denny Doyle’s campaign in 2008. Drake, who never met Knight despite several requests, was defeated after 16 years in office. Since then, annexation talks have largely vanished and the sportswear giant and the Oregon city are getting along much better.

Nike has about 3,500 employees at its headquarters, second in Beaverton only to the school district which has around 4,400.

After serving three terms, Doyle was defeated in 2020 by Lacey Beaty, who took office Jan. 1, 2021.