Nike CEO: "We are a brand of China and for China"

Rowdy Yates wrote:

runnER/DR wrote:

One of many companies that underestimated the risk they were taking when they put their future in the hands of an authoritarian communist regime. China has these companies by the balls. Fools gold.

Long term these companies are going to be cast aside by the CCP. Home cooked brands will completely push them out of the Chinese market, and Chinese labor costs will soar.

Good post.

Nike can slowly course-correct over time if they wanted to. They could get tax incentives here to build manufacturing plants. They could transition more production to the USA over time. They would also need people to think about paying a bit more for shoes made in the USA and why that's good. Our government can also play hardball as the Chinese do. We can level the playing field with taxes on Chinese goods to make up for their slave labor economics.

rogermortimer wrote:

I am not sure I understand the personal comments.

I think having a supply chain dependent on the PRC is riskier today than ever. My brother, a well known economist, informs that the China's impact on inflation should not be underestimated. Their shutdown levels due to COVID have been significant, wreaking havoc on supply chains.

As far as meeting Chinese consumer demand, well, it is an enormous country with lots of demand. The question is how much to trust the PRC and its ability to limit business and return on investments. A difficult problem. The risks vary by business.

I think the way forward is to have no illusions about China and Xi. But that doesn't mean dropping activity with them entirely. Just no easy answers.

For the love of God, your Nike shoes are probably made in Vietnam, not China.

Their supply chain is a lot less dependent on China than it was 10 years ago, for obvious reasons.

China production is for Chinese demand.

And I highly doubt the CEO of Nike is unaware of the risks/challenges he's facing in China. But meantime, there's still billions annually to be made there. Shareholders want them to maximize their sales.

Gawd

I'm wearing Nike Pegs right now. Just checked. Made in China.

Interesting research project for you. Go to any retail store and just casually check where the items are made. When I have done this it's overwhelmingly china. That said, it is true that many garments are made in Vietnam, and a good chunk in south/central American countries.

I mean technically is correct here.................

let's go buffs wrote:

Youth.in.Revolt wrote:

For the love of God, your Nike shoes are probably made in Vietnam, not China.

Their supply chain is a lot less dependent on China than it was 10 years ago, for obvious reasons.

China production is for Chinese demand.

And I highly doubt the CEO of Nike is unaware of the risks/challenges he's facing in China. But meantime, there's still billions annually to be made there. Shareholders want them to maximize their sales.

Gawd

I'm wearing Nike Pegs right now. Just checked. Made in China.

Interesting research project for you. Go to any retail store and just casually check where the items are made. When I have done this it's overwhelmingly china. That said, it is true that many garments are made in Vietnam, and a good chunk in south/central American countries.

Fair enough on your Pegs, but trend is moving production to Vietnam and other countries. Last fiscal year, 51% of Nike's footwear was produced in Vietnam vs 21% in China. Check the annual report. Vietnam was also top producing country for Nike’s apparel. This trend is only growing.

That’s racist. There are black problem in the south and in Texas. Why are you anti black people? Classic liberal, brain dead. 

Youth.in.Revolt wrote:

let's go buffs wrote:

I'm wearing Nike Pegs right now. Just checked. Made in China.

Interesting research project for you. Go to any retail store and just casually check where the items are made. When I have done this it's overwhelmingly china. That said, it is true that many garments are made in Vietnam, and a good chunk in south/central American countries.

Fair enough on your Pegs, but trend is moving production to Vietnam and other countries. Last fiscal year, 51% of Nike's footwear was produced in Vietnam vs 21% in China. Check the annual report. Vietnam was also top producing country for Nike’s apparel. This trend is only growing.

If true, that's good. I'd like to see Nike move a meaningful amount of production to the USA. Manufacturing is important. I for one would be willing to pay more.

let's go buffs wrote:

Youth.in.Revolt wrote:

Fair enough on your Pegs, but trend is moving production to Vietnam and other countries. Last fiscal year, 51% of Nike's footwear was produced in Vietnam vs 21% in China. Check the annual report. Vietnam was also top producing country for Nike’s apparel. This trend is only growing.

If true, that's good. I'd like to see Nike move a meaningful amount of production to the USA. Manufacturing is important. I for one would be willing to pay more.

Yeah, it's true. Moving to the U.S. will be trickier. Perhaps others will be willing to pay more for it, but I doubt they view that as the norm. Especially since their rivals are unlikely to do so.

It's also been said that today's "shoe dogs" -- the people and companies that know how to mass produce high quality shoes -- are simply not in the U.S. and Europe. Could those skills be quickly taught/acquired? Perhaps. More likely it would entail a lot of mechanization.

Youth.in.Revolt wrote:

let's go buffs wrote:

If true, that's good. I'd like to see Nike move a meaningful amount of production to the USA. Manufacturing is important. I for one would be willing to pay more.

Yeah, it's true. Moving to the U.S. will be trickier. Perhaps others will be willing to pay more for it, but I doubt they view that as the norm. Especially since their rivals are unlikely to do so.

It's also been said that today's "shoe dogs" -- the people and companies that know how to mass produce high quality shoes -- are simply not in the U.S. and Europe. Could those skills be quickly taught/acquired? Perhaps. More likely it would entail a lot of mechanization.

No question we can make high quality shoes here. We make freaking satellites, aircraft carries and fighter jets here.

The issue is economics, not aptitude.

In China or Vietnam the total enterprise costs are way less. That's everything from the construction of the facility (the regulations in our county are rightfully 100x what they are in China....i.e. fire safety systems, building codes, construction worker conditions and requirements, etc.) to the manufacturing to the supplies to the labor. Everything about the business is cheaper.

In my opinion the US should level the playing field a bit through taxing foreign products a bit more. We don't have to go crazy, but we shouldn't be overly penalized for treating our people better. China can tax the shoes that we sell to their people. Go ahead!

Ramsey Chef wrote:

America, be proud of your Chinese Nike shoes , the Nike CEO is happy with the manufacturing agreement and commented " Nike is a Brand of China , for China " .

https://www.foxbusiness.com/markets/nike-brand-of-china-ceo-says

Newsflash....90% of the crap you own is made in China. Nike is just one of thousands of products that you own that are made their or somewhere in southeast asia

I am not sure Youth in Revolt understands economics, especially in a commodity like market like footwear (I paid for one on the best law schools in the country with futures trading, so while not an expert, I am familiar with scarcity).

So let's assume modestly (at best) educated Youth in Revolt is correct in that all of Nike's supply chain sources from Viet Nam. Even so, China's problems, which are significant and real, impact Viet Nam's own supply situation. Query how Viet Nam can scale and at what cost, and indeed, how fast.

And can they treat workers Foxconn style indefinitely amidst an increase in business. These are sound questions, not to be met by a poorly educated "Gawd".

There is no particular barrier to entry in shoe wear manufacturing.

So in one way or another the industry's sourcing patterns are indeed impacted by China. Large manufacturers you can bet they are very much looking at alternative sourcing plans, even if they don't source much from China. Scarcity impacts all .

And the same thing goes for doing business in China. It is folly not to have a non-reliance strategy or even an exit plan if things turn south. Indeed, major banks and finance institutions have been doing just that as Hong Kong is not longer a financial center grounded in the rule of law. Financial services are talent rather than hard asset based so the disruption in transition may be less.

Youth in Revolt - why the snarkiness? I gave no large opinions - are you not that educated and feel a need to remonstrate? I see this often. Be honest.

Ah, how big of you to avoid snark as you peer down (with binoculars, no doubt) upon my modestly (at best) educated mind. I suppose I'll waive the white flag rather than attempt to debate someone with such an impressive legal pedigree.

For anyone else interested, I'll merely state that I am not purporting to be a master of economics. I'm merely stating facts that are publicly available in Nike’s corporate filings. The fact that many countries will face supply chain snags doesn't change the fact that Nike and others have been relocating manufacturing (for goods headed to North America, Europe and elsewhere) out of China in recent years. And FWIW, this is partly due to the trade war that was kicked off during the Trump presidency.

But please do educate us further about the intricacies of the global supply chain. I'm particularly interested in your outlook given your vast knowledge of futures trading

Addendum:

I very much *didn't* say that "all of Nike's supply chain sources from Viet Nam." In fact, I said Nike still makes more than a fifth of its footwear in China (as of last fill year report).

Also, there very much is a barrier to entry in footwear production--especially if you're looking to produce hundreds of millions of pairs of high quality shoes a year. Raw materials, for one thing, need to be easily enough brought to a particular factory. And that factory needs to have specialized machinery and workers who know what they're doing to make it happen. If there weren't barriers to entry, then we might not be having this discussion to begin with because all the companies would be producing sneakers in, say, Missouri.

Vietnam isn't any better than China really. It is still 3rd world child and slave labor. We should be aiming to manufacture >99% of the products purchased in the USA here.

347893 wrote:

Ramsey Chef wrote:

America, be proud of your Chinese Nike shoes , the Nike CEO is happy with the manufacturing agreement and commented " Nike is a Brand of China , for China " .

https://www.foxbusiness.com/markets/nike-brand-of-china-ceo-says

Newsflash....90% of the crap you own is made in China. Nike is just one of thousands of products that you own that are made their or somewhere in southeast asia

Then keep buying your China-Nike shoes . I just ask that your wear these China shoes with pride , and if you have the talent to make a National Team in the USA , March to the Start line with the Nike USATF singlet with a made inChina tag like your hero Emma C did , walking in the final 100 m of steeple final in her China made sports bra and China made bun huggers .

Where was the device manufactured that you used to post this?

let's go buffs wrote:

I would pay more for Nike shoes if they manufactured them in the USA vs. China. I don't think I'm alone in that opinion. They could offer the same shoe. Pay less for the Chinese made shoe. Pay more for the shoe made in the USA. I would pay more. Fuc# China!

well i question this or at least not enough people would do that. if enough people would actually do this companies would not manufacture in the cheapest country possible. but how many would buy an iphone produced in the usa for 3 times the price as in china? Nearly noone would do it. you guys are all talk no action.

runnER/DR wrote:

One of many companies that underestimated the risk they were taking when they put their future in the hands of an authoritarian communist regime.

CEO of such companies, 20 years ago: "What could go wrong???"