Nike first entered the Chinese market in 1981, and its growth was characterized by a unique approach. Instead of directly introducing its products, Nike in China opted to support sports clubs and athletic events. A pivotal moment occurred during the 2008 Beijing Olympics when Nike proactively sponsored multiple sports teams, effectively extending its brand presence across the entire country.
Michael Martin, VP of Nike China, explained that due to the country’s technological advancement paired with people’s willingness to connect with products via digital applications, Nike set the priority to keep up and utilize upcoming tech opportunities. The brand also focuses on Chinese e-commerce taking advantage of the high penetration of online shopping platforms.
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Nike’s historical presence in China
Since brand’s establishment and over the years, China has been a significant growth driver for the US sportswear brand. In 2022, the total revenue of Nike China reached USD 7.2 billion, with USD 5.4 billion coming from footwear and USD 1.6 billion from apparel. Nike’s worldwide revenue in 2022 was USD 46.7 billion meaning China accounted for 15.5% of Nike’s total revenue.
Guochao brands are giving Nike a run for its money
In recent years, there has been a noticeable shift in consumer preferences, within the Chinese sports market, with domestic sports brands like Li Ning and Anta gaining popularity due to avant-garde designs and reasonable pricing. This shift can be attributed to several key factors, includingthe Xinjiang cotton scandal and the rise of Guochao (国潮, “National tide”). Young people start favoring cultural heritage, social values, and domestic products. The era of relying solely on international brand names and celebrity endorsements, exemplified by figures like Kobe Bryant and Messi, to capture the Chinese market is showing signs of decline. Instead, brands must focus on crafting compelling narratives that resonate with consumers and invest in understanding their preference for products with a distinctly “Chinese feel.”
This transformation in consumer behavior holds significant implications for Nike’s strategy in China, and it underscores the importance of aligning with these evolving preferences and cultural dynamics to maintain and expand its market presence in the country.
Nike’s journey to 50% digital sales in China
As a response to modernization, Nike has developed new digital marketing strategies to continue engaging digitally active Chinese audience. The brand integrates retail stores, digital platforms, and offline activities to establish a comprehensive omnichannel experience and foster the community. This approach aims to build a brand ecosystem in China, encompassing consumer insights, product innovation, customer experiences, and value creation.
Nike’s sales growth in China can be predominantly attributed to its digital strategy. In 2012, Nike started its online journey in China by opening its first flagship store on Tmall, one of China’s largest e-commerce shopping platforms. Then, the digitalization continued with the launches of Nike’s official website store, the SNKRS app, and its WeChat Store. In November 2019, the sports brand developed a one-stop shop delivering exclusive content, events, and personalized services. By 2022 digital sales comprise over 42% of Nike’s sales and the brand believes it is well on track to earn more than 50% of its business from digital sales in the nearest future.
Nike’s D2C evolution: Cutting retailers, boosting revenue, and enhancing brand control
Nike has been establishing a Direct-to-Consumer (or D2C) retail framework covering online and offline stores, and a digital supply chain since 2012. The brand is always placing a heavy emphasis on D2C channels through Nike.com, brand-owned Apps, the Nike WeChat store, and its own retail stores.
In China, D2C’s revenue share increased from 23% in 2014 to 40% in 2019, while Nike’s wholesale business declined from 81% in 2013 to 61% in 2021. Nike also streamlined its wholesale partnerships, reducing the number of retailers from around 30,000 in 2013 to just 40 strategic partners by 2019. Additionally, Nike China decreased its reliance on department stores, focusing more on its own channels, which proved beneficial during the pandemic.
This shift toward Nike’s own channels not only reflects their increased emphasis on D2C business but also their commitment to providing “a consistent, connected, and modern shopping experience”.
Navigating from third-party platforms to brand-owned success
Alongside its official Nike China website, Nike utilizes its WeChat mini-program and the Nike App. These platforms serve as owned media channels through which Nike offers a broad range of products and services, establishing more personal connections with Chinese consumers.Since the launch of the Nike China App in 2019, Nike has been directing traffic from its website, WeChat program, and Nike.com to the brand-owned app. This app offers the most personalized access to products, exclusive content like coaching tips, and personalized services.
By gradually shifting sales to brand-owned channels, such as the Nike App and Nike.com, Nike in China has experienced increased profits and a more loyal customer base compared to third-party e-commerce platforms. The sports brand initially leveraged well-known platforms for Chinese consumers but is now actively transitioning them to its own channels.
Cooperation with e-commerce platforms
Despite brand’s prime focus on D2C channels, collaborations with e-commerce paltforms like Tmall continue to play a significant role in navigating the Chinese market successfully. Currently, Nike maintains its position as the leading apparel seller in the e-commerce sector. These partnerships have not only boosted sales but have also led to a substantial increase in new members.For instance, on Single’s Day in 2019, Nike’s membership program, Nike+, gained an impressive 3 million new members.
Furthermore, Nike’s collaboration with Tmall extends to data-driven marketing projects. By leveraging a variation of e-commerce platforms, Nike in China can access extensive consumer behavior and industry trend data, enhancing its understanding of Chinese consumers and refining its products and services.
New retail strategy of Nike: Starting from Nike 001
Opened in October 2018, Nike’s first global flagship store (Nike 001) brings digital-driven sports retail innovation and personalized services to the Chinese market. It is a cornerstone of Nike’s new retail and digital strategy in China, aiming to integrate digital and physical retail.
Nike 001 features “new retail” through digitalization, personalization, and online-and-offline integration, offering mobile checkout and exclusive experiences for Nike+ members. This store signifies Nike’s leadership in transforming sports retail in China. Through advanced or in-store booking, the Nike Expert Studio of the Nike 001 gives Nike+ members unrivaled access to try on exclusive and personalized products in one-on-one sports expert sessions. Also, members can access customized products, get private services through online reservations, and learn about the latest products and exclusive members’ benefits. Starting from Shanghai 001, Nike is leading the transformation of sports retail in China.
Nike shuts down NIKE Run Club (NRC) app in China in 2022
While Nike has previously achieved success in fostering a vibrant community with its social-enabled apps and community events, the brand has deactivated its Run Club app in China as of July 8, 2022. This move affected over 8 million users who collectively covered 600 million kilometers. While the specific reason wasn’t stated, it is likely due to increased compliance requirements from the Chinese government aimed at safeguarding personal information and data privacy.
Nike does not plan to abandon its runners and wants to launch a localized platform, emphasizing regional consumer needs and continuing to invest in its digital platforms.
Nevertheless, these new curbs on collecting and exporting personal data in China will make the collection of consumer data much more difficult in the Chinese market, forcing both domestic and foreign companies to revisit their data collection methodologies. While the Chinese market remains appealing, the end of the era of easy consumer data collection will make business decisions more difficult for Nike China.
Nike’s community – the gateway to members’ loyalty
Nike’s brand community in China allows two-way interactions, drawing regular customers closer to the brand, as well as offering Nike an understanding of customer behaviors and needs.
Nike has harnessed the community’s insights and preferences through various offline activities. These include annual sports events like the China High School Basketball League and regular gatherings through community clubs. For instance, Nike’s “Just Do It Sunday!” running campaigns, held in multiple cities, infuse elements like books, music, and charity to enhance the events’ appeal and significance. Additionally, the lifestyle community also revolves around the Nike+ platform.
While building the offline presence, Nike in China actively fosters customer engagement within its online brand community, where fans share workout photos, goals, struggles, and achievements using Nike templates and hashtags. These community members also serve as brand ambassadors, particularly on platforms like Weibo, using hashtags like #NikeTraining or #Nike+训练营. Through social media, user-generated brand stories showcase customer loyalty and the brand’s popularity, influencing prospective customers. This approach has enabled Nike to effectively connect with million users on Chinese social media, nurturing long-lasting relationships between the Chinese customers and the brand.
As a result, by incorporating the offline and online community events with their engaging themes, the brand can establish emotional resonance with its members to build brand equity with Nike’s Chinese customer base.
Female customers as the new brand’s target
There is a vivd growth in women’s running around the world, but especially in China where the female Nike+ runner market is growing faster pace than the male runner market. Thus, Nike has emphasized the female consumer market by launching various community campaigns and providing tailored services targeting women.
By activating the Nike Training Club (NTC), the brand provides all-level female runners with comprehensive running programming and elite coaching. Additionally, Nike launched the Nike Women WeChat account.
Through its wide digital platform base (integrating NRC, NTC, Nike App, Nike, and Nike Women WeChat account), Nike China is able to realize its woman-based marketing strategy and build a more cohesive female fitness community.
Nike’s marketing strategy fuels women’s empowerment
In addition, Nike launched its global “Better for It” campaign meant to spark women’s interest in sports. In China, the campaign was localized under the tagline “Just for better (只为更赞)”. Nike leveraged female influencers, such as actress Wang Luodan, to relate to consumers’ frustrations with everyday exercise and their love-hate relationship with working out. Influencers on WeChat and Weibo helped Nike connect with the target audience by sharing their training stories and inspiring women to be “Better for It.”
Nike China opens women’s only store
In 2014, Nike launched its second women’s-only store in Shanghai, offering specialized services, weekly programs, and tailored events to inspire active women. The store features a digital community area with updated calendars for NRC, NTC classes, and store events, as well as profiles of Nike coaches, product information, and campaign updates.
What brands should know about the new Nike’s China strategy
- Nike has successfully grown in the Chinese market through strategic measures such as supporting sports clubs and athletic events, particularly during the 2008 Beijing Olympics.
- The brand focuses on digital applications and e-commerce to connect with tech-savvy Chinese consumers, with over 42% of its sales coming from digital channels.
- Nike has adopted a Direct-to-Consumer (D2C) retail framework, emphasizing its brand-owned channels, online stores, and a digital supply chain to enhance customer experiences.
- The brand has collaborated with e-commerce platforms like Tmall and opened flagship stores to integrate digital and physical retail, offering personalized services and mobile checkout.
- Nike actively engages with its brand community through offline and online events, particularly targeting female consumers and fueling the empowerment of women in sports.
