Nike Does Not Respect Consumers And Discriminates Against Migrant Workers, Which Will Pay The Price Eventually

Front foot peak encountered the Brazilian men's football team's violation of the sponsorship contract and refused to wear pick brand clothes when receiving awards. Nike in the back foot was exposed that the shop assistants discriminated against migrant workers' customers, and finally admitted it after six days.

Nike's behavior of disrespect for consumers and the market will eventually pay a price. The rising trend of the national tide is surging, but if you want to grow into a global brand, you still need to make efforts to catch up with the original design, sports technology and other aspects.

After the Xinjiang cotton incident, Nike's income in China was lower than expected. After the Xinjiang cotton incident, Nike aroused public anger again, this time it discriminated against migrant workers and consumers.

According to "surging" and other media reports, when Mr. Mao, 44, was shopping for clothes in a Nike store in Kunming, a shop assistant snatched the clothes picked up by the children and hung them back on the hanger. This is undoubtedly a great harm to the child's self-esteem. Perhaps it is because Mr. Mao's clothes at that time were old clothes on the construction site.

"The broken gray T-shirt is more than 20 yuan of floor goods, and the feet are old-fashioned black cloth shoes bought for 15 yuan."

According to Mr. Mao, from the moment he entered the door, the shop assistant's eyes were full of discrimination. Later, Mr. Mao's wife was scratched on the neck while arguing with the shop assistant.

Later, the Xiaoxiang Morning Post reported that Nike responded that the staff involved in the operation had left their jobs, and the company apologized to consumers.

But the incident is still strongly dissatisfied by Chinese consumers. In fact, after a series of "fancy tricks", Nike's performance in China has been severely damaged, which shows that consumers have begun to "vote with their feet" to express their resistance to Nike.

According to the annual report of Nike (NYSE: NKE) as of May 31, 2021, from March to may, Nike recorded revenue of $1.93 billion in Greater China, lower than the market expected of $2.2 billion. However, this figure is still 17% higher than the same period last year.

What investors can't ignore is that Nike's global performance is high in 2021, which is mainly due to the better performance of other countries and regions (especially North America). In fiscal year 2020, Nike's revenue and net attributable to parent company decreased by - 4.38% and - 36.98% respectively, but the decline was reversed in fiscal year 2021, with the above data increasing by 19.08% and 125.56% respectively.

Under the stimulation of performance, Nike's share price has been rising all the way recently, with a market value of nearly 270 billion US dollars, and it continues to be the world's largest sporting goods company by market value.

But compared with what it has done, does Nike really have a clear conscience about its market value?

Compared with Nike, the popularity of domestic sports apparel brands has been significantly improved. The popularity of China's Li Ning's Guochao style remains unchanged. Anta's brand exposure during the Olympic Games is dazzling. Hongxing Erke has been robbed by consumers due to the rainstorm disaster relief event in Henan Province.

In terms of capital market performance, Anta sports (02020. HK) led the domestic sports brands with a market value of HK $465.5 billion. The growth of revenue and net return to parent before the epidemic reached 40% and 30% respectively, maintaining a high growth rate.

However, the company's cost of sales also surged, nearly doubling from 8.4 billion yuan in 2017 to 15 billion yuan in 2019 and 2020. According to the data in "2020 China Mobile Internet annual report" released by questmobile, Anta ranked fifth in the list of domestic brand advertising expenses in the whole year, after Yili, Mengniu, Huawei and bailing.

Looking back on the performance of domestic sports brands in the past two years, we can find that their strong growth can not be separated from the high marketing costs; However, looking at Nike, we can find that its marketing expense rate tends to decrease. Taking Q3 in 2020 as an example, the decline rate of marketing expenditure is as high as 33.5%. Why less advertising, products can sell better? Nike explained in the financial report that data-based marketing can increase the number of employees and reduce costs.

In addition, it has to be said that in terms of original design and sports technology, domestic brands have a long way to go.

In terms of original design, Nike AJ series basketball shoes and Adidas "coconut shoes" have swept the world and become the fashionable items that have been enduring in recent years. Domestic sports brands have no influence that can match the original design of the above two products.

In sports science and technology, domestic brands also need to increase their strength. Adidas, for example, has had a weak performance in the past few years and will almost be overtaken by under armour. However, with the help of "boost", an outstanding sole technology with rebound technology, the company has won a good reputation and consolidated its position. Nike has been sparing no effort in the research and development of sports technology, such as max air cushion cushioning technology, flyweave woven wrapping technology.

If you are a running enthusiast, you will find that the brands with good evaluation (mostly focusing on the personal experience such as elastic cushioning and package feeling) are still Japanese running shoes such as Nike, Adidas, Mizuno and Arthur's, and there are still few domestic brands.

Under the "fancy death" of Nike, the market share of traditional international sports giants has been loosened. Can domestic brands seize the opportunity to rise? On the basis of adhering to the principle, investors should also realize that market performance is the result of consumers voting with their feet. At present, Chinese sports brands still have a long way to go in terms of original design and sports technology.

Looking forward to one day, Chinese children's little wish is to "own the first XXX domestic brand sports equipment", rather than "have the first Nike".