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Is Nike Losing Out To Chinese Rivals Amid The Xinjiang Cotton Boycott?

By John F. Heerdink, Jr.

As per reports, Chinese sportswear makers are performing better than their global peers fueled by the Xinjiang cotton controversy amid Chinese consumer support in response to the alleged human-rights issues in the Xinjiang region. The incident has boosted at least one local sneaker maker by some 250% since the controversy escalated in late March, while Nike shares popped after earnings last month, they are only up 20% since end-March.

Firms like Li Ning Co., and Anta Sports Products Ltd. which have supported using materials from the contentious far west region, have gained market share as the Chinese move away from foreign brands amid a wave of patriotic buying. Rising geopolitical tensions over accusations of forced labor in Xinjiang have become a serious threat for global companies trying to operate in China.

“The sentiment to buy homegrown brands will continue. In the short-term, the stock prices of Li Ning and Anta will continue to rise,” stated Steven Leung, executive director at UOB Kay Hian (Hong Kong) Ltd.

While NIKE, Inc. (NKE) shares posted better-than-expected results recently as sporting events and consumer spending ramp back up, the brand is still struggling in China, where sales of western brands have slowed. 

Anta to be an official supplier to the Beijing 2022 Winter Olympics will further bring a shift in local preference to Chinese products. Anta who owns rights to the Fila brand in the region is enjoying a series of record highs, with its market value reaching over $60 billion.  Li Ning, a company founded by a gold-medal-winning Olympic gymnast, has seen its shares jump more than 84% since the end-March.

NIKE, Inc. (NKE) is the world’s top designer, marketer, and distributor of athletic footwear, equipment, apparel, and accessories. The Beaverton, Oregon-based company offers products for a wide variety of sports and fitness activities. To learn more about NIKE, Inc. (NIKE) and to continue to track its progress please visit the Vista Partners NIKE Coverage Page.

Vista Partners LLC (”Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.com with daily stories, weekly market updates, monthly macroeconomic newsletters, podcasts, & Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives.
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(Read Original Story: Nike Shares Lose Out to Chinese Sneaker Rivals After Xinjiang Cotton Boycott in Bloomberg)


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