"I Only Buy Domestic Brands, and I Can't Pay Full Price": Chinese Consumers Turn Away From Nike as It Falls Out of Favor

China revenue falls for ninth consecutive quarter
Homegrown brands such as ANTA and Li Ning erode market share
Inventory buildup and discounting undermine brand value

Nike, the U.S.-based global sportswear company, is struggling in China. Its sales decline has persisted amid the rise of domestic brands, weakening consumer spending, and a loss of brand value driven by discounting.

According to Nike on October 24, the company’s revenue in China for the first quarter of fiscal 2027 (June-August 2026) totaled $1.18 billion, down 26% from the same period a year earlier, excluding the impact of foreign exchange rate fluctuations. Revenue in China has declined for nine consecutive quarters, and the drop this quarter was the steepest during that period. Global revenue also fell 4% to $11.21 billion over the same period.

One factor behind this trend is the rise of local brands, which are expanding their market share by offering products that reflect domestic consumers’ tastes and competitive prices. Nike’s leading competitors include ANTA and Li Ning. Founded in 1991, ANTA has broadened its customer base by operating a range of brands, including FILA and Descente, in addition to its own competitively priced brand. The namesake brand, founded in 1990 by Chinese gymnastics hero Li Ning, has attracted the interest of domestic consumers by combining traditional Chinese culture with modern design in its sportswear.

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Analysts say global brands are losing ground as the “Guochao” trend, in which consumers favor domestic brands and Chinese-inspired styles, gains traction, while local companies quickly incorporate consumer preferences into their products. In addition, the economic slowdown and downturn in the property market have reduced consumer spending, weakening the appeal of Nike products, which are relatively expensive.

Accumulating inventory and discounting are also weighing on the company. Nike’s reliance on discounts to clear inventory has discouraged consumers from buying at full price and, analysts say, undermined its position as a premium brand. Its failure to respond quickly to changes in the local market in product development and distribution operations is also cited as a reason it has lost ground to competitors.

Nike is seeking a way forward by changing its distribution structure. Starting in January 2027, it plans to restrict major wholesale distributors’ online sales rights and shift sales toward its official online stores. The company aims to reduce price differences across distribution channels, rely less on discounts, and increase full-price sales. However, sales could decline further in the short term as it adjusts its online sales network.

Nike also plans to step up product development that reflects Chinese consumers’ preferences. It intends to strengthen the product development capabilities of its local organization and introduce footwear and apparel tailored to the Chinese market.

Nike is also pursuing a company-wide restructuring. It has set a target of reducing costs by approximately $2.5 billion by fiscal 2031. However, some say cost reductions alone will not be enough to offset the weakness of its business in China.

This content was produced with the assistance of AI translation services.