- Nike's sales in Greater China fell 17% in its most recent quarter.
- Nike CEO Elliott Hill acknowledged the slump, saying it needs to "reset" its approach to China
- Experts say Nike is struggling with cultural relevance as local brands connect with young consumers.
Nike's grip on China's sneaker market is slipping.
Once a status symbol among Chinese consumers, analysts say it's increasingly losing cultural relevance even as its products remain innovative.
The sportswear giant's stock tumbled by 9% in early trading on Friday after reporting its Q2 fiscal results on Thursday.
While sales in North America rose 9% to $5.63 billion during the quarter, sales in Greater China were down 17% to $1.42 billion — falling short of Wall Street's expectations.
Nike CEO Elliott Hill said on Thursday's earnings call, "It's clear that we need to reset our approach to the China marketplace."
"We're acting decisively to accelerate the lagging areas, with China at the top of that list," he said.
While retail watchers say Nike has made some progress in preparing for this reset by reducing promotions and improving inventory management, there's a deeper challenge at play.
The "brand that is not connecting culturally in a way that rivals are," Neil Saunders, managing director of GlobalData Retail, warned in a note to clients on Thursday.
Saunders said this is a "more entrenched problem" that is going to take some time to resolve.
'Cultural lag'
The core problem is a "systemic cultural lag," Linda Yu, general manager of consultancy firm Red Ant Asia, told Business Insider.
Nike "needs to move beyond traditional sports marketing and genuinely understand and integrate into the cultural confidence, sense of community belonging, and lifestyle aspirations of China's younger generation," she added.
Chinese consumers, particularly Gen Z, are embracing the "Guochao" movement that celebrates Chinese heritage and homegrown brands.
Local brands such as Anta and Li-Ning have been capitalizing on this by creating culturally relevant campaigns, product designs, and digital experiences that resonate with younger consumers.
Nike's messaging, which still leans heavily on "elite athleticism and individual grit" — with slogans like its iconic "Just Do It" — feels distant by comparison, Jack Porteous, Commercial Director at China marketing & strategy agency TONG Global, told Business Insider.
Geopolitical tensions between the US and China are also making it harder for Nike, encouraging consumers to favor domestic competitors.
"I think that Nike has failed to adapt to the cultural values of China's Gen-Z, " he said, adding: "Some netizens observe that while Nike's content is high quality, it feels less authentic and more brand-controlled — making it less accessible for a generation who crave personalisation and self-expression."
Rivals such as Lululemon and Adidas have seen growth in China as they've found ways to connect with shoppers there, Yu said.
Adidas does it through local trend collaborations and Lululemon via its "highly engaged value-based" communities," she said.
It's not just through its messaging that it's losing consumers. Porteous said, Nike is also playing catch-up when it comes to digital engagement.
In China, shoppers often discover brands through apps and marketplaces such as WeChat, Douyin, and Tmall. Local rivals excel here with livestreaming, influencer collaborations, and interactive community campaigns.
However, Nike's reliance on more traditional marketing channels means it is at a disadvantage in terms of visibility and relevance, especially among Gen Z shoppers.
