Nike China Cuts 400 Jobs to Make Way for Digital

Key Takeaways:

  • Nike China announced plans to lay off roughly 400 employees from sites on the Mainland due to strong online sales and growing demand from Chinese consumers.
  • COVID-19 brought about weak fiscal fourth-quarter results, but digital sales channels accounted for 30 percent of Nike’s sales last quarter — a number the brand did not think it would reach until 2023.
  • Nike is still considered pricey in China, and comments on Weibo indicate that netizens might prefer local homegrown heroes such as Li Ning and Anta.

Nike China has announced plans to lay off roughly 400 employees from sites on the Mainland, as strong online sales and demand from Chinese consumers helped the company back to profit in the first quarter following earlier losses.

China’s sports media outlet, Lanxiong, reported that Nike’s organizational structure will be adjusted with these layoffs and may result in many executives leaving the sportswear giant, which will account for a nearly 20-percent loss of the workforce and is to be carried out in phases.

The first staff cull started last week and saw losses in regional offices in Beijing and Guangzhou. So far, the Shanghai headquarters has not been affected, but that might only be temporary.

Earlier this year, the COVID-19 pandemic brought about weak fiscal fourth-quarter results, culminating in a 36-percent sales decline and a $790 million loss during those three months. However, digital sales channels accounted for 30 percent of sales last quarter — a number Nike did not have pegged until 2023. According to Lanxiong, Nike’s goal with these layoffs is to increase the percentage of revenue of digital sales up to 50 percent, which could point to losses in the brick-and-mortar side of the business.

In 2019, the company offered a Chinese version of its app from iOS and Android app stores. This one-stop-shopping platform was aimed at providing members with a personalized, immersive experience, since at the time, Nike’s global vice president and general manager of Greater China said that China’s consumer market was huge, and its digital consumption was very developed. Earlier this year, Nike continued its digital transformation by refitting its Guangzhou store (opened in 2012) as a digital-first retail mecca.

Despite a recent ramping up of its China strategy, Nike is still considered pricey to many Chinese netizens. The latest comments on Weibo also indicate that they might prefer local homegrown heroes such as Li Ning and Anta. “It’s time to buy more Chinese brands,” said one comment online. Nike was unavailable for comment.

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