Nike China revenue sinks 30% as domestic rivals gain ground

Nike's China business has shrunk by nearly a third since 2021, ceding ground to local rivals Anta and Li-Ning as younger shoppers embrace domestic brands over Western labels.

Nike's annual revenue in China fell to its lowest level in eight years at the end of May, with sales declining from the prior year for eight consecutive quarters. The 30 percent drop since fiscal 2021 has turned what was once the company's fastest-growing region into its smallest market, according to company filings.

"The one thing that I have certainly learned over the last six months is that the Chinese consumer has changed and they have high standards for what they want through product connections, engagement with the brand," Cathy Sparks, Nike's vice president and general manager of Greater China, said in an interview. "We know that if we can design footwear and apparel, lifestyle or performance, that's specifically targeted towards the unique needs of Chinese consumers, we'll drive full price revenue."

The decline comes even as China's overall sportswear market expanded 51 percent in the past five years, fueled by a surge in fitness participation, data from GlobalData show. Rivals have capitalized on the growth: Lululemon's comparable sales in China rose 20 percent in fiscal 2025, while Adidas brand revenue climbed 13 percent in the region during the same period. Nike's China revenue peaked at $8.29 billion in fiscal 2021 and has since fallen to its lowest annual level since 2018.

The erosion of Nike's China business carries broader implications for the company's global turnaround. China once commanded premium margins and was viewed by investors as a durable growth engine. Now, the region is weighing on results as Chief Executive Officer Elliott Hill works to stabilize North America operations. Nike's outgoing finance chief Matt Friend told analysts he could not say when China would return to growth, warning that "profitability will bottom before sales."

The 'China Chic' Shift

A political campaign championed by President Xi Jinping called Guochao, or "China Chic," has reshaped consumer preferences, driving younger shoppers toward domestic brands. The movement gained momentum in 2021 after Nike faced boycott calls in China over a statement expressing concern about reports of forced labor in Xinjiang. Actor Wang Yibo terminated his endorsement contract with Nike, while Anta and Li-Ning promoted their use of Xinjiang cotton.

"Years ago when you're talking to a high school boy asking which sports shoes you may want, they probably say Nike or Adidas, but right now if you ask them, they say Anta or Li-Ning," said Tracy Dai, director of operations at consulting firm China Skinny. "Nike probably is not that cool to them anymore."

Domestic brands have also improved product quality and marketing, narrowing the gap with foreign competitors. Chinese consumers have become more selective, prioritizing technical innovation over brand cachet, said Wei Kan, who spent about 15 years at Nike and Converse in China and Taiwan before founding consultancy Conduit Asia.

"Nike is still more like a global, generalist brand at this moment," Kan said. "The innovation pipeline is actually slower than the local brands and also the competitors."

Distribution Overhaul and Local Product Push

Sparks is unwinding a distribution model that became fragmented during the pandemic, when Nike allowed brick-and-mortar distributors to sell online even though their agreements did not include digital channels. The company is now shutting those storefronts to restore full-price selling and a premium brand experience.

BNP Paribas analyst Laurent Vasilescu estimates the change could reduce Nike's China revenue by as much as $1 billion annually, representing about 17 percent of regional sales. Sparks acknowledged some distribution will disappear but said "we believe we'll be able to replace total value with full-price sales and a more premium experience."

In a bid to reconnect with local tastes, Nike last week hired its first-ever Greater China vice president of local product creation, tasked with building an assortment designed, developed and made in China for Chinese shoppers. The company plans to launch two lifestyle capsules — one for Nike sportswear and one for Jordan streetwear — in time for the holidays, followed by performance apparel and footwear over the next 18 months.

Adidas has demonstrated the payoff from localization. Its Chinese Track Top jacket, designed by the local team for the Lunar New Year, sold out within 27 minutes and became a global phenomenon. Nike's marketing during the World Cup, by contrast, looked similar to campaigns from a decade ago, said Yaling Jiang, founder of consumer research firm ApertureChina.

"In a way, Nike has just become irrelevant," Jiang said. "I don't think young people can remember what's the last new thing they've done."

The China recovery is unlikely to be quick. With distribution changes set to reduce near-term revenue and local competitors entrenched, Nike's path back to growth in the region will depend on whether its new localized product strategy can win back a generation of shoppers who have already moved on. Investors will watch the next quarterly earnings call for signs of stabilization in China segment margins.

This article is for informational purposes only and does not constitute investment advice.