Nike undeterred by obstacles to trade

Senior executive: 'Super excited about our prospects in China; consumers 'passionate'

While some American corporations are diversifying their supply chains and pulling away from China to avoid tariffs, Nike Inc is looking to expand operations in the Asian economic powerhouse, which it sees as a growing consumer market for US companies, a top executive of the footwear giant told China Daily.

"We are super excited about our prospects in Greater China, and we are just grateful for an economy that is growing, and consumers that are passionate about our brand. I think a government that wants to facilitate growth is a good thing," Sean O'Hollaren, senior vice-president of government and public affairs at Nike, said on the sidelines Friday of the ninth Oregon-China Economic Forum, an event organized by the Oregon China Council.

O'Hollaren expressed careful optimism as Chinese and American negotiators prepare to meet again this week in Shanghai for trade talks, noting that the world's two largest economies have built extensive business and commercial ties with each other.

"I am confident that we can address our issues if we not only look at what we need to do, but how we do it," he said.

Nike has operated in China for 35 years, O'Hollaren said. It employs more than 8,000 people in its Shanghai Headquarters and Taicang Distribution Center. It also hires 40,000 people in its partner stores and another 145,000 in its supplier base.

The Beaverton, Oregon based company grew its business in China by 24 percent last year to $6.5 billion in sales.

With an eye toward attracting digitally savvy, younger Chinese consumers, the sneaker mammoth last year unveiled a House of Innovation on Nanjing East Road in Shanghai, which provides consumers with a personalized and digitally integrated shopping experience.

In addition to expanding its headquarters for Greater China in Shanghai, Nike announced the allocation of $100 million to its new logistics facility in Taichang, Jiangsu province, in January. It also renewed its contract as a sponsor for the Shanghai International Marathon.

"We are doing more, not less; the market is blooming, and we hope to continue to fuel the passion for sports in China," he said.

According to the Portland Business Journal, the sportswear retailer employed 12,000 people locally in 2017. The full-year revenue for Nike tops $39.1 billion, according to its fiscal quarterly report, released at the end of June.

"Our production in China not only benefits consumers, but also enhances our ability to innovate and support high-quality jobs in the United States," O'Hollaren said.

Nike is among the more than 170 leading footwear companies in the US that wrote a letter to the Trump administration in May, urging it to reconsider its latest tariffs on shoes made in China.

The Footwear Distributors & Retailers of America, which represents the brands, estimated that the additional tariffs would cost US customers $7 billion more per year.

If the trade war continues for a long time, American consumers will ultimately be the ones footing the bill, O'Hollaren stressed.

"At the end of the day, it's not companies who are going to be punished, it's the consumers, and they are going to have less choices, and higher prices, and that's not good for their income," he said.

Blaming China has become popular politically because it gives politicians someone to point to for the slump of good middle class jobs in the US.

"Maybe people are understandably concerned about the future and the ability to get a good job and earn a decent wage. It's easy to blame trade for this anxiety, but there are many other more important factors. At the top of the list is technology, which allows companies to produce more output with fewer workers," he said.

"Protectionism is not the answer. Even if the US imposed a 100 percent tariff on all products coming from China, relatively little manufacturing would return to the US. It may leave China, but it's unlikely to come back here," O'Hollaren added.

"China owns more than 35 percent of the US debt held by foreigners, but this uncertainty is pushing China to look for ways to diversify its investment away from the dollar. Why on earth would we want to incentivize diversification away from the dollar?" O'Hollaren asked. "The more our economies are interconnected, the less likely we are to take actions that will hurt each other's interests."