Nike Jumps Into China

“Swoosh!” describes the sound heard over China as Nike (NYSE: NKE) reorganized itself in August to better exploit opportunities it sees there.

Previously, China was part of Nike’s Asia Pacific operating segment, encompassing 13 countries. Now, Greater China has become its own operating unit, as Nike focuses on China’s youth.

At the company’s annual shareholders’ meeting in late September, Nike President and CEO Mark Parker called the Olympics in Beijing “the biggest win of all” for Nike in fiscal 2009. For 2009, Nike’s revenue in China grew by 22 percent year over year, on a currency neutral basis. By comparison, its rev- enue growth in the U.S. for the same period was only 2 percent. However, during a year of economic crisis, Nike’s having grown revenue at all reflects a fierce global competitor.

In terms of total revenue, net income and operating margins, Nike is the clear winner among its competitors, with a strategy to boost margins by eliminating its leastpopular styles. The company has 600 to 700 styles in the works at any one time. According to Parker, “that’s too many … we’re really trying to edit the product down to fewer and better product.”

As Nike continues to promote events such as “The Nike+ Human Race,” it is sure to attract more and more Chinese youth. Last year, the race featured 780,000 participants worldwide. 