Nike is 'a brand of China and for China,' CEO says during earnings call

Nike was recently criticized in China after raising concerns about forced labor practices

Nike CEO John Donahoe called the sportswear apparel giant a "brand of China" this week, following a fiasco it was involved in earlier this year over concerns about human rights abuses committed by the communist government.

During an earnings call this week, Donahoe explained that Nike had a long-term view of its operations in China, where it had been operating for about four decades.

"We are the largest sport brand there, and we are a brand of China and for China," Donahoe said. "And the biggest asset we have in China is the consumer equity. Consumers feel a strong, deep connection to the NIKE, Jordan and Converse brands in China. And it’s real."

Donahoe went on to say that the company intended to keep investing in its China operations as it reported better than expected revenues in its fiscal fourth quarter. Its sales in China missed Wall Street expectations.

Shares of Nike hit an all-time high during Friday's trading session, driven by its strong financial results.

Ticker Security Last Change Change %
NKE NIKE, INC. 164.57 -0.52 -0.32%

NIKE STOCK SOARS TO RECORD AS US SALES BOOM

Nike recently came under fire in China for a comment it made raising concerns about forced labor practices in the Xinjiang Uyghur Autonomous Region (XUAR). It reassured customers that it does not source textiles or products from the region, like cotton.

After the U.S. and other Western countries responded to the forced labor allegations with sanctions, its statement was resurfaced and resulted in calls among Chinese consumers to boycott the brand – as well as others like H&M.

The Chinese government has characterized companies' decisions to avoid using cotton sourced from the region as an effort to undermine its economy.

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U.S. companies are increasingly coming under scrutiny over their operations in China, where critics wonder how far they have to bend their practices in order to satisfy the communist government.

Apple, for example, was the subject of a New York Times report last month claiming the company abandoned some of its security policies in China because they are not allowed.

The Times said that the company has put the data of its customers at risk and has aided the Chinese government in censorship of its app store in order to meet regulators' requirements, which Apple refuted.

President Biden has said he intends to take a hardline stance on China to ensure economic fairness.