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Few western companies have more at stake than Nike in the fallout from an American basketball executive’s tweet about Hong Kong.
The US sportswear group, whose Swoosh logo adorns NBA player kits under an exclusive deal with the league, has been among the biggest beneficiaries from a basketball boom in China.
“The brand has been so hot over there,” said Brian Yarbrough, analyst at Edward Jones in St Louis. Such is the importance of China to the New York-listed company, which has a $115bn market capitalisation, that “one hiccup could spell problems” for the entire investment case.
▲Nike risks being dragged into China NBA dispute (via Financial Times)
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Its sales in Greater China surged 22% in the first quarter of this fiscal year to make up about 17% of its total revenue. Basketball and Nike are so popular in China, that "they can go there and basically charge what they want," one analyst told the Financial Times.
Nike's chief executive, Mark Parker, has repeatedly underlined the importance of China to the company and reaffirmed its commitment to the region.
"Nike is a brand of China for China and the results continue to prove it out. We've driven double-digit growth in Greater China every quarter for more than five years," he said on the company's first-quarter earnings call this year.
"We are also excited about the energy around basketball in this geography, and globally, as we enter the new NBA season," Parker added.
▲Why Nike is caught in the middle of the NBA's dispute with China (via Markets Insider)
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For footwear companies, China boasts a growing middle class that is increasingly interested in their products ... sales could take a hit if the controversy worsens. Footwear companies have already expressed concernabout the ongoing US-China trade war eating away at their profits.
"Should this situation escalate, should the government suggest that consumers no longer buy Western brands or brands that are associated with the NBA, that would be very bad," said Matt Powell, a retail analyst with the NPD Group. "They are all getting a significant portion of their growth from China."
▲Nike and other sneaker companies may feel the sting of the NBA's China controversy (via CNN)
文：Du Qiongfang Du
资料：Markets Insider, Financial Times, CNN
图：Getty Images, 网络 Ge