During a recent Nike earnings call discussing the second-quarter results for the sportswear giant, Chief Executive Officer, John Donahoe, seemed to have let the cat out of the bag when he made a statement in regards to the controversial relationship between his company and Communist China.
Speaking with Wall Street analysts on the results of the company’s quarterly earnings, Donahoe stated the company in which he heads is, “a brand of China and for China,” leading to additional questions on the company’s values.
“We are the largest sports 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.”
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.
This disavowal from the CEO comes after an Australian report from March 2020 that alleged Nike, Apple, and 80 other corporations are “potentially directly or indirectly benefiting from the use of Uyghur workers outside Xinjiang through abusive labor transfer programs as recently as 2019,” showing that Nike along with other companies who have much of their supply chain in China might actually have links to and profiting from forced Uyghur labor.
The company has claimed it does not source any of its product from forced labor, some critics of sportswear company argue that the country’s supply chain and these labor camps are interwoven. Some reports suggest there are as many as 1 million Uyghur Muslims held in Xinjiang, a region that accounts for 80 percent of the country’s cotton supply.
It is also important to note that Nike, along with Coca-Cola and Apple lobbied against a bill aimed at cracking down on imports from the Xinjiang region of China. H.R.6210 – Uyghur Forced Labor Prevention Act would have “imposed various restrictions related to China’s Xinjiang Uyghur Autonomous region, including by prohibiting certain imports from Xinjiang and imposing sanctions on those responsible for human rights violations there.”
Democrats also voted against a similar amendment designed to crack down on China and the human rights violations they are accused of committing, which is odd when one also considers that 80 percent of Nike’s donations went to Democrats in 2020, amounting to more than $604,000.
Actions like these have taken along with comments from the CEO as the company announced increased reported sales in China, sitting at $1.9 billion for a three-month period, continue to give cause for suspicion on just what the company knows about some of the origins of the material in which they are able to make such a profit off of.
Shares of Nike hit an all-time high during Friday’s trading session, driven by its strong financial results.
It has been a long-held belief that China has been able to undercut the market on manufacturing in the United States by having forced labor conditions in order to offer cheaper supply chain solutions to companies like Nike, which has been the target of these types of accusations for quite some time.
China calls efforts to impose sanctions or avoid using materials from this particular region an effort to undermine its economy in a classic technique that avoids accountability and instead accuses Western countries of xenophobic remarks.
These large companies are picking up increased scrutiny over their practices as it relates to China as critics say these companies are willing to bend their values in order to appease the Chinese government and continue to tap the large market for their products. A New York Times report even accused Apple of changing some of its security policies in order to be granted access to these customers at the behest of Bejing.
In the report, the Times accused the company of putting 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, claims which Apple has since refuted.