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Nike: ‘Of China and For China’

Nike shoes at a sporting-goods store in New York City. (Mike Segar/Reuters)

Nike is between a rock and a hard place — or, rather, between two global powers, one of which is complicit in ongoing crimes against humanity.

After Nike issued a statement tepidly expressing concern about forced labor in China’s Xinjiang region earlier this year, nationalistic Chinese consumers boycotted the company, prominent brand sponsors pulled out of deals, and sales in China plummeted. Nike’s troublesome statement was partly a response to the growing mountain of evidence that led the U.S. government, in addition to the parliaments of almost ten Western countries, to call the Chinese Communist Party’s conduct there — a sweeping campaign to eradicate Uyghurs through arbitrary mass detention, population-control policies, and other horrors — genocide and crimes against humanity.

But the sneaker company, for all of its recent troubles, is doing fine, for now at least. On Thursday, the company reported its earnings for the third quarter, showing that its North America operations drove revenue growth, despite tumultuous times in China. This was enough to bump the company’s stock up 13 percent.

Reports say that executives still have reason to worry: That growth took place in spite of these headwinds in China, not because the problem was resolved. The Wall Street Journal reports that Nike has a massive problem in the country, citing a Citigroup survey in which a third of respondents claimed they’re less likely to buy Nike following the Xinjiang controversy.

John Donahoe, CEO of Nike, has a solution: Double down on Nike’s commitment to the Chinese market. During the earnings call he declared, “Nike is a brand that is of China and for China.”

Committing to selling products to Chinese consumers is not a problem in and of itself. But Nike’s recent experience in China suggests that Donahoe and his colleagues are either too credulous when it comes to forced-labor practices, or they just don’t care, despite their socially conscious branding at home.

Before the China backlash, Nike had been accused of complicity in the forced-labor abuses taking place in Xinjiang with the Australian Strategic Policy Institute revealing that Nike had sourced products from a factory in Qingdao, to which some 600 Uyghur laborers had been impressed into labor.

Then, the New York Times later reported that Nike was one of three companies lobbying against the Uyghur Forced Labor Prevention Act, legislation that would bar products from Xinjiang from entering the United States.

The Nike statement in March might have sounded like a reversal, but it seemed like the company saw it as a low cost way in which to placate U.S. consumers perturbed by its alleged use of forced labor in China.

That the cost ended up being high, perhaps destroying Nike’s reputation in the country, does not seem to be an outcome deliberately sought by Donahoe in order to speak truth to power; if that were the case, the Nike statement on Xinjiang would have been quite a bit stronger than it was.

Nike, thankfully, hasn’t walked back that statement, but it is pulling its punches. Recall that Donahoe is not one to abstain from pointed language with a political tilt; in a June statement he spoke out about the need to “understand the enormous suffering and senseless tragedy racial bigotry creates” in no uncertain terms. By contrast, the statement on Xinjiang is perfunctory, the bare minimum of what one should say about a modern mass atrocity.

For now, it seems likely to cling to this double standard as it seeks forgiveness from Chinese consumers. But Nike, now a brand of China, should instead strive to understand the racial bigotry that has fueled the crimes against humanity in Xinjiang — and denounce it in no uncertain terms.

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