Nike has elected to withdraw a new shoe design in Mainland China after a politically sensitive image was posted to Instagram by one of its designers.
The issue overshadowed a solid result from the sportswear giant (scroll down for coverage)
The image was in support of protests in Hong Kong – news of which has been heavily censored on the mainland – and was posted to an account belonging to one of Nike’s partnering fashion labels in Japan, Undercover, which collaborated on the shoe.
Nike’s retail partners began pulling the shoe from sale following the post, with some vendors posting announcements that Nike had given urgent instructions to halt the shoe’s release. The withdrawal may have been a response to a negative backlash against the brand on Chinese social media for its apparent siding with Hong Kong.
Breaching sensitive political issues has proved costly for many companies attempting to do business in China, as nationalist sentiments spread virally on platforms such as WeChat and Weibo can decimate brand credibility overnight for crossing the line.
The Undercover Instagram post has since been removed, and the firm has claimed that the content was an “individual opinion” posted mistakenly.
Meanwhile, Nike’s net profit increased to US$4 billion during the 2019 financial year, more than double last year’s figure of $1.9 billion.
However, the large disparity is attributed to the enactment of the Tax Act last year, which raised Nike’s effective tax rate to 55.3 percent – causing a 54 percent drop in profits. This year, Nike’s tax rate returned to a more normalized level of 16.1 percent.
Yesterday, Nike president, chairman and CEO Mark Parker told investors this year was a pivotal one for the company.
“Our distinctive innovation and digital advantage led to accelerated growth across our complete portfolio, while our brand fuelled deeper relationships with consumers around the globe,” he said in a statement.
Revenue grew 7 percent to $39.1 billion, driven by sportswear, Jordan, and running, as well as strategic investments in innovation and digitally led by Nike Direct.
The Converse brand saw revenue grow 3 percent to $1.9 billion, which was mainly driven by double-digit growth in Asia and digital.