s moved on  Nike’s management has been careful not to blame any single factor. On the earnings call, CEO Elliott Hill described China as a “dynamic” and “complicated” environment, while reiterating confidence that sport will eventually power recovery.  In recent years, domestic champions such as Anta and Li-Ning have matured into sophisticated competitors. At the same time, emerging global players like On and Hoka have sharpened their positioning among younger, more discerning consumers. Olivia Plotnick, founder of Wai Social, said she recently joined a local run club of around 30 participants. Only three were wearing Nike shoes. Among younger runners, brands like On, Adidas, Hoka, and the Chinese outdoor label Kailas dominated, while Nike was more common among older participants. “The reality is we’ve become a lifestyle brand competing on price in China,” Hill acknowledged.  Digital missteps and retail fatigue Nike’s digital sales in China fell 36 per cent during the quarter, even as e-commerce remains central to consumer discovery and engagement.  According to Tony Wu, chief AI officer and partner at BorderX Lab, for years, Nike pursued “channel purity”, prioritising direct-to-consumer sales to protect margins and control brand presentation. In China, that strategy has collided with a fast-evolving digital ecosystem dominated by marketplaces, livestreaming and algorithm-driven discovery. “Emerging platforms like Temu, Shein or TikTok Shop are grabbing discovery and low-price traffic, forcing brands into hybrid plays,” Wu added.  Meanwhile, Hill conceded that Nike underinvested in refreshing its Chinese retail fleet, contributing to weak foot traffic.  Unlike the US, where wholesale partners help amplify reach, China’s monobrand retail structure limits Nike’s ability to compensate through third-party distribution.  “They’re now rebuilding wholesale partnerships to move inventory, even at lower margins,” Wu said. “Without sustained product buzz, DTC becomes an expensive illusion.” Globally, Nike’s gross margin fell 300 basis points in the quarter, weighed down by tariffs and inventory clean-up. In China, those pressures are magnified. Management described the weak performance as “partly by design,” noting that the company is cutting back on promotions, reducing summer buys, and working through obsolete stock to restore full-price selling over time.  Nike shares fell 11 per cent after the earnings release, extending a multi-year decline that reflects scepticism about the pace of recovery. A long road back Despite the gloom, few analysts are ready to write Nike off. The company has navigated similar turbulence before, including a difficult reset in North America earlier in Hill’s tenure that eventually yielded improvement. “I can’t help but draw a comparison between Nike and Starbucks – both brands cracked open huge categories which are now flooded with competitors, so it’s only natural to lose some market share,” Plotnick said.  “But there is still so much pie to be had if you get the formula right. More choices and more experienced consumers mean brands have to show up on the most effective channels, be culturally relevant and make a great product. It’s no easy feat, especially for a giant company.” Further reading: How Nike and Lululemon are confronting the Great Wall of China.