"Do you want a sweatshop with that?"

October 29, 2004 7:42 AM

Cultural Revolution When Nike founder Phil Knight first traveled to China in 1980, before Beijing could even ship to U.S. ports, the country was just emerging from the turmoil of the Cultural Revolution. By the mid-'80s, Knight had moved much of his production to China from South Korea and Taiwan. But he saw China as more than a workshop. "There are 2 billion feet out there," former Nike executives recall his saying. "Go get them!". The Chinese responded (the goal was "to hook kids into Nike early and hold them for life"): sales through the 1990s picked up 60% a year. Here's how Phil Knight did it. Print page for main link here
posted by matteo (8 comments total)

A Jog with Nike's Numbers Man
CFO Don Blair talks about the hard job of instilling discipline at the freewheeling sports-equipment marketer

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Nike's New Game Plan for Sweatshops
Unlike giants such as Wal-Mart, it now has a system to inspect -- and try to improve -- working conditions at supplier factories

for Business Week, BugMeNot
posted by matteo at 8:49 AM on October 29, 2004

But cool or not, the new approach is working. In fiscal 2004, ended May 31, Nike showed just how far it had elevated its financial game. It turned in a record year, earning almost $1 billion, 27% more than the year before, on sales that climbed 15%, to $12.3 billion. What's more, orders worldwide were up a healthy 10.7%. In North America orders rose 10% following eight stagnant quarters.

That performance has pleased investors, who now see a company where earnings are less volatile and less fad-driven, yet still growing rapidly enough to spin off lots of cash. In the past fiscal year, Nike's free cash flow totaled $1.2 billion, and its return on invested capital was 22%, up from only 14% four years ago. The company boosted its dividend by 43% last fall and completed a $1 billion share repurchase. It plans to buy back $1.5 billion more in shares over the next four years. The result: Nike stock recently traded at about 78, up 37% in the past year vs. a 9% rise in the Standard & Poor's 500-stock index. The truth is, the onetime corporate rebel is edging toward blue-chip respectability.

posted by matteo at 8:52 AM on October 29, 2004

You gotta give it up for Phil Knight. He might be evil, but he's no dummy. And that article reads like an ad for the Greatness of Phil Knight.

It's also good to see all that pressure to improve the sweatshop conditions might have actually borne some fruit.
posted by chicobangs at 9:08 AM on October 29, 2004

further to your "hook the kids" link: blackspot shoes. (rethink the cool)

Nice post, matteo.
posted by shoepal at 9:39 AM on October 29, 2004

I suppose they cant fire me twice for writing about them so here goes.

I always find it odd that whenever the issue of nike comes up among people I know, there is always someone who touts a new indie shoe brand that every should buy instead of nike or adidas, etc. Sounds great, x company only hires disabled veteran minorities for a living wage, all renewable resources, blah, blah, but what exactly would happen to that company, if everyone did what their admirers hoped for? How would that indie shoe company respond to sales of $12 billion? Where could they possibly come up with the workers, machinery and resources to make them?

Just wondering, I suppose.

As for adbusters, they lost it in my eyes with the porcelain anti-oreo or whatever trinket they tried to fob off on readers. Made in China. But you know, its the thought that counts.
posted by efalk at 10:11 AM on October 29, 2004

If he pulled a Henry Ford and paid his employees enough to make it sensible to pay for Nike shoes that would be good. As it is it's double-evil.
posted by Space Coyote at 10:12 AM on October 29, 2004

further to your "hook the kids" link: blackspot shoes. (rethink the cool)

Can't wait for your Black Spots to ship? In the meantime, order a pair of No Sweat Sneakers. Wage and benefit info are right on the site. Wages seem low but are relative to the country, and they come with an actual contract (!) between worker and employer that is a fantastic step away from potential employee abuse. NPR did a very favorable story on No Sweat a while back.
posted by Shane at 10:43 AM on October 29, 2004

Thanks shane. Cool idea.
posted by shoepal at 2:00 PM on October 29, 2004