Nike named and shamed by Chinese state media for misleading buyers over US$200 sneakers

Nike Inc has become the latest foreign brand to be caught by China’s annual “name-and-shame” TV show, this time running foul of consumers who claim to have been misled into believing that its Hyperdunk basketball shoes were built with high-tech sole cushions.

The show, watched by hundreds of millions of viewers during the annual “315 Gala,” could deliver a backlash to Nike in its second largest market and profit centre. The company’s shares fell almost 1 per cent to US$56.75 in US trading while the show was being aired.

A Shanghai consumer found his Nike Hyperdunk to be missing the high-tech cushions, despite advertising by the athletics goods producer, according to a broadcast by China Central Television. Concurrent with the show, Shanghai law enforcement officials carried out investigations at Nike’s Shanghai office, according to a report by state media portal Xinmin Evening News.

Last year, Nike’s Greater China region overtook Europe to become its second largest market, scoring a 23 per cent growth in sales to US$3.79 billion from 2015, and about 69 per cent of the revenue came from footwear.

On the back of Chinese people’s yearning for heathier lifestyles and their rising income levels, the US consumer giant laid out an ambitious target for its China division: achieve US$6.5 billion in revenue by the end of 2020.

Despite its status as the most popular sports brand in China, Nike is, however, faced with intensifying competition from both its German rival Adidas and home-grown players such as Anta Sports, which has snapped up Italian brand Fila in a bid to carve out a share of the country’s lucrative premium athletic goods market.

Meanwhile, its chief US competitor Under Armour has stepped up its efforts to make a foothold in China since last year, bringing Golden State Warrior star Stephen Curry on a tour across China in a sprawling marketing campaign for its signature basketball shoes.

With a track record of bringing counterfeiters, substandard services or price gougers to task, the annual show delights consumers with undercover reports that are often coordinated with police investigations. Some local businesses that were named and shamed in the past have gone bankrupt amid the public backlash and penalties.

Nike was singled out for having falsely advertised its “limited edition” basketball shoes that sell for over US$200 in China.

Watch: Nike called out for false marketing on China TV

The Shanghai customer, who can only be identified by his surname Lang, told CCTV that Nike’s customer service staff had admitted there were no so-called Zoon Air sole cushions inside the premium shoes, despite claims on the company’s Chinese website.

The product in question is called Nike Hyperdunk 2008 FTB, a classic design as the company’s farewell to Kobe Bryant’s NBA career.

Nike said on Wednesday in a statement that it had sold 300 pairs of the Hyperdunk 2008 FTB in China, inaccurately stating that the shoe contained air bags, adding that it had offered compensation and an apology to consumers.

“We will fully cooperate with the government regulators regarding their inquiries,” Nike said.

The Oregon-based company isn’t the sole foreign brand caught out.

Last year, Apple’s chief executive Tim Cook apologised to Chinese consumers and promised a revamp of the iPhone’s China warranty, weeks after “315 Gala” condemned the smartphone maker of inadequate after-sales service in the country.

“It reveals the loopholes Nike has in complying with a globalised standard of advertising,” said Zhu Danpeng, an associate with China Branding Institute.

“It’s also worth noting that this iconic American brand is named and shamed at a time of heightened tensions in Sino-US relations.”