Nike tightens grip over digital sales channels in China

Shares of Topsports International Holdings fell sharply in Hong Kong trading after Nike Inc moved to cut off the distributor's online sales of Nike products on the Chinese mainland, marking the latest step in the US sportswear giant's efforts to regain control of its digital retail ecosystem.

Topsports shares opened down 23 percent on Wednesday, trading at HK$1.47 ($0.19) and valuing the company at about HK$9.12 billion. The decline followed the company's announcement that Nike had formally notified it that sales of Nike products through Topsports' online platforms on the Chinese mainland would be terminated from Jan 1, 2027.

Nike plans to phase out thousands of online distributors in China as it seeks to address what it views as an increasingly fragmented digital marketplace and revive growth in one of its most important regions.

Beginning next year, the Oregon-based sportswear giant's online presence in China will focus primarily on its own website, official mobile apps and flagship stores operated on major domestic e-commerce and social platforms, including Tmall, JD and Douyin.

For Topsports, the move represents a significant challenge. The company said revenue from Nike products sold through online platforms accounted for about 22 percent of its total top line in the fiscal year ended Feb 28.

The distributor, however, said it would continue cooperating with Nike on offline retail operations.

The restructuring comes as Nike faces mounting pressure in China. The company announced personnel changes in the region earlier this year, following a prolonged period of weak performance. Nike China revenue fell 11 percent year-on-year in its 2026 fiscal year, marking the eighth consecutive quarter of decline.

Cathy Sparks, the new vice-president and general manager of Nike China, said the company's strategy was intended to simplify the customer journey rather than reduce access.

"These new flagships will serve as the single, elevated destination for Nike within these ecosystems, with clearer product presentation, stronger storytelling and more connected consumer journeys," Sparks wrote in a letter. "This is about strengthening the platforms where consumers already begin and end their shopping journey, making sure those experiences are direct, consistent and unmistakably Nike."

The shift reflects Nike's broader attempt to rebuild pricing discipline and restore brand control online. Analysts, however, remain divided on whether channel reform alone can reverse the company's business downturn in the Chinese marketplace and question whether the move might open online shelves to other brands.

BNP Paribas analyst Laurent Vasilescu warned that Nike's problems may extend beyond distribution. "We don't think Nike has a distributor problem but rather a product problem which also applies in other markets," Vasilescu wrote, maintaining an underperform rating on the stock.

According to Topsports' fiscal 2025 annual report, its principal brands — Nike and Adidas — accounted for 86.7 percent of total sales revenue between February 2025 and February 2026. It also represents other brands including Puma, Converse and Asics.

Nike's strategic reset also comes amid a widening contrast with Adidas. While Nike has struggled to regain momentum in China, Adidas has reported a strong recovery. Adidas China generated 3.62 billion euros ($4.13 billion) in revenue in 2025, up 13 percent year-on-year, while fourth-quarter revenue reached 850 million euros, rising 15 percent and marking the region's 11th consecutive quarter of growth.

Industry veteran Cheng Weixiong, founder of Shanghai Liangqi Brand Management, said Adidas' recent recovery has been driven by a renewed focus on product expertise, professional leadership and localized market execution.

Cheng said Nike must rebuild around an integrated online-to-offline strategy and return to its core strengths in branding, marketing and product innovation. Nike's restructuring of its China distribution network may therefore be only the first step in a broader transformation aimed at restoring consumer appeal, product localization and innovation.