How Nike Figured Out China

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Starting in 2001, Nike coined a new phrase for its China marketing, borrowing from American black street culture: "Hip Hoop." The idea is to "connect Nike with a creative lifestyle," says Frank Pan, Nike's current director of sports marketing for China. The company's Chinese website even encourages rap-style trash talk. "Shanghai rubbish, you lose again!" reads a typical posting for a Nike League high school game. The hip-hop message "connects the disparate elements of black cool culture and associates it with Nike," says Edward Bell, director of planning for Ogilvy & Mather in Hong Kong. "But black culture can be aggressive, and Nike softens it to make it more acceptable" to Chinese. At a recent store opening in Shanghai, Nike flew in a streetball team from Beijing. The visitors humiliated their opponents while speakers blasted rapper 50 Cent as he informed the Chinese audience that he is a P-I-M-P with impure designs on their mothers.

Thanks in part to Nike's promotions, urban hip-hop culture is all the rage among young Chinese. One of Beijing's leading DJs, Gu Yu, credits Nike with "making me the person I am." Handsome and tall under a mop of shoulder-length hair, Gu got hooked on hip-hop after hearing rapper Black Rob rhyme praises to Nike in a television ad. Gu learned more on Nike's Internet page and persuaded overseas friends to send him music. Now they send something else too: limited-edition Nikes unavailable in China. Gu and his partner sell them in their shop, Upward, to Beijing's several hundred "sneaker friends" and wear them while spinning tunes in Beijing's top clubs. To them, scoring rare soles and playing banned music are part of the same rebellious experience. "Because of the government, Chinese aren't allowed access to a lot of these things," says Gu's partner, Ji Ming, "but with our shop and Nike-style music, they can get what they want."

The Nike phenomenon is challenging Confucian-style deference to elders too. At the Nike shop in a ritzy Shanghai shopping mall, Zhen Zhiye, 22, a dental hygienist in a miniskirt, persuades her elderly aunt, who has worn only cheap sneakers that she says "make my feet stink," to drop $60 on a new pair. Zhen explains the "fragrant possibilities" of higher-quality shoes and chides her aunt for her dowdy ways. Her aunt settles on a cross trainer. For most of China's history, this exchange would have been unthinkable. "In our tradition, elders pass culture to youth," says researcher Zhang. "Now it's a great reversal, with parents and grandparents eating and clothing themselves like children."

Success aside, Nike has had its stumbles. When it began outfitting Chinese professional soccer teams in the mid-1990s, its ill-fitting cleats caused heel sores so painful that Nike had to let its athletes wear Adidas (with black tape over the trademark). In 1997, Nike ramped up production just before the Asian banking crisis killed demand, then flooded the market with cheap shoes, undercutting its own retailers and driving many into the arms of Adidas. Two years later, the company created a $15 Swoosh-bearing canvas sneaker designed for poor Chinese. The "World Shoe" flopped so badly that Nike killed it.