How Nike Figured Out China

Yet all that amounts to a frayed shoelace compared with losing China's most famous living human. Yao Ming had worn Nike since Rhoads discovered him as a skinny kid with a sweet jumper — and brought him some size 18s made for NBA All-Star Alonzo Mourning. In 1999 he signed Yao to a four-year contract worth $200,000. But Nike let his contract expire last year. Yao defected to Reebok for an estimated $100 million. The failure leaves Nike executives visibly dejected. "The only thing I know is, we lost Yao Ming," says a Shanghai executive who negotiated with the star.

Nike is determined not to repeat the mistake. It has already signed China's next NBA prospect, the 7-ft. Yi Jianlian, 18, who plays for the Guangdong Tigers. And the company has resolved problems that dogged it a few years ago. Nike has cleaned up its shop floors. It cut its footwear suppliers in China from 40 to 16, and 15 of those sell only to Nike, allowing the company to monitor conditions more easily. At Shoetown in the southern city of Guangzhou, 10,000 mostly female laborers work legal hours stitching shoes for $95 a month — more than minimum wage. "They've made huge progress," says Li Qiang, director of New York City — based China Labor Watch.

In China, Nike is hardly viewed as the ugly imperialist. In fact, the company's celebration of American culture is totally in synch with the Chinese as they hurtle into a chaotic, freer time. In July, at a Nike three-on-three competition in the capital, a Chinese DJ named Jo Eli played songs like I'll Be Damned off his Dell computer. "Nike says play hip-hop because that's what blacks listen to," he says. "The government doesn't exactly promote these things. But we can all expose ourselves to something new." That sounds pretty close to a Chinese translation of "Just Do It."