Consumers aren’t giving Nike a break.
On Friday, the Instagram account run by Unilad, a media company that describes its focus as “breaking news and relatable viral content,” shared what seemed like an innocuous video.
Self-described “micro-influencer” Laura Croft, a Nike footwear developer who previously worked for Toms and Forever 21, uploaded a three-minute TikTok video showing off where she works at the athletic giant’s sprawling Portland headquarters, complete with an indoor slide and gratis Nike rideshare bikes for criss-crossing 286 park-like acres dotted with sakura cherry blossom trees gifted from Japanese manufacturers. She also offered viewers a peek into what someone with her job title actually does.
Commenters, however, were decidedly less interested in the posh perks afforded to Nike’s privileged headquarters professionals. The post received a host of negative comments from users piling on to criticize perceptions of the Oregon company’s labor standards. “Show us where the 3rd world slaves who build your products work,” wrote one user in a comment that has been liked more than 1,000 times. The post itself has received more than 63,000 likes and over 800,000 views and counting.
“Bet the sweatshop workers don’t get a bike to ride to their office,” wrote another user who racked up more than 900 likes. Another user alleged Nike’s state-of-the-art campus was “paid for by underpaid slave labour” while a comment like more than 500 times asked, “where do all the little Chinese kids work?”
Yet another commenter demanded a “tour of the manufacturing facility where 9 year olds work for $2 a day with no toilet breaks.”
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The flare-up underscores a new reality for brands in the age of information and era of social media. Some consumers, like elephants, never forget. And past misdeeds can return to haunt the present.
Though for decades labor groups have accused the footwear heavyweight of poor labor standards—Nike has responded with initiatives to increase transparency and assuage consumer concerns—it faced renewed scrutiny last year when a report claimed Xinjiang Uyghurs and other ethnic minorities were being forced to work in a factory in the athletic giant’s supply chain.
In November, Nike released a statement saying it was “deeply concerned about reports of forced labor in, and connected to, the [Xinjiang Uyghur Autonomous Region]. It asserted it does not source products from Xinjiang and said it had confirmed with its suppliers that it does not use textiles or spun yarn from the region, either.
In March, that statement placed Nike in hot water in China, as social media users called for a boycott of Western brands that had expressed concern over the forced labor reports. The backlash arrived days after the United States and its Western allies announced sanctions on several Chinese officials for what they described as “genocide” against Uyghurs, Kazakhs and other Turkic Muslim minorities in Xinjiang.
Analysts from China Market Research (CMR) reported in mid-April that store checks the firm conducted had shown traffic down 20 percent to 50 percent at Nike and Adidas stores.
But Kerstin Brolsma noted that Nike stores had already seen a bounce back in traffic. She predicted the company would return to where it was in March in two to four months. Based on CMR’s intel, Stifel, an American brokerage and investment firm, downgraded its forecast for Nike’s 2021 fiscal year—defined by the company as concluding at the end of May— from $43.5 billion to $43.4 billion.
Nike’s November statement outlined the various steps the company has taken to ensure its products are not made using forced labor. The sneaker giant says it conducted 561 total audits and assessments in the 2020 fiscal year. That same year it also expanded its use of Verité’s Cumulus Forced Labor Screen—a diligence tool designed to help identify risks related to the recruitment of foreign migrant workers—from Malaysia to Thailand, Taiwan, Japan, Jordan and Egypt. Nike said it has disclosed the independent factories contracted to make its products since 2005. The company offers an interactive map of its current suppliers online.
Weeks after issuing its statement on forced labor, however, The New York Times reported that Nike—as well as other major companies like Coca-Cola and Apple—was lobbying Congress to weaken a bill that would have banned imported goods made with forced labor in Xinjiang. The legislation had passed the House of Representatives months earlier 406 to 3, but did not make it through the Senate before that session of Congress ended.
Since then, new legislation has been entered in both chambers. Earlier this month, Cowen & Co. analysts warned the bill could stretch U.S.-China tensions to their breaking point and pose a “large risk to retail” if enacted.
While Nike has courted controversy in a variety of other ways recently—it’s even gotten on the wrong side of the USPS—perhaps one of the more salient issues has been the allegation that it paid no federal income taxes last year.
“A recent study shows that 55 of the nation’s biggest corporations paid zero in federal income tax last year,” President Joe Biden said Wednesday in his address to Congress. “No federal taxes on more than $40 billion in profits.”
The report Biden was referring to, released by the Institute on Taxation and Economic Policy, called out Nike by name. According to the report, Nike earned $2.9 billion of U.S. pretax income last year and rather than pay any federal income tax, it received a $109 million tax rebate.
“If you paid $120 for a pair of Nike Air Force 1 shoes, you paid more to Nike than it paid in federal income taxes over the past 3 years, while it made $4.1 billion in profits and Nike’s founder, Phil Knight, became over $23 billion richer,” Sen. Bernie Sanders (I-Vt.) wrote on Twitter in early April.