A Very Risky Strategy

You might be asking why are Nike and Levi Strauss going left? Nike with its “protest the national anthem” move and Levi Strauss with its push towards gun control. It is a wonder.

Why alienate a very large fraction of your customer base? It makes no sense. Unless you consider supply chains.

And this feller has.

“a multinational corporation would never make a branding decision adverse to their financial interests. Unless there is a hidden risk unrelated to what is visible on the surface.”

Now we are getting somewhere.

The bigger risk to Nike has nothing to do with Black Lives Matter, U.S. Consumers, or Antifa-like political advocacy. The bigger financial risk to the Nike Corporation has everything to do with geopolitics and a reset of international trade agreements.

Here’s the hidden aspect with research to back it up. Nike Inc. has hitched its massive corporate existence to a 10-year business plan that is dependent on the continuance of recently negotiated manufacturing contracts.

And now the final piece of the puzzle.

The contracts for the manufacture of the Nike products are almost exclusively based on international agreements with Asian companies. Some are ASEAN countries; but specifically the most quantifiable risk stems from Chinese and North Korea contracts.

President Trump is likely, some would say predictably, about to levy a massive round of Section 301 tariffs on imported Chinese goods. Nike would be one of the U.S. manufacturing companies hardest hit by such a move. The current Trump administration objective toward renegotiated trade deals with China represents the most significant and mostly quantifiable threat to the Nike business plan.

Read the rest of the article for more details. But before you go let me give you my political analysis.

Trump is upsetting some very big apple carts.

What is Trump’s strategy? Corporate profits will be squeezed. American worker’s wages will rise.

Politically? Democrats (and Republican globalists) will get branded as a political arm of Communist China. The Democrat strategy is very risky. I don’t think they have a choice. China’s strategy is in an even worse position.

China knows how to buy politicians. What it does not do well is sell ideas. Because it does not allow competing ideas. Thus it has no practice defending against other competing ideas. It can only work with the one’s its government prefers. The same system did in the USSR.

Update: 5 September 2018 0706z

Slave labor in China. (Not to mention North Korea)

How is the trade war affecting China?

For more Gordon Chang ==> http://www.gordonchang.com

The TL;DR version: Companies that have their products manufactured in China are siding with the Democrats.