NIKE: FROM RELOCATION TO RELOCATION

Adapted from: Relocation of Companies

By: Denis Horman, 1993

One feature of globalisation is the increased ease with which companies are able to relocate to other countries.

"The world’s largest producer fo sports items (shoes, clothes, etc) is the American enterprise Nike, above all, a design and trading company. Nike outsources 99% of its production to the continent of Asia and changes its suppliers according to variations in the local cost of production.

Until the early 1980s, most of Nike’s sports shoes were made in the United Kingdom and Eire, as well as in Malaysia and the Philippines. In the mide 1980s, Nike decided to group outsourced production in Korea and Taiwan. Since then, part of this production has been relocated to China, Indonesia and Thailand. In 1988, 68% of Nike’s sport shoes were made in South Korea, by by 1992, the percentage had fallen to 42%. In the same period, the precentage of Nike shoes made in China, Indonesia, and Thailand increased from 10% to 44%.

About 35% of Nike’s totoal production is now being carried out in China, whereas it was only 5% at the end of the 1980s.

Outsourcing to Asian-based manufacturers is very cost effective. Nike sports shoes are sold to American consumers at between 80 and 175 US Dollars a pair. In Korea, the cost price of production is below 10 Dollars a pair. In Indonesia, the cost price per pair of shoes was below 5.6 US Dollars".