Nike, NFL, and Levis Strauss Political Business Strategy – The Much Bigger Geopolitical and Trade Picture….
September 4, 2018
From a pure economic/financial perspective this Nike branding campaign doesn’t make sense…. unless, you realize a much bigger picture. A hidden bigger picture.
On its face, it just seems absurd. Why would any major corporation intentionally stake out a branding position that is adverse to their financial interests?
I’ve spoken to some very excellent business actuaries on this late today; and one specific conversation finally helped to make it all make sense. During that conversation a good ally shared: “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.” ….BINGO, there it is, the lightbulb went on.
A hidden risk that likely has nothing whatsoever to do with Colin Kaepernick.
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.
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.
“Apple, Nike and 18 other U.S. companies have $158 billion at stake in China trade war” (details)
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.
This is the epicenter of the issue.
The hearings on $200 billion worth of Chinese tariffs ended today. It is not coincidental that Nike stakes out a political position in opposition to those pending tariffs.
But wait…. it gets worse. The Nike contracts with China have almost certainly been sub-contracted to non-publicized, generally secret, manufacturing facilities in North Korea.
DANDONG, China (Reuters) – Chinese textile firms are increasingly using North Korean factories to take advantage of cheaper labor across the border, traders and businesses in the border city of Dandong told Reuters.
The clothes made in North Korea are labeled “Made in China” and exported across the world, they said.
Using North Korea to produce cheap clothes for sale around the globe shows that for every door that is closed by ever-tightening U.N. sanctions another one may open. The UN sanctions, introduced to punish North Korea for its missile and nuclear programs, do not include any bans on textile exports.
“We take orders from all over the world,” said one Korean-Chinese businessman in Dandong, the Chinese border city where the majority of North Korea trade passes through. Like many people Reuters interviewed for this story, he spoke on condition of anonymity because of the sensitivity of the issue. (more)
The people I have spoken to virtually guarantee that Nike goods and apparel are made in North Korean sweatshops. The contracts are with Chinese companies, but a corrupt Beijing process allows many -approved by China- companies to use DPRK sweatshops as sub-contractors.
Due to the scale of operations, Nike uses contracted manufacturing in multiple nations. The use of sub-contractors allows plausible deniability toward the North Korean facilities by the parent corporation signing the contract(s).
This presents a dual risk. #1 there are likely to be tariffs on Chinese imports; and #2 there are current sanctions against any companies operating in North Korea.
A multinational company doing simultaneous business with ASEAN nations, China and North Korea for the majority of their manufacturing is extraordinarily exposed to the risks inherent within a U.S. -vs- China/DPRK trade reset.
A 20% drop in Nike value (based on current evaluations), as a result of branding themselves with controversial and political Kaepernick, is nothing compared to the staggering financial risk inherent within multi-billion manufacturing contracts that can become worthless overnight.
Losing the entire supply chain, all future inventory and an inability to manufacture goods would cost much more than if half of the U.S. consumer base stopped buying Nike products. Many of the current DPRK sanction breeches have been overlooked (but not unnoticed) by President Trump and Treasury Secretary Steven Mnuchin.
Therefore the Nike Company would be sympathetic to, and financially dependent on, alignment with the objectives of the Chinese Communist Party. In fact, with so much on the line, Chairman Xi Jinping would openly embrace and assist anti-U.S. endeavors around trade.
To that extent Beijing (the ultimate decision-maker and approval body) would willingly lower production costs to offset any drops in U.S. revenue for parent corporation, Nike. A rather interesting quid-pro-quo.
And that answers the question: “Why would any major corporation intentionally stake out a branding position that is adverse to their financial interests?”
They, wouldn’t; and they didn’t.
The Nike political branding position is reconciled when you look at the bigger picture and see where the real financial risk aligns. The Nike economic decision is to align with China, and by extension North Korea, for a position of mutual benefit. It is all about the proverbial $$$$ and Nike’s best financial play is to mitigate risk and assist Communist China in their trade strategy.
China is willing to subsidize Nike (lower production costs), and replace any dropped revenue, in exchange for mutually beneficial political opposition against Trump and by extension his policies that are a risk to Beijing. As a result there is minimal financial risk to the Nike Corporation.
And with the current multinational Wall Street agenda now being confronted, we should not expect this approach to stop at Nike. Likely, many more multinational (globalist) corporations, specifically those in the apparel sector, will stake out a similar position.
Remember, part of the NFL brand and business is also apparel; an industry virtually wiped out in the U.S. by outsourced manufacturing in Asia. Small companies, those more nationally minded, gain from the Trump business tax cuts, expensing and investment opportunities. However, the big brand Wall Street multinationals don’t benefit as much from Trump policy and are invested overseas.
- Nike = Apparel
- NFL = Apparel
- Levi Strauss = Apparel
See the connection? Remember, there are TRILLIONS at stake.
Now, does this also make sense?
WASHINGTON – American denim giant Levi Strauss & Co. announced Tuesday that it is launching a series of new initiatives to benefit groups working to prevent gun violence.
Levi Strauss’s CEO and President Chip Bergh wrote in Fortune on Tuesday that the company “simply cannot stand by silently when it comes to issues that threaten the very fabric of the communities where we live and work.”
“You may wonder why a company that doesn’t manufacture or sell guns is wading into this issue, but for us, it’s simple,” Bergh wrote. “Americans shouldn’t have to live in fear of gun violence. It’s an issue that affects all of us – all generations and all walks of life.”
Bergh said it was his responsibility to speak up for important issues since he leads a “values-drive company that’s known the world over as a pioneer of the American West and one of the great symbols of American freedom.” (more)
The multinational Wall Street firms are aligning with domestic political positions that align with Democrats; that is to say they align against President Trump and the economic/trade policy therein.
The agenda is to defeat the Trump-trade-reset; however, they, in this example Levi Strauss, cannot openly side with China and Asia against the United States. The PR optics would be horrible…. So they do it covertly by supporting domestic political policies and opposition toward the President who is threatening the construct of their multinational business model.
Together the NFL, Nike and Levi Strauss stand to retain their current level of trade benefit (profit) if President Trump is blocked from instituting America-First trade and manufacturing policies. Supporting gun control (Levi Strauss) or supporting BLM/Antifa (Nike) is simply a tool to support the political opposition of the policy-maker adverse to their financial interests.
Can you see what’s happening?
Just like the DeceptiCON moves in the U.S. Congress, this is exactly how U.S. Chamber of Commerce President Tom Donohue works. Donohue is aligned with both Democrat and Republican wings of the UniParty. Any group in the momentary position to best support the efforts of his Wall Street corporations is where Donohue focuses his lobbying efforts.
