NBA Stars Seek to Stay on China’s Good Side

(Bloomberg) -- As the dispute between the NBA and China escalated, one of the first on-court stars to speak publicly was 2018 most-valuable player James Harden.

“We apologize. You know, we love China. We love playing there,” Harden said from a Houston Rockets practice in Tokyo. Standing next to All-Star teammate Russell Westbrook, he added, “For both of us individually, we go there once or twice a year. They show us the most important love.”

It’s no coincidence that Harden would be among the first players to offer an olive branch. It was Rockets General Manager Daryl Morey who started the controversy with a since-deleted tweet supporting protesters in Hong Kong, and the Rockets were already in Asia as part of the NBA’s international preseason series.

But Harden is also one of the most popular players in mainland China, partly due to his talent and partly due to the Rockets’ massive following in Asia, which dates back to Yao Ming’s time with the team. It’s one of the reasons Adidas AG lured him away from rival Nike Inc. with a 13-year deal worth a reported $200 million, making him the face of Adidas Basketball.

While the furor has threatened the NBA’s multibillion-dollar China business, marketing experts say NBA players themselves -- and the shoe companies that sponsor them -- are more insulated from the backlash coming from the world’s most populous country.

“Fans in Asia, including the Chinese, are incredibly passionate about the NBA and its stars, and I doubt that they will allow a political issue to diminish their enthusiasm,” said Howe Burch, president of TBC Advertising and a former marketing executive for Adidas’s Reebok. “Harden and Adidas may feel the impact a little more because the Rockets are at the heart of the controversy, but I believe it’s unlikely there will be a wider impact on the overall basketball footwear and apparel business in China.”

But NBA Commissioner Adam Silver added to the controversy on Tuesday when he defended Morey’s freedom of expression, signaling that the league won’t back down in the face of outrage over the tweet.

China is slated to host a pair of games this week, but state television and Tencent Holdings Ltd. have canceled plans to air and stream the events.

Chinese sponsors, including sportswear maker Li Ning Co., have suspended ties with the Rockets. Sports forum Hupu said it has blocked all Rockets-related news, streaming and comments. Vivo, a Chinese smartphone maker and one of NBA’s biggest sponsors in the country, is suspending all cooperation with the league.

Anta Sports also will immediately halt negotiations with NBA due to “wrong” comments, that company said.

There are two major markets for basketball shoes in the world: the U.S. and China. And sales in the U.S. are down around 15% this year, according to market-research firm NPD Group. That has led companies to focus increasingly on China.

Nike’s footwear revenue in China grew 22% in fiscal 2019, with increased sales from the Jordan Brand and Nike Basketball. Overall, the company’s sales growth in China has topped 10% in every quarter for more than five years.

James, Bryant

The company’s NBA endorsers include LeBron James, who had the top-selling jersey in China last year, and Kobe Bryant, who remains popular in Asia despite being retired. Nike also paid a reported $1 billion for its current eight-year apparel deal with the league. Though Nike’s stock fell as much as 3% Tuesday -- a drop that analysts attributed to the NBA-China spat -- many experts believe the company will see no lasting ill effect.

“There are still hundreds of millions of kids playing basketball in China,” said Matt Powell, NPD’s senior industry adviser for sports. “They have to wear shoes.”

NBA stars are huge celebrities in China. During the offseason, it’s common for shoe sponsors to bring their players to Asia as part of a marketing tour. When Steph Curry and Under Armour Inc. launched their new golf collection earlier this year, for example, they did it from a golf course in Shenzhen.

If this week’s news were to hurt individual players and their shoe deals, Harden would likely be the most vulnerable. Much of the anger aimed toward the NBA this week from mainland China is directed specifically at the Rockets. Earlier this week, some of China’s biggest e-commerce sites, including Alibaba Group Holding Ltd. and JD.com Inc., removed Rockets gear from their sites. The Chinese basketball league said it would stop working with the Rockets.

Last year, Harden had the third-best-selling jersey in China, trailing only James and Curry. In the U.S., he ranked eighth.

“We appreciate them as a fan base,” Harden said of the Chinese on Monday. “We love everything there about them, and we appreciate the support that they give us individually and as an organization.”

To contact the reporter on this story: Eben Novy-Williams in New York at enovywilliam@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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