How Does Nike 'Really' Manufacture Their Products? (Explainer)

Nike is an international conglomerate that produces a vast range of sporting goods. This includes virtually anything from athletic apparel, hats and shoes to accessories and equipment. Its customer base reaches the entire world: from Europe, North America, Middle East and Africa to Latin America, and Asia.

Originally called Blue Ribbon Sports (BRS), the company was founded by Philip Knight and William Jay Bowerman in January 1964. The company first began its operation in Eugene, Oregon selling Japanese shoes from the trunk of a car.

At the beginning, times were of course tough. The company sold over a thousand pairs of Japanese running shoes in its first year, earning a mere $8,000. But they bounced back quickly. By the following year, their sales boosted to $20,000. The company soon opened a store in 1966 in California. From then on, it made greatly impressive sales, causing it to expand its operations.

In 1971, the relationship with their Japanese supplier ended, and Blue Ribbon Sports officially became Nike Inc., debuting the now iconic 'Swoosh' logo designed by Carolyn Davidson.

By 1988, Nike launched the "Just Do It" campaign, cementing its place as a global cultural icon. In 1990, the company moved into its expansive world headquarters in Beaverton, Oregon.

By 2026, this legacy has evolved further with the "Why Do It?" campaign. This is a strategic reintroduction of the brand's core philosophy to a new generation. While the headquarters reamin in Oregon, NIke's manufacturing strategy has matured into a sophisticated global network that prioritizes speed and local market responsiveness.

Today, Nike continues to attract consumers. It is still well-renowned for its excellent designs and high-quality products. It has also started using environmentally friendly materials in its products such as recycled materials, organic cotton, bamboo, and hemp.

Once manufactured, products are distributed through a "digital first" supply chain to over a thousand Nike-owned stores and tens of thousands of third party retailers.

Given that global giants like Nike outsource the manufacturing component of their supply chain, it is easy to see why many Australian companies do the same. Many engage sourcing experts to navigate the complexities of international production.

Nike has manufacturing locations across various countries, but the map has shifted significantly. While they maintain sites in the Philippines for equipment and Italy for high-end luxury collections like Every Stitch Considered, the "Big Three" of Nike production are Vietnam, China and Indonesia.

Here’s why Nike chooses to outsource its manufacturing in the way it does.

The primary reason why Nike outsources its products overseas is purely financial – because it is able to cut costs. The cost of wages in counties like China is low – the average wage of a private sector worker working in urban areas totals around US$9,000 a year. At the same time, the rate of production is high – the country’s total manufacturing output in 2020 escalated to $3,853.81 billion.

So, naturally, Nike is able to produce large quantities of products without having to spend the larger sums of money required in the United States or Australia.

Indeed, it is much cheaper to outsource in Asian countries than in North America. This is why a lot of major companies opt to contract factories and workers across the Asian countries. It’s in those countries they are able to maximize profit margins. They’re able to cut costs by paying less money for plant operations and employing factory workers at a lower rate.

By cutting costs, Nike is also able to invest in other aspects of the business such as advertising. Since it has more money to advertise its products, it is able to work with high-profiled celebrities and boost their own brand awareness. Moreover, by reducing its operational costs, Nike is able to attract company investors and retain them. It is able to have more money for increasing the profitability of the business.
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By outsourcing its production operations, Nike has also made the effort to reduce its legal obligations to pay tax in its home base. It has also managed to create itself a system whereby they have adopted a smaller amount of risk when manufacturing its goods – namely, its liability under insurance.

Since Nike is able to produce products more efficiently while reducing costs, it is able to price the products more competitively. Its prices are neither too high nor too low. This is why a lot of people are able to afford Nike shoes and apparel. The products are reasonably priced and tend to be high in quality.

In addition, Nike is able to keep up with other companies that produce similar products. Therefore, it’s able to increase its competitive advantage – and that is why it is able to corner its target market.

Nike is often thought as one of the most popular brands in the world. For decades, it has been admired by consumers everywhere across virtually all continents.

The company is highly skilled at designing and creating its products, and it’s managed to come from humble beginnings to the athletic powerhouse of the world. It’s used powerful marketing strategies to showcase its brand and boost their sales and continue to do so to this day.

Nike has proven that outsourcing can be a powerful strategy for leveraging business. Through its outsourcing, Nike was able to outdo its competitors and rise to the top.

Outsourcing, generally, can be a very useful way to improve the bottom line of any business that sells goods. Not only can you reduce your costs, but fuel growth and sustainability in the coming years. Today, adopting a business model that centers on outsourcing is crucial for any business that wish to stay ahead of its competitors.

If you’re thinking about outsourcing your manufacturing, then learn from Nike – the world’s economic powerhouse. Given that huge brands like Nike outsource their manufacturing for the various reasons outlined above, then you too can outsource your manufacturing.

At The Sourcing Company, we help businesses large and small take advantage of opportunities across the world when it comes to outsourcing manufacturing. With our expertise in international sourcing, your business can gain that competitive advantage in getting the right suppliers manufacturing your products, allowing you to expand your business and serve your customers. Get in touch with our team to learn more.