Nike Supports TPP Agreement New Balance Feels Pressure

In May 8th, President Obama went to Nike headquarters in Oregon for lobbying.

Obama, the 8500 employee of the company's headquarters, once again expressed support for the "Trans-Pacific Partnership Agreement TPP".

 

The agreement is initiated by the New Zealand, Singapore, Chile and Brunei countries of the Asia Pacific Economic Cooperation Conference (gapec). Since 2002, a group of multilateral relations free trade associations have been brewed. Now there are 11 member countries, including Vietnam and Mexico.

The most important part of the agreement is tariff reduction, that is, 90% of the tariffs on member states are immediately waived.

The United States joined the TPP negotiations in 2013, but it failed to sign the agreement because of persistent opposition from the Congress.

The Obama administration hopes to formally sign the TPP agreement.

Back to the United States, he promised to create more jobs with high skill and high salary in the market, and reduce product prices by reducing import tariffs on manufacturing industry.

 

"We support President Obama's implementation of this trade initiative."

Mark Parker, President and chief executive officer of Nike, said, "the signing of the TPP agreement means that the tariffs on imported footwear will be reduced. This will not only promote the business expansion of Nike products in innovation, but also further increase investment to promote the overall development of the US manufacturing industry".

With the support of Obama's political propaganda, Nike's fundamental starting point is to improve the price competitiveness of products.

Vietnam and Mexico are the main foundry countries of Nike, employing millions of contract workers locally.

According to Nike's 2014 earnings report, the company currently has 150 shoe factories in 14 countries. Among them, several countries with a large share of production share are Vietnam 43%, China 28% and Indonesia 25%.

The United States imports an average of 10% tariffs on imported shoes and products, and eventually these taxes and labor costs will be pferred to the price of products.

If the cost of this part is reduced by signing TPP, it will increase Nike's pricing flexibility.

Nike also announced that once the TPP agreement was formally finalized, Nike will accelerate the development of high-end innovative footwear manufacturing methods, with the ensuing of more than 10 thousand jobs.

In the next ten years, this advanced manufacturing model is expected to create more employment opportunities in the United States, including thousands of manufacturing and engineering jobs, as well as up to 40 thousand supply chain service jobs.

But not all sports brands are on the same line with Nike.

New Balance, the US sports brand based in Boston, opposes the signing of TPP.

New Balance is one of the few reservations in the US.

One, if competitor Nike gets bigger price space, for New Balance, it means that the competition between the two companies will be more intense.