(Yicai) Jan. 22 -- US sportswear giant Nike will replace the head of its China arm to innovate and keep up with new demands amid operating performance challenges.

Angela Dong will step down as chairwoman of Nike China after a 20-year tenure on March 31, the Oregon-based company announced yesterday. In addition, Cathy Sparks, who has worked at the firm for 25 years and served as vice president and general manager of the Asia Pacific and Latin America regions, has been appointed as VP and GM for the country.

The leadership change is likely due to Nike facing operating performance pressure, especially in the Chinese market. Its China revenue fell 17 percent to USD1.4 billion in the three months ended Nov. 30 from a year earlier, while earnings before interest and taxes sank 49 percent, according to its fiscal second quarter financial report released last month.

In addition, Nike's overall net profit plunged 32 percent to USD792 million, while its operating income fell 1 percent to USD12.4 billion. Its gross margin dropped 300 basis points to 41 percent, mainly due to higher production costs from new US tariffs and more promotional activities to clear excess inventory, particularly in North America.

Previous executives and their teams might have a better understanding of the Chinese market, but they might also find it difficult to revolutionize themselves and keep up with new demand, an analyst told Yicai regarding Nike appointing a person with no local management experience to lead its China arm.

"Changing the China head is aimed at disrupting the existing interest structure and creating opportunities for innovation and reform," the analyst noted.

Nike's products, marketing, and distribution channels in China are somewhat outdated and lagging amid the rapid demand changes in the Chinese sports consumption market, a sports brand dealer previously said to Yicai.

As the world's largest sports brand, Nike is not short of innovative technologies and eye-catching products, the dealer noted. However, how to introduce them to emerging markets, integrate local marketing, and localize them requires the operational capabilities of local teams, the person pointed out.

Despite the change of Nike's China head coming as a surprise to many, a source close to the company told Yicai that after Simon Men left his post as VP of sales for the country at the end of last year, rumors began circulating about top management reshuffles not only in the Chinese market but also at the US headquarters and other regions.

Dong joined Nike China as chief financial officer in 2005. After holding various posts, she was appointed as chairwoman and chief executive as well as CEO of the ACG brand in October 2024, making her the first senior executive from the country to take charge of a global brand under the company.

The market interpreted Dong's appointment at the time as Nike highly valuing the Chinese market and being determined to revitalize the ACG brand. The move reflected the firm's strategic adjustment of "delegating power" and "increasing investment" in China in response to changes in the global economic environment and fierce market competition, according to many industry insiders.

Editors: Tang Shihua, Martin Kadiev