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WALLED OFF

Another US consumer service is leaving China

A man walks past a building with the white Nike swoosh logo.
Reuters/Valentyn Ogirenko
Published

Nike has announced that it will suspend its popular Nike Run Club in mainland China starting in July, making it the latest US brand to discontinue some of its services in the country.

In a notification today, the run club app, which has around 8 million users in the country according to Reuters, said it will cease service and operation from July 8 due to “business adjustment,” and said data exportation service is available. “Thanks for every run with us!” said the app in the announcement, without giving a reason for the decision. In a statement to Reuters, the company said it plans to provide runners in China with an “enhanced and localised digital solution.” “We are creating an ecosystem from China for China, specifically catered to the region’s unique consumer needs to serve athletes better,” said a company spokesperson to the outlet. The company didn’t immediately reply to Quartz’s request for comment.

The episode comes as a number of US brands are pulling out from the China market amid the country’s stringent data protection rules and increasingly strained relations between China and the western world. Last week, Amazon announced that it will shut its Kindle e-book store in China in July 2023, and the company has stopped providing Kindle devices to retailers. The company didn’t give a reason for the decision, but said its other existing businesses in China will not be affected. Around the same time, Airbnb announced it will take down all listings in China to focus on serving Chinese travelers who are going overseas, citing the costs incurred by covid-19, which has led to mass lockdowns in the country.

A growing wall between companies’ Chinese and foreign operations

While Chinese consumers see fierce local competition as one major reason for the companies’ retreat, China’s  data laws are often cited as another possible factor that have led to such moves. China’s Personal Information Protection Law that went into effect in November last year, for example, requires processors of personal information which would include companies to meet one of four major compliance requirements, including having a contract with the outbound recipient of the data (in practice often companies themselves or third parties) before transferring it outside China. Analysts have argued that this means firms need build IT infrastructure in China that is separate from their global operations to meet the regulations.

Some companies seem to have taken action in that direction. Last year, LinkedIn shut its local service in China, citing “a significantly more challenging operating environment” and greater compliance requirements in the country. The company then launched InJobs, a standalone job application service customized for the country’s users.

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