In mid-1992, Michael Jordan, his champion Chicago Bulls, and his U.S. Olympic “Dream Team” dominated the athletic world. His Nike ads had made the Swoosh a symbol recognized around the globe, while making Phil Knight and Jordan rich. In a year, however, both men came under savage attack. Knight stood accused of making Nike wealthy on the bent backs of exploited, poorly paid Asian workers. Both Knight and Jordan came under further fire for squeezing vast profits from, but otherwise apparently ignoring, African-American children who tried to survive in violent inner-city neighborhoods. Such accusations were only starting to build in intensity. By late 1993, Jordan stunned the sports (and advertising) world by suddenly retiring from the Bulls. An era seemed to have ended in the history of basketball and of sports marketing.
The accusations that Knight and Jordan ignored inner-city children had entered a new stage in 1990 when news stories spread of teenagers killing each other in Chicago, Houston, Baltimore, Atlanta, Detroit, and Philadelphia, among other places, simply for new sports clothing or sneakers. In Maryland, fifteen-year-old Michael Eugene Thomas was found strangled in a woods in May 1989. He wore no shoes. They had been taken by his killer, a seventeen-year-old who wanted the Air Jordans. In Houston, sixteen-year-old Johnny Bates was shot to death by seventeen-year-old Demetrick Walker, who then took Bates’s Air Jordans. When the seventeen-year-old was sentenced to life in prison, the prosecutor pointedly announced, “It’s bad when we create an image of luxury about athletic gear that it forces people to kill over it.”1
Jordan, Knight, and Spike Lee (who had made the popular commercials glorifying the Air Jordan sneakers), quickly received some of the blame for the killings. Sports and editorial writers alleged that the three, through their advertisements, had made poor children so much want a status symbol the teenagers could not afford that they were willing to kill to obtain that status. Other young people sold illegal drugs to support their sports clothes habit. An owner of sportswear shops in Connecticut finally posted a sign telling customers to spend their drug-dealing profits somewhere else. The owner estimated he lost $2,000 in sales per week after he put up the sign.2
Spike Lee refused to take such blame. “The emphasis should not be on the sneakers or the Starter jackets,” the filmmaker argued. “The emphasis should be on: what are the conditions among young black males that are making them put that much emphasis on material things?” Lee also blamed journalists for criticizing Jordan and him, but not blaming white stars, such as Larry Bird, who endorsed sneakers. Lee began to take some action. At a Nike All-American basketball camp in 1994, he told the young players they were “being used,” and “the only reason you are here is because you can make … schools win and they can make a lot of money.”3
Jordan remained quiet. He seemed confused. When reporter Bob Greene asked him what he thought should be done, Jordan replied that if a child was threatened, he or she should simply surrender the clothes. Greene asked whether parents should try to help by telling a child they would buy replacement clothes. Jordan thought that many parents could not afford another purchase. Instead, “They should say I’ll [Michael Jordan] buy a replacement.” A surprised Greene realized Jordan had not begun to think the problem through. The Bulls star told another writer, Rick Telander, that “I’d rather eliminate the product [the shoes] than know drug dealers are providing the funds that pay me.”4 He was sincere, but he did not stop his endorsements. In 1990, Nike alone spent $60 million on ads with the slogan “Just Do It.” The company tried to atone to some degree by devoting $5 million to ads stressing the importance of an education and the necessity of staying in school.
The sneaker crimes soon became only part of a larger set of charges levelled against Jordan. He was perhaps the most widely admired African-American in a world where one of every four African-American men was in prison, on parole, or on probation. Nearly 40 percent of African-American men were found to be functionally illiterate. One of every three African-American children was growing up in poverty, even while living in the world’s richest country. Jordan worked hard to be a role model, but the odds of a 20- to 29-year-old African-American playing in the NBA was 135,800 to 1 (and for Hispanics, 33,300,000 to l.)5
Jordan stood accused of making a terrible situation worse: by spectacularly parading his basketball skills on the new media, he encouraged the young of all races to attempt the impossible and be like him. Critics claimed he instead should be sending youngsters a quite different message: that since they could never be like him, and since, contrary to what Nike said, they could never “Just Do It” in copying his athletic skills, they had to stay in school so they could survive in the new post-industrial era. Only such a symbol of that era, critics argued, could help convince youngsters, especially African-Americans, that sports was not going to be their ticket out of the inner city, while convincing others that these youngsters were interested in—and had talents for—things other than bouncing or dunking basketballs. In 1982, sociologist Harry Edwards had noted that “Blacks in sport … function in a semi-caste system relegated as they are to the least powerful, least secure, most expendable and most exploited population in the sports institution—that of the athlete.”6 Emphasizing that message, however, might sell fewer Air Jordans.
In 1990, these social and economic problems had turned political as well. In Jordan’s home state of North Carolina, the popular former mayor of Charlotte, Harvey Gantt, an African-American, ran against archconservative U.S. Senator Jesse Helms. Gantt faced a steep uphill race. During his eighteen years in the Senate, Helms, who played to voters’ worst instincts with his race-baiting and anti-civil rights record, had built up an overflowing campaign treasury, due in part to lavish gifts from the state’s powerful tobacco industry. Jordan could have made a major difference in a race that went down to the wire. He was enormously popular in North Carolina, not least because of the true story that he continued to wear his powder-blue University of North Carolina basketball pants underneath his Bulls’ uniform, partly for good luck, partly out of affection for his alma mater.
A number of African-American leaders, including tennis champion Arthur Ashe, asked Jordan to support Gantt publicly. Deloris Jordan did contribute, but her son never responded to repeated pleas. Close observers and friends blamed his silence on his commercial endorsements. As Julius Erving phrased it, “He has to consider the downside,” and it is a “pretty heavy downside” if you “alienate half … or one-third” of your public.7 Ashe believed that “advertisers want somebody who’s politically neutered.”8 As a widely respected, even beloved athlete, who was outspoken in his demands for racial equality, Ashe had difficulty understanding those who were “politically neutered.” Erving’s point about the “downside” was no doubt true. In 1988, Jordan had signed a new, highly profitable deal with Nike, and by the early 1990s he and his agent, David Falk, had negotiated endorsement or licensing deals with at least fifteen businesses—deals worth millions of dollars. Gantt finally lost to Helms by a thin margin.
The new information-age marketplace could make you rich. It could also make claims on your soul. Jesse Jackson, the nation’s most visible African-American political organizer, pointed out this danger in 1990. His organization, PUSH (based in Chicago), charged that although one-third of Nike’s sales were from black customers, the company had few African-Americans in its management or on its board of trustees. Jackson also claimed that Nike refused to deposit profits in black-owned banks. He repeated the charge that Nike ads could lead to the poor dealing drugs and resorting to violence so they could acquire Air Jordans. When neither Nike nor Jordan responded, Jackson organized a boycott of Nike products.
Jackson hit a stone, or at least canvas, wall. The Swoosh proved stronger than PUSH. A poll showed that of those asked, about 39 percent agreed with Jackson’s argument that a firm selling to African-Americans had a responsibility to return profits to those neighborhoods. But nearly two-thirds said that, regardless, they would continue to buy Nike products.9 Again, Jordan remained silent throughout the controversy. Phil Knight and Nike did respond by sponsoring Spike Lee’s antiracist television spots, putting money into youth groups, and—in an especially successful move—sponsoring many of the “midnight basketball” leagues that brought inner-city youths off the streets at night and into supervised neighborhood gymnasiums.
Jordan’s friends believed his silence was not due entirely to his and his agent’s neverending quest for ever-expanding markets. They argued that he had never had to face the kinds of discrimination and struggles earlier generations of African-Americans (such as Arthur Ashe) confronted. His parents had consciously played down race as a reason for anger. Their children were simply expected to excel, without excuses. They lived not in an inner city, but in a woodsy area three miles from an ocean beach. Laney High School was desegregated when Jordan entered. A friend recalled that “Laney seemed like a family back then. It had about a 6–4 white-to-black ratio, but it was really cool. No tension or anything.” When he did face discrimination (as when a neighbor refused to let him use a swimming pool, or when a racial fight erupted at a University of North Carolina party), Jordan quietly exited. “Don’t worry about race unless somebody slaps you in the face,” he told a buddy.10
Some, especially advertisers and their customers, tended to see all this as evidence that Jordan simply transcended race. He was one of those rare public figures who appealed to all groups. Jordan certainly seemed to pull off this miracle in Chicago, one of the most racially and ethnically divided cities in the northern United States. He had also, however, demonstrated some sensitivity to the needy, especially African-Americans, but others as well. He had worked for the United Negro College Fund, for the Special Olympics, which supports athletic events for the disabled, and, later, he became involved in Ronald McDonald House Charities. He secretly developed an extraordinary relationship with a young Bulls fan who was dying from an incurable disease and worked hard for the Starlight Foundation, which helps children who are terminally ill. But his mother believed he could do more. In 1989, Deloris helped her son establish the Michael Jordan Foundation that contributed to African-American charities as well as the Ronald McDonald and Starlight Foundations. She tapped corporations and personal friends to raise hundreds of thousands of dollars each year to go along with Michael’s own expansive giving.11
The problem, critics claimed, stemmed not from any selfishness or insensitivity on Jordan’s part. Rather, when commerce clashed with social need, commerce too often won. Precisely because Jordan displayed such a sterling, appealing character, he was being pulled in all directions. By 1992, however, even his character came under fire. For the Bulls’ star, this was the most agonizing charge of all.
The story began in March 1992 with, as David Jackson of the Chicago Tribune nicely phrased it, “the type of men Michael Jordan’s mother might have told him to stay away from.” James “Slim” Bouler was a charming drug dealer who loved to jet to headline sports events and hang around headline athletes. In 1991–1992, authorities had seized $200,000 from Bouler, terming it money from drug (especially cocaine) and gambling profits. Among the funds was a $57,000 check from Michael Jordan.
Bouler first claimed Jordan had loaned him the money to buy a golf driving range. Police, however, concluded it represented Jordan’s losses during high-stakes poker and golf matches at the star’s retreat in Hilton Head, South Carolina. Jordan was well-known in Hilton Head for suddenly flying in on a private jet from Chicago for all-night poker. He was also known for laying a thousand-dollar bet on a golf putt. In South Carolina such gambling was illegal, a misdemeanor offense.
Then Jordan’s name was linked to Eddie Dow, a bail bondsman. Also involved in shadowy nightclub businesses, Dow carried a loaded pistol and stainless steel briefcase full of cash to work each day. In February 1992, four men killed Dow, then took $20,000 in cash from the briefcase. Left in the briefcase were three checks totaling $108,000 from Michael Jordan. The checks were repayment to Dow for money Jordan lost during a three-day poker and golf excursion at Hilton Head in October 1991. The two also had often bet a thousand dollars per hole in their golf matches.12
When the news of the checks broke in 1992, Jordan was not accused of any crime. He was accused by sports writers of showing questionable judgment by enjoying the company of thieves and drug dealers while betting enormous amounts of money. It was precisely the kind of association that could make a person indebted to underworld characters who, in turn, could use this leverage to fix basketball games. No one accused Jordan of ever betting on basketball or falling under the control of such blackmailers. As he emphasized, moreover, betting a thousand dollars was for him equivalent to the average wage-earner putting a dollar on the state lottery. His bets hardly threatened him with bankruptcy.
Jordan nevertheless publicly admitted he had made a “mistake” in associating with such characters. He then added he had “a right to associate with whoever I choose,” and that “There’s nothing wrong with friendly wagers between friends.”13 The revelations did not hurt his basketball skills. During the height of the controversy, he scored 51 points as the Bulls defeated Washington. Nor did the news apparently lessen his market value: in the fourth year of an eight-year $25.75 million contract with the Bulls, Jordan announced he would not demand a new contract, but that he certainly deserved a much higher salary.
Friends defended him by arguing that such bets in cards or golf were simply an outlet for his uncommon competitive fire. He lived to compete. Always in motion, Jordan could not simply sit and watch television, unless he was criticizing films of his own basketball performances. The Bulls had even switched to a private jet for away games after Jordan and his teammates upset airline passengers by flinging loud taunts and hundred-dollar bills at each other in card games on commercial airliners. Such games were not uncommon among professional athletes. They were apparently addictive for Jordan.
As the charges erupted, Nike and other companies associated with him were notable for their silence. The air cleared, finally, in late March 1992 when the NBA investigated Jordan’s betting and declared him innocent of any wrongdoing. South Carolina did not press charges because, authorities declared, the betting had occurred a year earlier and no one had come forward to press charges against Jordan. One South Carolina police spokesman was not as kind. “Absolutely, he [Jordan] appears to have been in violation of the law,” declared a member of the Beaufort, South Carolina, Sheriff’s Department. “But this is an incident that occurred last year, and no one has come forward, an eyewitness.… We’ve made some notes. My advice to Mr. Jordan would be start honoring the laws of Beaufort County. This is South Carolina, not little Las Vegas.”14
The Bulls’ star publicly apologized again. He also backed down from his earlier defiance that he could associate with anyone he pleased: “I … spoke without thinking.” “Sometimes,” he noted, “you tend to forget as a public person the things you have to take into account.… The letting down of people is something I don’t want to encounter again.” Jordan lamented that the media made him appear to be “a 38-, 39-year-old mature person who has experienced life to the fullest,” while in reality he was a “29-year-old who never really got the chance to … do some of the crazy things” people in their twenties do. Such justifications were weak, but he was closer to the truth, no doubt, when he explained why he was (to use Arthur Ashe’s phrase), “politically neutered”: “I don’t think I’ve experienced enough to voice so many opinions …, I think people want my opinion only because of the role-model image that has been bestowed on me. But that doesn’t mean I’ve experienced all those things.”15
With those words, Jordan survived the most dangerous threat to his careers in basketball and global television. Nike made no grand gesture to support him during this time of trouble, but neither did Phil Knight attempt to lower Jordan’s visibility. The Bulls’ star probably felt that he owed some thanks to Nike for not ditching his endorsements. In mid-1992, before the largest international media audience in history, Jordan vividly demonstrated that thanks—and immediately became swamped in another controversy.
Jordan, Scottie Pippen, Charles Barkley, Chris Mullin, David Robinson, and John Stockton were, along with Larry Bird and Magic Johnson, leaders of the U.S. Olympic basketball “Dream Team.” The squad’s appearance on the gold-medal stand at the end of the games was simply assumed, not least by opposing teams that were easily steamrolled. But the “Dream Team” was supposed to appear on the winner’s stand in red-white-and-blue U.S. warmup suits that had a Reebok logo. Reebok had paid $4 million to the U.S. Olympic Committee for that valuable advertising. (The $4 million was part of $160 million paid by forty corporate sponsors to fund all the teams’ expenses and training—and to have the sponsors’ logos regularly in front of the worldwide audience viewing the games.)
Reebok was Phil Knight’s most hated competitor. It was a company that differed from Nike not only because its shoes were different, but because its laid-back, cool company culture was the opposite of all the values loved by the freewheeling, hard-charging Knight. Jordan and Barkley, along with several athletes from other U.S. teams, announced they would not wear the Reebok logo. “I don’t believe in endorsing my competition,” Jordan declared. “I feel very strongly about loyalty to my own company.” Notably, Pippen, Mullin, Robinson, and Stockton did not object to wearing the Reebok symbol.16
A media explosion erupted around Jordan and Barkley. They “think they’re here representing Nike instead of the United States,” columnist Dave Anderson wrote in the New York Times. Jordan is not “an alien from the planet Nike on loan to the Olympic team,” Anderson added. “As for loyalty to his company, how loyal was Jordan to Coca-Cola when Gatorade offered him more money” and he quickly dropped Coca-Cola?17 Bob Ryan wrote in his Boston Globe column that “Michael Jordan has been in danger of losing touch with the Real World for a long time,” and he threatened to tarnish “the very image Nike is paying so dearly to exploit.” Nike should tell Michael to “Do the Right Thing,” Ryan believed, because “nothing he’s said indicates he has a clue.”18
An especially bitter attack came from Mark Kriegel’s column in the New York Post. Jordan and Barkley, Kriegel charged, played not for the United States, but “for Nike, the Tammany gangsters of the sportsworld.” After all, “Gangsters are loyal to the dollar too.” Kriegel said he respected the public protest against racism by the U.S. African-American athletes at the 1968 Olympics: “Theirs was an act of politics, an act of courage, and an act of significance.” Now Jordan and Barkley were making statements, “But not about racism. Not about anything really. Just about Nike, a company which has learned, above all else, how to sell $150 sneakers to [poor African-American] kids on Saratoga Avenue.” “What a bunch of bums,” Kriegel concluded.19
The stakes were huge. An estimated audience of six hundred million in 193 countries would be watching the basketball finals. As criticism rose, a Nike director tried to distance the company from the controversy. “We’ve had no conversations with Michael this week,” went the strange announcement, “and we won’t.” Privately, Knight was said to be appalled by the terrible publicity.20 When, however, the Dream Team marched to the stand to receive their gold medals before a watching world, Jordan had solved the problem. He draped himself in the U.S. flag and so hid the Reebok emblem. “I stood up for what I believed in,” he announced. After all, “When you hire 12 Clint Eastwoods to do a job for you, you don’t ask them what bullets they’re going to be putting in their gun.” “If I offended anybody,” Jordan declared, “too bad.”21
His reputation, already tarnished for associations with gamblers and drug dealers, was not enhanced. The shoe companies nevertheless seemed to profit. “Now everybody looks at the Olympics as Nike vs. Reebok,” one sports analyst noted. “The companies brag about who’s going to wear what, when, and the networks go for it hook, line, and sinker.”22 Vulgar commercialization of the Olympics was not news. Other charges surfacing against Nike, however, were appallingly new.
By the early 1990s, Nike had recovered from its errors in underestimating competitors and the importance of the women’s shoe market. It dominated the sportswear, especially sneaker, business. Nike’s $4 billion in annual revenue nearly doubled that of its closest competitor. Wieden & Kennedy’s advertising remained fresh and successful. So did Phil Knight’s courtship of sports luminaries: about seven times more athletes were under contract with Nike than with any other company. These Nike endorsers included eighty NBA players led by Michael Jordan. It seemed impossible to watch a major basketball, baseball, or football contest on U.S. or international television without being constantly confronted by the Swoosh. “Professional athletes,” wrote correspondent Dan Weil, served “as moving billboards for Nike shoes and apparel.” Soccer, the most popular of international sports, at least outside the United States, was another matter. As yet, Knight had shown little interest in this sport.23
In a revealing series of articles in 1996 on “globalization” and the new U.S. transnational corporation, the Washington Post believed that “No company symbolizes the mobilization of American companies overseas more than Nike Inc. Its 30-year history in Asia is as close as any one company’s story can be to the history of globalization, to the spread of dollars—and [German] marks, and [Japanese] yen—into the poor corners of the earth.” It was a story, the newspaper added, “of restless and ruthless capital continually moving from country to country in search of new markets and untapped low-wage labor.”24 Knight, of course, had discovered the value of Asia more than thirty years earlier—as a source of ideas for shoes, as a place to find money for expansion, as a vast potential market, and now especially as a production line where new transnationals could find efficient, extremely cheap labor.
Exploiting low-wage labor to produce high-quality goods for American and European markets was a telling characteristic of the new transnationals. Before the 1960s, traditional multinationals tended to make their quality products in the United States, Europe, or, at the end of the era, Japan. These nations had reputations for style and quality. Goods from Taiwan, Hong Kong, and South Korea, on the other hand, had a reputation for being cheap and badly made. In the 1970s and 1980s, executives such as Knight saw that with new technology—especially computers and faxes that allowed a U.S. corporation to control overseas plants second by second—production could be done nearly anywhere. And if that anywhere had cheap, disciplined labor, profits could skyrocket. Between 1988 and 1995, producers such as Nike and Reebok poured more than $400 billion into so-called developing countries where that cheap labor lived.25
Knight spied the opportunity earlier than most. His first shoes had come out of 1960s Japan, then a low-wage, highly efficient system. When Japanese labor became more expensive, Nike signed contracts with South Korean entrepreneurs. Some of the first Korean shoes made in 1975 are displayed in a glass case in Hur Kwang Soo’s office in Seoul. Hur ransacked Seoul’s markets that year to find soft leather and rubber for Nike’s famous waffle sole. He was so successful that by the 1990s his plants turned out four million pairs of Nike shoes each year. By the 1990s, however, South Korea’s laborers, like Japan’s in the 1970s, demanded better wages and working conditions. Hur and other Nike contractors quickly set up plants in Southeast Asia where laborers were more passive. Between 1988 and 1992, South Korea’s share of Nike’s total production fell from 66 percent to 42 percent. But Hur, now with his own transnational firm working in Southeast Asia under contract to Nike, grew ever richer.26
Knight, always admiring of the Asian way of business, was direct about why Nike made high profits. “We were … good at keeping our manufacturing costs down,” he told an interviewer in 1992. “Puma and Adidas were still manufacturing in high-wage European countries. But we knew that wages were lower in Asia, and we knew how to get around in that environment.”27 Some of his plans failed. The Philippines proved too full of bureaucrats and corruption, so Nike quickly pulled out. The business climate in Taiwan and Indonesia, on the other hand, was near perfect. Thailand also produced millions of pairs of shoes. Taiwanese technology was so good that Knight put a research lab for new, advanced products in the capital city of Taipei.
Then in 1978 China began to open up and welcome foreign investments. It quickly became obvious that this ever-growing population of 1.5 billion offered the potential for huge profits. Knight was enchanted by his first visit to the People’s Republic of China in 1980. As Nike closed its two U.S. sneaker plants (in New Hampshire and Maine) in the 1980s and began to focus on production in Asia, Communist China appeared to be the door to long-term success and riches. Problems, however, quickly appeared.28
Nike had to work with factories owned by the Chinese Communist government that had no idea how to turn out Nike-quality products. For five years, China’s factories encountered huge problems in making white shoes. As a Nike vice president put it, “We tried to make white shoes, but we couldn’t do it. There was too much dirt.”29 Chinese Communist leaders, moreover, ruthlessly imprisoned or otherwise silenced dissenters, most notably by killing large numbers of them in Beijing’s Tiananmen Square during early June 1989 when they demanded a more democratic system.
Ted Turner’s CNN televised the early moments of the clash. Realizing CNN’s power, Chinese authorities pulled the plugs on the network’s equipment and sent its reporters packing. U.S. law stipulated that nations committing continuing human rights abuses were not to receive trading privileges in the American market. Nike and other producers who exported Chinese-made goods into the United States thus faced the prospect of those exports being reduced in 1992 when an angry U.S. Congress placed restrictions on trade. Only a veto of the bill by President George Bush averted a crisis between the Americans and Chinese. The problem nevertheless threatened to disrupt the two nations’ relationship—and Nike’s imports of low-cost products from China—as the Communists continued to arrest dissidents.
Still, the Chinese plants quickly passed North Korea’s and Taiwan’s to become Nike’s fastest growing production source. The facilities in China were developed by South Korean and especially Taiwanese and overseas Chinese investors who understood how the Chinese governmental and family-oriented economic system functioned. In 1989, as Nike thankfully ended its last contract with plants owned by the Chinese government, the Tsai family from Hong Kong moved in to set up factories. Where the Tsais built factories on the Pearl River Delta had been home mostly to pigs and chickens. It was an area in which there was an hour wait to use the phone at the local telephone office. Within seven years, the Tsais’ Yue Huen corporation, located among new high-rise apartments and a six-lane highway, employed 54,000 people making shoes for Nike, Reebok, and Adidas. Yue Yuen was the world’s largest supplier for each of those companies and probably the largest foreign investment in booming South China.
By 1995, its ninety-seven production lines made forty-five million pairs of sneakers. The Tsais negotiated highly profitable deals with the local Chinese bureaucrats, deals allowing investors to bring in massive amounts of up-to-date equipment without levy. Yue Huen did this, moreover, while somehow keeping separate the production of Nike, Reebok, and Adidas shoes and not revealing secrets of one company to the others. Sports shoes have about two hundred parts. In a case study of brilliant vertical integration of production, the Tsais produced most of these materials internally, even down to the $2,000 shoe molds. Such integration, combined with cheap labor, climaxed in rich profit margins of 25 to 38 percent. Meanwhile, the Tsais planned to expand sneaker production in Indonesia and Vietnam. New York City’s Goldman Sachs investment bank financed the expansion of the Hong Kong transnational into Southeast Asia.30
As the Tsais counted their profits, Phil Knight endured bitter criticism. He came under fire just as Michael Jordan was being scathingly attacked for his involvement in gambling and his lack of political involvement. In 1992, Nike, along with Sears and Levi Strauss, stood accused of allegedly selling goods made by Chinese prison labor. It is against U.S. law to import the products of such labor. The three American companies began spot-checking all their Chinese suppliers to ensure that prisoners were not involved. While these accusations died down, another did not: that Asian producers for Nike and other shoe companies paid near-slave wages to overworked employees who endured horrible working conditions.
Four Indonesian plants, owned by South Koreans, paid young girls as little as 15 cents an hour for an eleven-hour day. Nike shoes that cost $5.60 to make in Asia sold in the West for $70 and up. Michael Jordan’s $20-million endorsement fee was higher than the combined yearly payrolls of the Indonesian plants that made the shoes. Nike’s general manager in Indonesia countered that “they are low wages. But we’ve come in here and given jobs to thousands of people who wouldn’t be working otherwise.”31 Other Nike executives argued that they did not have any actual supervision over Asian plants; the factories were built and operated by local families (such as the Tsais) to whom Nike contracted the work. These executives added that since competitors such as Adidas used this low-cost labor, Nike had to employ it if the company hoped to compete in world markets. But the charges did not go away, especially as human-rights organizations learned of Korean operators physically beating employees in the new Vietnam plants.
Knight and other investors liked to point out that the U.S. transnationals helped create a new, if small, Asian middle class. China’s manufacturing wages rose by 27 percent in 1993 and 1994, and by 14.5 percent in 1995. These rates rose from a low base, but they did seem to offer hope, especially to Nike sales agents.32 For if cheap labor provided large profit margins, 1.5 billion Chinese consumers could provide net profits beyond imagination. As Public Relations Journal phrased it in 1993: “Consumerism has arrived in China.” If the Communist Party’s drab uniforms symbolized China’s past, “Nike sneakers, Big Macs, and Pierre Cardin suits are symbols of China’s future.”33
The vast nation was served by 1,700 daily and weekly newspapers, extensive television was regularly available at least to 800 million Chinese (courtesy especially of Rupert Murdoch, Ted Turner, and the BBC), and an extensive network of sport sponsorships evolved—all ready and waiting for imaginative advertisers such as Nike. In the 1780s, 1840s, 1890s, and 1970s, overly imaginative Americans had falsely claimed that the great China Market was becoming a reality. In the 1980s and 1990s, two centuries of sometimes desperate hope finally seemed to be turning into reality.
Phil Knight captured the moment: “There’s no telling what can happen to the business if China truly catches on.”34 He certainly did not intend, of course, to depend entirely on China. Nike’s sales outside the United States in 1992 amounted to a billion dollars. Only 15 percent came from Asian countries, 75 percent from Europe. The remaining 10 percent came from Canada and Latin America. In 1991 European sales had doubled. The upsurge came even before Knight geared up to exploit the 1992 Olympics.35 He obtained exclusive coverage for his products on the pan-European cable powerhouse, Eurosport. Ads featuring Michael Jordan ran on Eurosport and MTV Europe. Nike raised a spectacular one-hundred-square-foot mural of Jordan near Paris’s Bercy Stadium. Wieden & Kennedy accordingly opened offices in Hilversum, a suburb of Amsterdam, so the agency could oversee Nike’s European ads on the spot. One of the projects was expanding Nike NBA Action Report, a weekly recap of NBA games for foreign markets that naturally tended to feature Jordan. Converse had written a large check to the NBA so it would be called the league’s “official sneaker,” but fans around the world could be forgiven if they thought that Nike held that title.36
Two U.S. firms, Reebok and especially Nike, deployed American advertising skills and technology to eclipse their once-powerful European competitors, Adidas and Puma. Spending upwards of $100 million each on advertising in Europe (while Adidas could muster only $60 million), the two U.S. giants surged from having a five-percent share of the European market in 1983 to a fifty-percent share in 1993. Meanwhile they enormously expanded that market. They also set styles. In Paris fashion shows, beautiful models strutted down runways with the latest dresses and canvas high-top sneakers. In Frankfurt, Germany, a leading rabbi was observed wearing his yarmulke and a long robe over Air Jordans as he attended a rally protesting violence by racist German “skinheads.”37
American “soft power,” as its advocates proudly termed it, was now fully in view.38 Soft power referred to the influence of U.S. culture and commerce, rather than to its military and political muscle. Transnationals such as Nike exemplified such soft power. Their influence was made greater by widespread use of the English language—the international language of computers, science, and many of the young who considered themselves “cool.” By the 1990s, some 70 percent of Western Europeans ages eighteen to twenty-four spoke English. (Only 20 percent of those over fifty-five years of age, however, could read or speak the language.)39 It was the young who idolized Jordan and the “Dream Team,” and who bought sneakers and Chicago Bulls’ clothing.
The transnational manufacturers also profited from continued spread of U.S. transnational communications. The ABC network bought into one of Germany’s leading television stations. ABC’s highly successful sports subsidiary, ESPN, controlled one-third of Europe’s largest sports network, Eurosport. The NBC network in the United States meanwhile took over Superchannel, a cable operation that reached sixty million Europeans. Only one percent of prime-time American television shows were produced overseas. But nearly 80 percent of Europe’s television programs originated in the United States. It was an impressive exercise of soft power.40
The new American capitalism did not go unchallenged. European critics claimed the networks were too parochial and U.S.-oriented. Transnationals responded by featuring European events while becoming more multilingual and playing down local American stories. These responses did not satisfy France’s Minister of Culture, Jack Lang. He believed the world should fear that “vast financial groups and entertainment industries will impose cultural uniformity on a a global scale [.]” Lang wondered, “Will technology enrich us … or might the truth be more ominous: the higher the satellite, the lower the culture?” After all, he added, “the disappearance of languages and cultural forms is the great risk today. Diversity threatens to be replaced by an international mass culture without roots, soul, color, or taste.”
Lang warned that soft power moved mostly in one direction because Americans were so closed-minded and provincial, if not grossly ignorant of other cultures. An author from Latin America or Europe could find readers more easily “in Moscow than in … Los Angeles. It is much easier for a European filmmaker to be seen in Tokyo than Atlanta.” United States culture, this “immense empire of profit,” had become a “financial and intellectual imperialism which no longer grabs territory, or rarely, but grabs consciousness, ways of thinking, ways of living.” The French minister exclaimed: “We must act if tomorrow we don’t want to be nothing but the sandwich board of the multinationals.”41
Advertisements of Nike and other U.S. corporations nevertheless flourished while their European sales boomed. The opposition of Lang and other critics caused not even a hiccup as American soft power continued to inundate foreign cultures. Rupert Murdoch’s multinational operation in China, however, suffered a significant setback.
Murdoch bought Hong Kong’s powerful Star TV. Nike, one of Star’s initial advertisers, had beamed programs into fifty-three countries, including China. In a 1993 speech, Murdoch made the mistake of bragging that “Advances in the technology of communications have proved an unambiguous threat to totalitarian regimes everywhere.” Satellite television could simply bypass state-run newspapers and television. Unfortunately for Murdoch, China’s Communist government agreed with him. It quickly moved to keep Star’s programs out of the country. The campaign even outlawed ownership of the dishes needed to receive Star’s satellite signal.
Murdoch immediately surrendered. He replaced an objective BBC news program from London with Chinese-language films. He publicly declared that although “we Americans don’t like to admit it … authoritarian countries can work.” Ted Turner also got the message. The creator of CNN blasted the U.S. government for trying “to tell so many other countries in the world what to do” about human rights.42
During the early 1990s, Murdoch and Turner had learned much about how their political views could undermine their global economic empires. Nike and its subcontractors in Asia also came under intense fire for allegedly growing rich through the exploitation of poor workers. Michael Jordan meanwhile discovered in both the United States and at the Olympic Games in Spain how the media that enriched him could also be the media that wounded him before an international audience.
Phil Knight’s ambition never diminished, regardless of the criticism. “I’d say we’re only halfway to being truly global,” declared this head of one of the most successful of all global companies. Jordan, however, began to bend under the never-ceasing attention and criticism.