David Rosenthal: evaluation

Transcript context

…And it was a secret hedge. Again, break the rules, fight the law. They use Nissho's money, which was supposed to be to buy inventory instead to plow it into capex of buying and rehabbing a factory, and then they were secretly operating their own factory with money that was not supposed to be used for that purpose. But again, Nike break the rules, fight the law. Here they are today, a huge and successful company. I like that. Break the rules, fight the law sounds much more inspiring than toe-stepping. Global outsourcing, though. At first, this, of course, is in Japan with Nippon Rubber. But as we were saying, Japan is coming up in the global economy. Right around this time, Nixon cuts the dollar peg to the yen loose, and the yen starts floating against the dollar. Up until this point, from after World War II until the mid 70s, the Yen was pegged to the dollar. Once the currency floats, and the Japanese economy, of course, has come up hugely over these decades, now, currency issues become a big problem for Nike in terms of importing from Japan. The cost of labor is going up. Basically, the writing's on the wall, there's no way that they're getting shoes for $3 a pair anymore anytime soon. This means that they got to go find other countries to make the shoes in. Phil and a bunch of the management team starts flying around Asia. They go to Taiwan, they go to South Korea. Ultimately, they go to China, they go to Indonesia, they go to Vietnam, and this is where the Nike global production machine is born. At first, it's primarily Taiwan and then South Korea that they go to, then the big move is into China, both in terms of production and for selling. I think there's a scene in Shoe Dog even when he's on the trip around the world in 1963, that he peers into China from Hong Kong, and his dreaming about 2 billion feet in China. Nike would be one of the very first companies and I think the first footwear company that would be allowed to sell in China. To sell and open factories, they opened the country for the industry.…

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