Nike and Adidas saw their online sales plummet in China over the Xinjiang cotton boycott

• Online sales of Adidas and Nike products at Alibaba's Tmall plummeted in April.
• These sportswear brands are being targeted in a consumer boycott in China against western brands
• Meanwhile, Chinese athleticwear brands are "reaping" the benefits, according to Morningstar.

Adidas and Nike are feeling the effects of a consumer boycott in China.

According to a note from Morningstar analyst Ivan Su, online sales of Adidas and Nike products on Alibaba's Tmall platform fell by 78% and 59% respectively year-over-year in April.

Chinese consumers snubbed the sportswear brands over statements they had made expressing concerns over alleged forced labor practices in the Xinjiang region in China. Tmall is China's largest online business-to consumer-platform.

Meanwhile, Chinese athleticwear brands Anta and Li Ning "reaped" the rewards of these consumer boycotts, Su said.

"China Lining (Li Ning's premium fashion arm) is by far the biggest beneficiary, with Tmall sales up more than ninefold in April," Su wrote in the note. "We estimate Tmall sales for Anta group were up by about 59% in April, while for Li Ning group, they rose a whopping 92%."

Chinese consumers started boycotting western brands including Nike, Adidas, and H&M in March over their pledges not to use Xinjiang cotton. Past statements the companies had made on the issue resurfaced online in the wake of sanctions placed on China by the US, Canada, EU, and the UK, alleging "repressive practices against Uyghur Muslims and members of other ethnic and religious minority groups in Xinjiang," Insider's Mary Meisenzahl previously reported.

China is the most important market from a growth and profit perspective for both Adidas and Nike, according to Jefferies research. In a recent note to clients, Jefferies analyst Jamie Merriman said that Chinese sales represented nearly a quarter of Nike and Adidas' revenue in fiscal 2020.

Merriman isn't expecting this fallout to have a long-term impact, however, given the strength of both the Nike and Adidas brands in the region, she said.

Su echoed this point in his note on Wednesday.

"Chinese consumers' current buying behaviors are most likely temporary," he wrote. "We maintain our view that as there aren't renewed attacks from state media, consumer boycotts against Nike and Adidas should most likely fade over the next months."