Brands are Wrecking Their Sales in China Over East-West Cultural Divide

If the missteps of Versace, Coach, and Givenchy over Hong Kong two months ago taught the luxury industry a valuable lesson about government control in China, then this month offered the West even more high-profile admonitions regarding the country’s political sensitivity. Companies in a variety of industries, from Vans (sneakers) and Apple (tech) to the beloved NBA (sports), were singled out by both the Chinese government and consumers for appearing to side with protesters in Hong Kong, leading to international quagmires those businesses didn’t seem to anticipate.

If luxury brands learned only one thing from the Versace episode, it’s that they need to clearly label Hong Kong and/or Taiwan as part of China on their products and websites. But these days, even small details seemingly buried within a campaign can result in a backlash. An example of this comes from the jewelry maker Tiffany & Co. On Monday, the brand posted an ad campaign featuring model Sun Feifei covering her right eye — a symbol Chinese netizens interpreted as the “eye for an eye” gesture often used by Hong Kong protestors. Even though the post was quickly taken down (and the company stated that the ad was shot before any protests) netizens remained outraged.

Meanwhile, Vans and Apple both got slapped with the label of favoring Hong Kong independence due to a series of events. On Saturday, in a sneaker design contest held by Vans, netizens ferreted out one controversial submission that featured a yellow umbrella alongside a Hong Kong flag. Even though the company insisted that it didn’t create or select the submitted design, that didn’t stop videos of Hong Kong consumers burning their vans from surfacing online. Then, on Wednesday, Apple became a target of the Chinese state media, China Daily, because it allowed a Hong Kong app that crowdsources police activity to be listed on its iOS App Store, giving Chinese consumers another reason to support their local phone maker Huawei.

With such tight restrictions in place from the Chinese government, it seems as if the only way foreign brands can prosper in China is to first engage in a top-to-bottom cleaning to eradicate any problems that might drag them into this witch hunt, including product design, marketing campaigns, and even employees’ social media.

There appears to be no end in sight to this heightened level of political sensitivity in China. There are a few reasons for this, the first of which is that this year is the 70th anniversary of the founding of the People’s Republic of China, but it’s also because Chinese consumers, which many luxury businesses have come to depend on for sales over the years, are now using their newly-found purchasing power to command the cultural respect they insist upon. It should also be noted that younger Chinese generations have grown up loyal, patriotic, and extremely socially connected, so brand missteps are sure to be quickly pointed out.

Among all brands, the NBA is perhaps the one paying the steepest price for its China blunder. Thanks to one quickly-deleted tweet from Houston Rockets’ general manager, Daryl Morey that expressed support for the Hong Kong protestors, Chinese companies have decided to cut ties with the NBA, which could result in more than a billion-dollar loss for the American brand. And now, the effect is spreading beyond the league, as the footwear company Nike, which is the exclusive on-court apparel provider for the NBA, has seen its prices drop down on trading platforms ever since the controversy began.

How did this situation, which has quickly become a case study on poor crisis mismanagement on the level of the Dolce & Gabbana disaster, get so bad for the NBA? Many say it has more to do with how the company reacted to the event than the tweet itself. “What made the NBA a target is how they came out to explain themselves,” said a seasoned Chinese PR professional who preferred to remain anonymous. She believes that the league should have held its tongue after the release of its initial apology and that NBA commissioner Adam Silver’s refusal to apologize on behalf of Morey because he believed his “right to freedom of expression” was ultimately what angered Chinese citizens the most.

Netizens quickly became fixated on the word “freedom,” which, in their minds, is interpreted differently in the East than it is in the West. In essence, many Chinese don’t feel as if the NBA is respecting their country’s values as much as American values, which is also a way of saying they don’t value China’s business.

Another difference in the cultures extends to the perceived way employees should behave. “It is irresponsible to come out and make personal comments on behalf of a company because there are many stakeholders of a company,” said the anonymous PR person. “If you [want to express] your personal view, claim your retirement and then speak it so that it’s none of the company’s business.”

The NBA’s response — to stand behind the freedom of speech rights granted to all of their employees and players — is a display of individualism that differs from China’s preferred collectivist mentality that always puts the company before self-expression. Freedom is closely tied with responsibility in China, and the loss of billions of dollars over a tweet is a responsibility that would be seen as too big for one individual’s actions.

Foreign brands have traditionally done extensive marketing before expanding overseas, but in a highly political country like China, they must also learn to keep their business separate from their personal politics, or else they are likely to ruin the hard-fought business they worked so diligently to get in the first place.

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Consumer, Market Trends, Trending in China