What Happened: China might be a goldmine for luxury, but companies are facing mounting pressure operating in the country. A study conducted by Swedish National China Center found evidence of 78 boycotts of foreign players since 2016 — a sixfold increase compared to the preceding eight years.
According to the report, businesses faced major backlash when challenging Chinese sovereignty in Hong Kong, Taiwan, and Tibet (Versace, Givenchy, and Coach), criticizing its human rights record in Xinjiang (Nike, Adidas, H&M, and Burberry), and committing racism and cultural appropriation (Dolce Gabbana, Chanel, and Dior). For some these missteps have had serious consequences. H&M, for instance, has been and still is banned from all local e-commerce platforms.
The Jing Take: There are a number of reasons for this steady rise. Behind the surging number of boycotts is a growing wave of nationalism, fed by political tensions such as the China-US trade war. Establishments from the US, France, and Japan have found themselves caught in a battle of wills between here and the west. Hillevi Parup, co-author of the study, told how “a third of the boycotts have received the support of the government.” Labels that undermined the country’s territorial integrity and those embroiled in the Xinjiang cotton controversy were openly criticized by the state-run media.
Secondly, under pressure from netizens, firms have rushed to issue public apologies but these have varied results. Often, they only resulted in additional negative publicity, like in H&M’s case. On the other hand, British luxury outfit Burberry, also caught in the Xinjiang cotton issue, successfully navigated its PR disaster. It tried to completely avoid the public eye and ceased posting on Chinese social media for months. Only when the Henan flood disaster occurred did it take the opportunity to restore its image through donations. Apologizing, it seems, entails its own risks.
Still, houses can have hope in the fact that online reactions do not necessarily reflect the opinions of shoppers. Chen Liang, the managing partner at éClair, explained in a previous Jing Daily article: “In the digital era, people who agree do not speak as loud as those that disagree. But those who disagree may not be the brand’s actual consumers.” This shows why for some, the impact on their sales in the mainland was very limited. Chanel, for example, continues to deliver brilliant financial results in the market.
One thing is sure: this trend is not going away any time soon. Maisons have to be prepared for a bumpy road ahead. Indeed, avoiding backlash completely is all but impossible. What matters is how you respond. Working out a strategy for minimizing reputational cost will be key to surviving in the market over the next few years.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.