Fan Bingbing’s Tax Scandal Uneasy for Luxury Brands like Guerlain, De Beers and Montblanc

China’s movie star and social media influencer Fan Bingbing (“范冰冰”) is being investigated by Chinese authorities on suspicions of tax evasion. Luxury houses like Guerlain, De Beers, and Montblanc that have appointed Fan as their brand ambassador are cautiously observing the possible impact on their businesses, with all of them stopping engaging with Fan on social media.

As one of the most well-known Chinese celebrities around the world who starred in Hollywood movies like Iron Man 3 and X-Men: Days of Future Past, Fan Bingbing was called out in early June by Cui Yongyuan, a controversial Chinese talk show host, who charged she was using a so-called “yin-yang” dual contract system to underpay taxes on her film earnings.

The system is known to be commonplace among film companies in China. It entails the celebrity signing two different contracts, with one showing the real amount of the payment while the other one shows a lesser amount of payment to be reported to the Chinese tax authorities.

Late last month, China’s tax bureau set up a case to investigate celebrities and film companies who are reportedly involved. The latest development is that Fan Bingbing and her younger brother, Fan Chengcheng (“范丞丞”), are said to be banned from leaving mainland China as of July 28.

For some time, Fan Bingbing has arguably been the top choice for luxury brands when it comes to influencer marketing in China. She has a massive following on social media (62.9 million on Weibo, 3.8 million on Instagram and 10.6 million on Redbook) and a widespread recognition among the masses, as evidenced by the fact that her posts on Weibo receive ultra-high engagement.

Moreover, Fan has a strong commercial value for brands that hope to convert online influence into sales. Last year, she opened an official account on Redbook, China’s social commerce site, and recommended beauty products that she said she used daily via a live-streaming session. Many of her recommendations sold out immediately.

Besides her official partnerships with Guerlain, De Beers and Montblanc, Fan also has been closely associated with a long list of luxury labels, including but not limited to Louis Vuitton (which invites her to fashion shows every year and sent her and her fiancé customized suitcases), Valentino, Chopard and L’Oreal over the past few years.

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Fan became the brand ambassador for German luxury brand Montblanc this April. However, the brand stopped engaging with her on Weibo in late May. The jewelry brand De Beers also ceased to mention Fan online since mid-May. In the brand’s latest store opening event in Xi’an SKP Mall, another Chinese celebrity, Gao Yuanyuan (“高圆圆”), showed up to cut the ribbon.

The French prestige beauty brand Guerlain recently shot a campaign video with Fan to promote its lipstick but did not post it on any of its official channels. Fan’s online fan community released it on Weibo. Comments under the post said Fan looks unwell and pale.

The Thai duty-free giant King Power has also initiated an internal legal process to replace Fan with others to be their brand ambassador, according to a report by Thai Headline on July 30.

Tax evasion is a much more serious charge in China than in the West. As the gap between the rich and the poor widens in the country, the public’s tolerance for the tax evasion practice of a highly-paid figure like Fan is incredibly low. The Chinese authorities have vowed to address this phenomenon in recent years so as to ease the public outcry.

Fan Bingbing has been the best paid Chinese celebrity for three consecutive years, according to Forbes magazine. In 2017, she earned an estimated $45 million.

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Influencers, Policy