What Happened: On May 5, the Hermès of yoga wear, Lululemon, topped Weibo’s Hot Search List — but for all the wrong reasons. The Canadian fitness brand was fined more than $12,000 (81,000 RMB) and confiscated $3,500 (23,000 RMB) of illegal income by the Beijing Xicheng District Market Supervision Bureau for selling poorly made products. Following this, the hashtags #Lululemonsellspoorlyqualifiedproducts and #Lululemonapologies trended on the platform’s Hot Search List garnering a combined 200 million views, thus far. Lululemon quickly released a statement of apology via Weibo, but it had to turn off its comment section to avoid the flood of negative comments from irate Chinese netizens and shoppers.
The Jing Take: Lululemon’s impropriety is a hard hit to the momentum it was having in China. As its Q3 2021 earnings report shows, the brand achieved a growth rate of 70 percent in the mainland market over the past two years. As such, it has accelerated its expansion, launching its first stores in Nanning, Ningbo, Jinan, Hefei, Lanzhou, and Sanya, while opening its largest store in Beijing and renovating a host of boutiques in key Chinese cities in 2021.
The high-end yoga clothing label is just the latest in a long line of luxury and high street brands being fined for selling substandard products. In March, Bally had a similar incident: It was fined for selling overpriced, substandard shirts. Meanwhile, H&M, Nike, Zara, and GAP’s childrenswear were discovered to contain unqualified dyes and other harmful substances. However, after the episodes, neither the high-end house, nor the fast fashion retailers, have had any significant impact on their brand images. Can Lululemon hope for a similar scenario?
Only time will tell. Yet, one thing is clear. Luxury will face stricter scrutiny from Beijing going forward. In recent years, China has been the growth engine for many high-end brands. However, initiatives such as ongoing price hikes from global maisons — Chanel increased their price points three times in the course of one year — has alarmed local market supervisors and consumers associations, which called out shoppers to be weary.
Recently, China’s national newspaper Worker’s Daily defined luxury as “non-essential” and “unworthy for investment.” Given this, could government actions potentially cool down domestic shoppers’ enthusiasm for luxury purchases, especially now, as China suffers through its worst wave of COVID-19 since the start of the pandemic? Will Chinese luxury consumers — once projected to be the future of the global luxury market — still find spending outrageous sums of money on bags and shoes and clothes a priority once the mainland opens up again? That’s the multi-million dollar question.
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.