Millions of Chinese consumers watch “315” each year, a nationally televised program that exposes unfair practices by popular brands. The show's name comes from the date it airs, March 15, or World Consumer Rights Day. Brands that have come under fire in previous years include Esprit, Guess, and Nike, who were called out for having no air pockets in their supposedly air-cushioned Hyperdunk shoes.
The theme for this year's two-hour show is ‘quality consumption’, making the luxury industry a likely target. Take downs of luxury brands are especially satisfying for media and audiences as high prices would seem to warrant high quality products, and corner cutting seems even more egregious.
In order to respond quickly to any issues that do emerge, it’s important for brands to understand the general rule of thumb when handling crises in China.
Low Quality Luxury Reflects Directly on the Buyer#
Recent research shows that Chinese women are more likely to see luxury as an identity, whereas elsewhere it is associated with price and quality of life.
“Luxury is about lifestyle, aesthetics, and self-identity,” said Rachel Catanach, President China for FleishmanHillard. “Any issue or crisis that damages a consumer’s desire to associate themselves with these brand elements needs to be handled delicately.”
Such close identification with a brand means it's not just the product that matters to Chinese consumers. They are more concerned with all aspects of a brand, from the behavior of a brand ambassador to building a flawless digital experience, to the location of a store. When one detail fails to fit, it could have an outsized impact on their perception of the whole.
The Customer Isn't Always Right#
Earlier this year, Balenciaga’s Triple S sneaker was found to be made in China, when previously it had been made in Italy. Many consumers doubted the quality could be as high as before, and were disappointed the shoes cost just as much. The brand rightly called out consumers who doubted the abilities of Chinese manufacturers, saying they “have the savior-faire and capacity to produce a lighter shoe.”
“We need to emphasize the market – China, when we talk about crisis management,” said Gao Ming, Senior Vice President and General Manager Luxury Practice China at Rudder Finn, who has advised many big luxury names such as the Richemont and the Kering group.
“In China, consumer understanding of luxury products is relatively weak compared to other industries. You could say they lack relevant knowledge, or even hold a certain bias towards luxury goods.”
In the case of Balenciaga, as the brand learned, there is a gap between customer’s perception of ‘made in China’ and its brand value. Catanach also suggested it comes down to educating consumers about how the brand maintains global quality standards, whether their products are manufactured in China or Italy.
“It’s sometimes the crisis PR’s job to educate consumers, as well as press and KOLs, and that kind of work is not built overnight, “said Ming, “it should be reinforced every time when dealing with a crisis and practice on a daily basis, to make sure when the crisis hits, you will have allies standing by.”
Adopt a Global Strategy...#
In today’s hyper-connected world, the distance between brand and consumer has shortened. Not only have they become physically closer by traveling to stores all over the world, they also consume global content online. Challenges to a brand's reputation in one market can now emerge from activities everywhere.
Mainland Chinese netizens recently found out that Mercedes had quoted the Dalai Lama in an Instagram post, for instance, and model Gigi Hadid’s perceived racist behavior overseas caught up with her when she was cast in a Victoria's Secret show in Shanghai.
The days of running one social media strategy for the West and a separate one for China are fast coming to an end, even on Western platforms that are banned in China.
“The operation of a brand’s mainstream social platforms in the West obviously is not under the monitoring of the Chinese PR team. In many enterprises, the Chinese team did not even participate in this part of the work,” Ming said.
In an op-ed for Ad Age, global lead of FleishmanHillard’s crisis management practice Brian West suggested headquarters should shorten the chain of command, making sure to “train [local teams], ensure they know the company's key messages, and authorize someone local to speak to media as soon as the story breaks.”
...Yet Remain Local#
China is its own unique business environment, and attempts by foreign brands to bend the rules can cause real anger. The Victoria’s Secret fashion show after party was abruptly shut down at midnight, despite staff trying to persuade police officers to let it continue longer. This left a negative impression of the brand that could have been avoided had the situation been anticipated and discussed with officials before the event.
As Catanach put it, foreign brands “usually want to maintain good relations with both the Chinese government and state media, and this guides their approach to managing issues and crises.”