China’s “Quality Crackdown” Puts Coach, Tory Burch in Crosshairs

Longtime observers of China’s fashion and luxury markets are well aware of the country’s occasional, highly publicized crackdowns on the quality of imported foreign brands, which often coincide with periods of tension with the U.S., Europe, Japan, or South Korea — or a mix of all of the above. This week, amid signs that the a U.S.-China trade deal is highly unlikely in the near term, the Shanghai Market Supervision Bureau announced the results of a “random quality inspection” on 125 batches of clothing in Shanghai. According to the bureau, 23 batches failed to meet their quality standards, with brands such as Tory Burch, Coach, Tommy Hilfiger, and DKNY called out for missing the mark. Chinese press noted this week that the quality inspection involved items from 36 companies and focused on meeting “mandatory standards” such as pH, tensile strength of materials, and colorfastness. The department ordered the companies that failed its tests to “immediately stop selling substandard products, comprehensively clean up the products in inventory and on sale and take proactive measures to protect consumers in accordance with the requirements of relevant laws and regulations.” Beyond a spate of bad PR this week in Chinese-language press and the annoyance involved with recalling any inventory that failed the quality standards, this latest quality crackdown likely won’t have much of an impact on brands like Coach and Tory Burch. But it’s a sign to other brands that — whether warranted or not — they need to be prepared for the same to potentially happen to them. This kind of punitive crackdown, which predominantly targeted American brands, is par for the course for foreign brands in China around times of high international tension. Jing Daily readers might remember similar targeting of Japanese brands in 2012 and 2014, South Korean brands in 2017, or even the short-lived singling out of Canada Goose last year amid tension around the arrest of Huawei CFO Meng Wanzhou in Vancouver. In most cases, brands wait out the bad press and get back to business once the heat dies down. This will undoubtedly be the case for the likes of Coach and DKNY, which haven’t yet seen news of the quality crackdown widely translated into English. Now that brands are past the 70th anniversary of the founding of the PRC — and the massive amount of scrutiny of their advertising and marketing that preceded it — most can breathe easily and try to end a tumultuous 2019 on a relatively high note. Coach, in particular, is looking to have a better 2020 in China, with an impending “third-time-lucky” launch on Tmall, and thankfully — for that brand — this Tmall launch should drown out any residual bad press from this Shanghai quality crackdown.

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China’s “Quality Crackdown” Puts Coach, Tory Burch in Crosshairs