Key Takeaways: The mass exodus of celebrities from brands in defense of Xinjiang cotton signified a broader cultural issue requiring brands to revisit their China influencer strategy. Despite the market buzz and future potential of virtual KOLs, human influencers are still the most effective branding vehicle in luxury and fashion. Brands can take micro-steps toward improving their current influencer strategies by opting for more flexible, politically aware, and collaborative formats. Working with the right influencers — in other words, key opinion leaders (KOLs) — is how most luxury and fashion businesses began tapping into China’s affluent, young consumers. Now, adapting that strategy to fit into Gen-Z China’s patriotic consumerism and cancel culture has quickly become the new game. Last month, a site-wide campaign targeted global fashion brands over their stances on human rights in China's autonomous region of Xinjiang, sparking digital consumer riots. Within a week, more than 44 celebrities and countless social media KOLs terminated all types of collaborations with the brands in question, including Adidas, Nike, Converse, and others. This type of celebrity and influencer mass exodus is not new for China’s young and digitally empowered generation. After the Dolce & Gabbana “racist” rant scandal in 2018, an avalanche of outraged comments led to the cancelation of the brand’s Shanghai show and all its celebrity and model contracts. In 2019, a T-shirt that had questionably listed Hong Kong and Macau as independent countries propelled a cohort of A-list brand ambassadors to cut off ties with Versace, Givenchy, and Coach. The recent dramatic influencer dropout in defense of using Xinjiang cotton is only part of a greater issue that would force brands to reconsider their China marketing strategies in an increasingly polarized world. Without a revisited plan, brands are likely to see even more complications and consumer boycotts soon. Given the volatility of working with humans, predictable and perfectly disciplined "virtual KOLs" seem to like an easy alternative for brands. The Chinese CGI influencer Ling 翎 is a good case in point. “Born” in May 2020, Ling combines the look of traditional Chinese beauty and contemporary streetwear style, and young netizens are loving her ancient-meets-modern look. Thus far, she has worked with well-known brands such as Tesla, VOGUE, and Nayuki. Using virtual KOLs has been an emerging marketing experiment for brands in China, said Arnold Ma, founder & CEO of the Chinese digital agency Qumin. “Ling, Luo Tianyi, KFC’s Colonel Sanders, Tmall’s Aimee, PokaPoka, and L’Oréal’s Mr. Ou are all famous to Chinese Gen Zers," he explained. "And although virtual Chinese KOLs have yet to reach their peak, brands could get on board because this industry has huge potential.” Yet, this shift away from real humans to virtual KOLs is not being met without skepticism, especially when it comes to concrete business results. Elisa Harca, co-founder of the retail consultancy Red Ant Asia, claims it is still too early to pinpoint a long-expected burst of the “influencer bubble.” “There was a lot of hype and buzz about virtual KOLs in the West and China pre-COVID-19," she said. "But since then, the discussion has moved more toward livestreams with KOLs, KOCs (key opinion clients), or brand owners and employees, whereby anyone can become a voice of a brand.” On the Gen-Z favorite platform Bilibili, the average top-level influencer has over 10 million followers. Yet, the average top virtual influencer owns only about 2 million (one-fifth of its human peers). Plus, with digital becoming the default mode of social interaction, there is greater value in a real human voice backing a brand. “In China, influencers and KOLs reign supreme, as they are still a highly effective way to reach communities. Influencers, with targeted advertising and in-platform SEO, are still the most effective marketing path for brands in the digital ecosystem,” she said. Rather than jump into a virtual KOL-only approach or cut out KOL marketing altogether, taking micro-actions to improve the current influencer marketing model should be a more feasible option for most brands. Here are four different steps in that direction: 1. Choose short-term flexibility over a long-term commitment Red Ant Asia’s Elisa Harca suggests brands consider shorter-term deals versus long-term contracts to leave space for a pivot if needed. “In the past, many brands have opted for long-term collaborations in the view that it demonstrates commitment, loyalty, and consistency," she said. "However, with shifts taking place at China speed, it would be wise to break up those partnerships and collaborations so that not all your eggs are in one basket.” 2. Cultivate political sensitivity towards China-related issues Young Chinese consumer trust exists when the appetite for fashion and beauty meets fervent patriotism. To earn that, brands must have the conscience to cultivate practical political wisdom to avoid controversy. “Brands can either have a clear standpoint that supports China or avoid talking about politics on social media," warned Qumin’s founder Arnold Ma. "Once Western brands get involved in political controversy, KOLs and celebrities will 100-percent stop work with the brands because they need to save their reputation in the Chinese market, and they are patriotic and socially progressive.” 3. Use “creators” over “influencers” The influencer archetype used to be someone with a big follower count who simply says nice things about the brand. But that scenario is problematic, business-wise. “Brands should move away from an overreliance on the traditional influencer model where they essentially borrow reach from KOLs," explained Ma. "Every time they spend money on a KOL campaign, not only are they borrowing reach, but they are also paying money to help the KOLs grow their audience.” A more sustainable alternative is to co-create with the KOLs by either creating brand-specific content together, a special collection, or anything that stays in the brand’s creative asset. 4. Leverage the brand’s own digitalization The year 2020 stretched the idea of using digital to enhance luxury and the fashion business to its breaking point. From Prada’s post-runway designer talk format to Bottega Veneta’s “quit the social & join the magazine” reverse approach, numerous cases have proven that, if used creatively, digital tools could enhance brand equity rather than diluting it. During COVID-19, virtual consultations and founder meetups became increasingly popular ways for brands to engage with their audiences. In the beauty realm, KOEs (key opinion employees) also became more important during branded livestreams. But across these industry examples, one pattern is consistent: KOLs or no KOLs, brands that digitally experiment more to convey authenticity are the ones winning over both press and consumers.