Making Sense of “New China,” Where a Repressive State Meets Expressive Millennials

International fashion and luxury brands maintain a constant balancing act in China. While the country has become the latest growth engine for their businesses, the Chinese government's standard unpredictability when it comes to regulating foreign entities has hit them ruthlessly of late. It is not a secret that Beijing exerts enormous control over the operation of foreign businesses, which has kept tech giants like Google and Facebook out of this market for a decade. But who would have anticipated that Victoria’s Secret, an American consumer brand that specializes in the lingerie products, could be targeted for political reasons? Last week, Victoria’s Secret hosted its annual fashion show for the first time in China, which was a major marketing effort by the brand to pave the way for its expansion in the market. With beautiful supermodels, A-list performers, and glamorous lingerie items, the goal of the show was to create positive buzz among consumers until that hope was shattered by Chinese regulators. A few days before the show, media reports on visa denials of some high-profile models and guests started to surface. Model Gigi Hadid was barred for her seemingly “racist” Instagram post which Chinese people believed she mocked Asians. American singer Katy Perry was rejected due to her incidental support of Taiwan’s “sunflower” independence movement at a Taipei concert in 2015. The commercial behaviors of consumer-facing brands are tangible targets that the government can directly influence. Victoria’s Secret’s bumpy launch in China cannot be a random occurrence. It clearly illustrates that Beijing has stepped up its regulatory efforts to target consumer-facing businesses from sectors such as fashion and luxury, as the country is heading toward a consumption-driven society where luxury and fashion purchases start to make up a significant part of citizens’ daily activities. The trend is also in parallel with the latest political developments. During October’s National Congress of the Community Party, President Xi Jinping achieved unprecedented power consolidation. In his vision of “New China,” the government will continue to promote consumption as an economic growth driver, while the party's need to stay in power requires it to exert a tighter-than-ever control over people in every aspect. As a result, a case like Victoria’s Secret is no longer unimaginable, as the commercial behaviors of consumer-facing brands are tangible targets that the government can directly influence to ensure what people watch, read, and interact with every day is in line with their criteria. However, luxury and fashion brands should also be aware that Chinese consumers, who stand at the receptive end of the country’s regulation, are not static agents. The target of these repressive practices is a new generation who has the strongest demand for self-expression compared to any of their predecessors. The emerging younger generation sees their consumption behaviors as a means of self-expression. They favor brands with strong opinions that can empower them to express their values, ideas, and preferences. As evidenced by some winning branding efforts by international brands in recent years, Chinese consumers appreciate brands that resonate with their values and facilitate their expression of opinions. For example, one of the best marketing campaigns by the Japanese luxury cosmetics brand SK-II was an ad that addressed China’s “leftover women," a term that refers to unmarried women over the age of 30. SK-II has turned itself into a platform for its targeted consumers to voice their frustration with the discrimination and stress that the "leftover women" have received from society. At this point, international fashion and luxury brands should be aware that the heightened control of Chinese government and the growing need for self-expression of the millennial generations are two trends evolving simultaneously in this vast marketplace. This seemingly contradictory direction that the state and its people have taken poses challenges for brands to operate in the country. On the one hand, it has become quite important for foreign brands and retailers to abide by Beijing's rules and conduct the self-checking process from time to time to ensure their commercial behaviors align with official stances. China's unpredictable political standards, nonetheless, have cast a shadow over the ability of brands to empower self-expression of Chinese consumers. Even though most Chinese youths agree with the Chinese government on the political front, their understanding of social and human rights issues such as gender equality, LGBT rights, and social migration can differ significantly from official stances. China’s unpredictable political standards, nonetheless, have cast a shadow over the ability of brands to empower self-expression of Chinese consumers. All of this has made the business management of international fashion and luxury brands in China highly delicate. Going forward, in a marketplace where everything is political, an ability to strike a winning balance between political sensitivity and consumer expression is likely to be the key for brands to win over an increasingly discerning audience.

Sectors

Insights

Company

Making Sense of “New China,” Where a Repressive State Meets Expressive Millennials