Beware the power of the Chinese consumer
Big brands find it doesn’t pay to offend customers in giant market
China’s most powerful weapon as geopolitical storm clouds gather may not be tariffs or riot police, but ordinary consumers. Beijing is increasingly under siege as President Donald Trump’s trade war squeezes the world’s secondlargest economy and protests in Hong Kong question its hold over the territory. But as it has in the past, China is finding support from an increasingly nationalistic online community, who use mistakes by multinational companies to drive home their point.
A growing list of global brands, from Versace to Calvin Klein, have been forced to apologise in recent days after an army of Chinese internet users called them out for products and company websites that identified Hong Kong as a country, not as a city.
“There’s a nationalist response on the internet that obviously the government stokes,” says Andrew Polk, co-founder and partner of Beijingbased consultancy Trivium China. “It goes from official state media and then takes on a life of its own.”
Global companies, which are increasingly counting on China’s wealthy middle class and burgeoning consumer market for growth, have learnt the hard way that it pays to make amends — and fast. Chinese buyers account for at least a third of luxury sales and two-thirds of the industry’s growth, according to estimates from consultancy Bain & Co.
Even companies that don’t sell directly to consumers aren’t immune from social-media outrage.
PricewaterhouseCoopers found itself a target after an online post, which appeared to be from the accounting firm, urged support for the protests.
While PwC issued a statement calling the original post a fraud, it didn’t mollify critics on Chinese socialmedia platforms, according to the
The state-run tabloid said the firm’s response “sparked widespread dissatisfaction among the public” because it didn’t strongly condemn the demonstrations.
Hong Kong may be the hot-button issue now, but there are plenty of other topics that can set off nationalist anger online. Chinese social-media users expressed indignation in June
Never have I wanted to disrespect China’s National Sovereignty and this is why I wanted to personally apologise. Donatella Versace
after an economist with UBS Group used the phrase “Chinese pig” in a report on the impact of the country’s swine flu outbreak. The Swiss bank publicly apologised.
Companies are also at risk as the US-China trade war intensifies, says Julian Evans-Pritchard, Singaporebased senior economist for China with Capital Economics Asia. “I do think life is going to become more difficult for foreign firms in China, particularly US firms,” he says.
Taking to Instagram last weekend, Donatella Versace, head of the Italian fashion house, said she was “deeply sorry”, alluding to the firestorm that erupted on Chinese social media over the weekend. At the centre of the backlash was a photo of a Versace T-shirt that suggested Hong Kong and Macao were independent countries, not part of China.
“Never have I wanted to disrespect China’s National Sovereignty and this is why I wanted to personally apologise for such inaccuracy and for any distress that it might have caused,” Versace’s post read.
Actress Yang Mi, Versace’s brand ambassador in China, issued a statement saying she would part ways with the label.
Coach and Givenchy followed suit after internet users unearthed T-shirts bearing their brands that list Hong Kong as an independent country, and Calvin Klein apologised this week for apparently identifying Hong Kong, Macao and Taiwan as independent countries on its website.
Chinese model Liu Wen terminated her contract with Coach. The model apologised publicly on Weibo for working with the US fashion label, saying, “I am sorry for the damage caused to the public for my poor choice of brand. I love my motherland and I resolutely safeguard national sovereignty.”
The Communist Party’s Central Political and Legal Affairs Commission posted an article on its WeChat account recommending that Cathay Pacific, the Hong Kong airline, and Versace listen to a song called
Liang Liang. Meaning “cold, cold”, the phrase “liang liang” is internet slang for something that is hopeless.
“Chinese people’s anger is not just verbal but will translate into action. The Chinese people have the determination, the will, and the ability to make you ‘liang liang’ completely,” the Communist Party department wrote on its social media page.
“China’s sovereign interests are not things of value that can be exchanged!”
This week Japanese sportswear company Asics joined the long line of brands apologising after it listed Hong Kong and Taiwan as independent countries on its English site.
“We sincerely apologise for what the [Chinese] press pointed out about Asics’ official website, and solemnly state that Asics China and all our employees have consistently supported the territorial integrity of our motherland, the ‘One China’ principle, as well the fact that both Hong Kong and Taiwan are an inalienable part of China,” it said.
Foreign companies “shouldn’t ‘queue up’ to cause trouble in questions related to Hong Kong, Macao and Taiwan,” the Communist Party newspaper People’s Daily said in an editorial published on Monday.
However, the Chinese government may also be worried about scaring off foreign companies at a time when economic growth is slowing, says Trivium China’s Polk. American consumer giants like Starbucks and Nike are still expanding in the country.
In most cases, he says, the government is aware that things “can go too far and become a genie that’s out of a bottle and can’t be put back in”.