Mark Tanner
14 August 2019 0 Comments

As protests in Hong Kong enter their 10th week, the violence continues to intensify, leading to Monday’s closure and yesterday’s mass cancellations at the eighth busiest airport in the world. Many miles away, some of the world’s most aspirational brands are having their own set of issues recognising the Special Administrative Region.

On Sunday, following an uproar on Chinese social media, Italian luxury brand Versace officially apologised on Chinese and Western social media for selling a Versace t-shirt that suggested Hong Kong and Macau were independent countries. The following morning, images of a 2018 t-shirt from the Coach and Disney collection labelling Hong Kong, Macau and Taiwan as independent countries was circulated on Weibo, with similar designations on Coach’s website. Coach was forced to apologise. Next came Givenchy, Calvin Klein, Fresh skincare and Japanese sportswear brand Asics, who all apologised after being embroiled in similar gaffes.

An online poll by fashion blogger Zoe which asked peoples’ attitudes towards brands that “insulted China”, swiftly attracted more than a million respondents, with 70% claiming they’d “never buy their products even if I have nothing to wear.” Actress Yang Mi ended her endorsement of Versace, “very indignant that Versace’s mistake blatantly defies the sovereignty and territorial integrality of China.” Coach’s brand’s ambassador in China, model Liu Wen, apologised on Monday for not being rigorous in her selection of brands to represent, ending her collaboration with Coach since its behaviour had “hurt the national feelings of the Chinese people” and must be “condemned seriously”. KOLs for the other brands were quick to follow suit.

Although China is becoming increasingly more powerful and confident, it remains sensitive to any brands that disrespect Beijing’s mandate, right through to Chinese individuals. Although this has increased in intensity with the trade war and the latest round of geopolitical challenges, it is nothing new. Many of us are likely to recall the firestorm when United Airlines unfairly treated a ‘Chinese looking’ passenger in the US in April 2017.

The implications of wrongly classifying Hong Kong as a country have been known for some time. Marriott Hotels discovered this with its PR-disaster in January 2018 following an online questionnaire which listed Hong Kong as a country (as well as Tibet, Taiwan and Macau). Zara and others made similarly high profile slip ups. Luxury brands such as Versace, Coach and Givenchy should be wiser as a result. Chinese consumers account for a third of all luxury purchases worldwide, and are expected to buy half by 2025. With so much at stake, it is surprising that these brands don’t have a better understanding of the basic cultural and politically-sensitive issues that have been rattling China for some years. Just having a Mainland Chinese exec, or someone who deeply understands China at the senior table would be a good place to start.

The good news is, as long as they aren’t as reckless as Dolce & Gabbana, Versace, Coach, Givenchy, Calvin Klein, Fresh and Asics’ fortunes in China aren’t lost forever. Although Chinese consumers can come across as virulent on social media, they typically move on relatively quickly from blunders such as Hong Kong territorial mis-classifications. The brands may see a dip in sales and some issues finding new KOLs in the short term, but as long they have a smart and sensitive strategy going forward, China should continue to be a strong market for them. We only need to look at Zara who have seen growth since their similar slamming in 2018; and Marriott Hotels who continue to be a strong brand in China and remain a core pillar in Alibaba’s 88 loyalty scheme, with barely a whisper of their misstep 18 months ago.

On a brighter note, if you’re in Shanghai next Wednesday evening, August 21, China Skinny’s Andrew Atkinson will join the Directors of Strategy for Treasury Wine Estates and eCargo on a panel organised by the Australia-China Young Professionals Initiative to discuss how to drive growth outside of the familiar Tier 1 cities. You can find more information and RSVP here. Go to Page 2 to see this week’s China news and highlights.

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