There is no doubt that foreign brands have been viewing China with apprehension for a while now as political tensions continue to escalate between western superpowers, namely the US and Australia. China has found itself in a seemingly never ending series of retaliations, most recently with Trump’s Tiktok ban and the last two Australian journalists being flown out back home.
With Chinese netizens often kicking up quite a fuss online when it comes to boycotting foreign brands over whatever the most recent political transgression is, brands are justifiably concerned. According to a survey by consulting firm AlixPartners conducted just before Singles’ Day 2019, 80% of Chinese shoppers said they planned to boycott American brands, citing “patriotism” as the major reason. Yet despite the fuss, the US was the second best performing foreign country of origin after Japan, which goes to show brands should not be scared off simply by online buzz and propaganda rhetoric.
But how are these sensitive times playing out for top Chinese influencers and KOLs taking on foreign brands?
For starters, many of these top influencers with large fan bases, such as ‘lipstick king’ Austin Li and Viya, are increasingly cosy with the government. Just this summer Viya became a standing member of the all-China Youth Federation, a part of the communist party, as the government hopes she can help spur the economy and aid in poverty alleviation. Austin Li has also recently been selected by the government as a “special talent”, entitling him to a Shanghai hukou (residency) that is usually only given out under certain circumstances.
These top influencers are finding themselves in a potentially tough spot as China battles it out with the main countries of origins for foreign brands that can take up a chunky part of these influencer’s portfolio. It seems they are increasingly worried about any reputational damage and assumably anything that could strain relations at home. As there is no official mandate or news on the topic, China Skinny reached out to a few of our clients and local livestream/KOL agencies to discuss their own experiences.
How are brands being affected?
It looks as though top tier hosts in particular, including Austin Li and Viya, are being very cautious and picky with foreign brands. US brands are under particularly intense scrutiny, which “are more or less considered a no-go unless they have come out with pro-China statements”, according to a local influencer agency. Even Australian brands will be thoroughly vetted to ensure they have no strong ties to the US or else risk being turned down by hosts.
A British brand who works frequently with the likes of Austin Li and Viya says that Mr. Li’s team has recently told the brand to remove references to foreign accreditation, awards or accolades, such as US FDA certification and anything to do with royal endorsement.
While it appears small bits and pieces of similar news are seeping through the cracks, agencies who haven’t experienced it yet for themselves also say they would not be surprised. “We didn’t hear anything about US, UK, or AU brands being blocked,” says a China-based influencer agency, “But that’s not to say that it’s not unofficially happening. The possibility is a little scary though, and we wouldn’t be surprised as the US increases its sanctions.”
How concerned should foreign brands be?
While there is no official news or evidence of this potential roll-back, as US sanctions increase and tensions with Australia and the UK rise, foreign brands should be arming themselves with the knowledge to navigate any impending risks in the market. For brands particularly reliant on their country of origin background, heritage branding, and/or foreign accolades, should consider adopting more strings for their bow. However, it is also important to note that many of these top hosts with government ties tend to have a lot more at stake than mid-to-lower tier influencers that most foreign SMEs are utilizing due to their budgets.
Life is thriving once again in China and consumer confidence is definitely stronger than much of the rest of the world still waylaid by the pandemic. Alibaba has seen a spike in cross border ecommerce transactions as Chinese consumers continue to demand quality, imported goods. Brands shouldn’t shy away from China because of this news, but we would encourage them to audit their current strategy and pre-empt risks that may suddenly find them in hot water.