Mark Tanner
26 January 2022 0 Comments

Two years ago on this very week before the Chinese New Year, we started to hear reports of what looked to be a serious virus sweeping through the city of Wuhan and beyond. That put a dampener on CNY 2020, but China was quick to return to relative normalcy within months. Yet recent, small outbreaks of Delta and Omicron, followed by ultra-strict policies such as keeping people in malls and office buildings for days while they await test results is spooking some consumers.

China has always taken a hard line on Covid, but it is particularly vigilant with the Winter Olympics a little over a week away in Beijing. The arrival of the highly infectious strain will scupper countless plans during China’s biggest festival, although many Chinese appear dogged in their ambitions to get home this year.

Covid is likely to have changed the world as we know it forever. Even when it finally fades, it is unlikely that life, business, supply chains and logistics will look like they did in the free-swinging decades that proceeded 2020. Although rising nationalism should temper when people can start to travel and study abroad more freely again, the world is likely to operate differently due to the larger wedge between countries and their people, not seen on such a scale since the 80s. Anyone who grew up in the 80s in the West may remember the communist Russians being the villains in what felt like every second Hollywood movie. This fuelled a lot of nationalist sentiment, particularly in America.

What has changed now is that Hollywood is much more financially dependent on countries which have different views and values to America. Rather than villainising them, it seeks to woo those audiences. Nevertheless, there are some interesting trajectories which may change that. 39% of imported films in China last year were American, down from 47% in 2019. Last year, American films collectively accounted for 12.5% of China box office, versus 29% in 2019 and close to half a few years earlier. If China continues to become less important to Hollywood, we may see the bad guys change. If things improve for Hollywood studios, more of their movies in China are likely to curb nationalism on both sides of the divide and help keep things more peaceful.

There is no question that Chinese self-confidence, China chic and nationalism are on the rise in China. This has been accelerated by Covid and how China has managed to contain it, where other countries haven’t. The lack of exposure to foreign travel, study, media and people exchanges hasn’t helped either. Yet for many foreign brands, China continues to be one of their largest and fastest growing markets globally – particularly those who have tailored their marketing strategies to the local market.

We noted last month how much Chinese embraced western-themed Christmas markets and celebrations. Similarly, the proudly-Californian iPhone has outsold every domestic brand for six weeks, leading China’s smartphone market for the first time since 2015 in what was one of the earliest categories representing the rise of China brands. Our Skincare and Beauty Trackers illustrate how foreign brands continue to dominate the premium cosmetics market.

Arguably the most interesting news related to nationalism revolved around the beautiful camellia flower. Sun Laichun, founder of red camellia-based cosmetics brand Lin Qingxuan, went on a nationalistic rant, accusing Chanel cosmetics of stealing several key employees. He also claimed that the brand didn’t have the heritage to use red camellia flowers for its The Czar skincare products. The flowers originally grew in China and elsewhere in Asia, not France. Although Sun garnered a lot of airtime for his brand, the vast majority of responses on social media were level-headed and supported Chanel.

Going into the Year of the Tiger, there will continue to be uncertainties, but China continues to look positive for well-marketed foreign brands. On that note, we wish you a Happy Chinese New Year and start to the Beijing Winter Olympics.

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