If you were driving a Mazda in China in 2012, you would have had to be careful where you parked it. Virtually overnight, Japan became the villain to many Chinese, fuelled by a territorial spat over the Diaoyu/Senkaku Islands. In two waves of protests, hundreds of Japanese-branded cars were smashed and overturned, rocks were thrown at Japanese restaurants, Japanese factories were set ablaze, Japanese buildings were broken into and ransacked, and stores selling Japanese goods were vandalised, causing more than $100 million of damages.
By 2013, things were back on the mend, and it wasn’t long before Chinese couldn’t get enough of Japan and Japanese products. Within five years Chinese visitors to Japan more than quadrupled from 1.4 million to 7.4 million a year, stuffing their suitcases with so many Japanese goods that a new term was coined meaning “buying explosion.” The number of Japanese restaurants in China grew from about 10,600 to 40,800 in 2017 alone.
Similarly in 2011, Nike was called out by the CCTV’s 315 Consumer Rights show for its Hyperdunk sneakers not having air cushions. The show had much more sway back then, and the negative press contributed to a flat performance for Nike in the period that followed. But savvy marketing saw Nike return to explosive growth quarter after quarter – even with another showing on the 315 show in 2017 and Chinese New Year Blunders. The most recent Xinjiang cotton challenge is unlikely to dampen growth for long.
Apple has faced arguably worse press than Nike in China, slandered on CCTV’s 315 for ‘unparalleled arrogance‘ in 2013. This impacted sales. It has had its share of other challenges since, including formidable competition from China’s domestic smartphone brands, but in its most recent March quarter, Apple’s Greater China revenue almost doubled year-on-year, setting an all-time record for the company.
After being slammed for quoting the Dalai Lama on its Instagram account outside of China in 2018, Mercedes performance in China continues to impress, growing 60% in the last quarter. The NBA has seen strong growth on social media for both followers and engagement although it still isn’t back to the full CCTV coverage it had before the HK Tweet. P&G, KFC, Starbucks and many others are on the list of foreign MNCs and geographies that have been denounced in China, but they followed with strong growth.
Tesla is the latest big foreign brand to face a PR storm in China, labelled ‘arrogant’ – similar to Apple in 2013 – due to the way it dealt with customer complaints and perceived quality issues. To address the challenge Tesla issued the mandatory apology. It has also followed the approach of China’s big tech firms like Tencent, contacting Chinese bloggers with threats of defamation suits, leading to more positive posts. But to add to the challenge, Tesla faces more complex geopolitical issues with bans in government complexes due to security concerns. Tesla’s sales took a hit in April, and although it isn’t out of the woods yet, there are positive signs that it is back on the road to recovery.
Despite the examples above, Chinese consumers are not so quick to forgive and forget every foreign brand that does something that offends them. Dolce & Gabbana’s gaffe from 2018, which followed their insensitive advertising in 2017, is likely to haunt the brand for some time yet, as Hong Kong pop star Karen Mok discovered after donning D&G in her latest music video.
While every big, successful foreign brand slandered in China fuels nationalism a little more, in many cases consumers will quickly move on and the brands’ fortunes will bounce back. We can learn from those who do. They all have three things in common: a strong crisis management plan, consistently great products, supported by Chinese-resonant marketing. It sounds easy doesn’t it? Contact China Skinny to discuss how your brand can be best placed to deal with headwinds in China.
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