If a Government or a company does something that China doesn’t like, it can often have negative effects on trade.
A little over a week ago, New Zealand’s news outlets were full of stories that the country’s significant dairy, wool and kiwifruit exports to China were under threat, if New Zealand didn’t back down from its complaint about China dumping cut-price steel in its market. While no one appears to be certain of what will come of the threats, it is another example of Beijing’s sometimes combative approach to get what it wants.
Yet it isn’t just Beijing pulling its trade levers that can harm your exports to China. Nationalistic Chinese consumers can pose similar risks if there is a tenuous link between your brand and something deemed anti-China.
Following this month’s international tribunal ruling which rejected China’s territorial claims in the South China Sea, a spate of heated Anti-American protests have ensued. Many Chinese, having grown up being taught that the disputed territory belongs to China, were quite angry when the ruling said otherwise. Protesters congregated outside of KFC restaurants waving banners such as “‘Get out of China, Kentucky and McDonalds.”
Numbers swelled for the Anti-America camp on social media, with users calling for celebrities to support China and boycott foreign brands. A man in Dalian was reputedly beaten on the subway for wearing Nike garb, as it symbolised his support for America. Users circulated videos smashing their Apple gadgets, and an employer in Hangzhou announced he would sack any employee who bought a new iPhone 7 when released in September. If anti-American sentiment wasn’t bad enough already, an iPhone ‘glitch’ meant when users typed out “jichen”, meaning “hit and sink”, “China” appeared as the first recommended word.
As concerning as it all sounds, the anti-American sentiment doesn’t mean sales of foreign brands are about to fall off the cliff. Nationalistic outbursts do foreign brands no favours, as Japanese automakers learnt during Anti-Japanese sentiment in 2012, but the latest dander is tiny relative to the anti-Japan protests, and isn’t as deeply rooted. The protesters are a vocal minority and fortunately the consumers driving sales of foreign brands are mostly open-minded Millennials.
Apple is a good example of how these outbursts can wash over in China. In 2012, Apple was villainised for being ‘arrogant’ and providing poor customer service. The negative press contributed to sinking consumer sentiment and saw its market share drop from 9% to 5% in 6-months. Nevertheless, things bounced back stronger than ever soon after.
As Brexit and Trump voters have demonstrated, plenty of places are becoming increasingly nationalistic. Yet many Chinese consumers will still pay a premium for quality, well-marketed products, regardless of where they are from. Go to Page 2 to see this week’s China news and highlights.