Image source, Image caption, H&Mhas been the main target of a Chinese boycott
For many years, foreign companies operating in China have faced consumers fueled by social media. backlash, sometimes on cases of cultural insensitivity and sometimes on political controversies.
"Anyone who offends the Chinese people must be prepared to pay the price," was the direct message of Chinese Foreign Ministry spokeswoman Hua Chunying, who was recently interviewed. on a number of Western companies being boycotted after expressing concern over alleged human rights violations in Xinjiang province.
H&M was the main target, but the backlash has also hit Nike, Adidas and Puma - all members of the Better Cotton Initiative (BCI), a non-profit group promoting sustainable cotton production.
The Swedish fashion retailer is bloque on major e-commerce platforms in China and their physical stores have disappeared from some digital cards. Twenty H&M stores remain closed.
These companies aren't the first to take a hit in China and certainly won't be the last.
But the price of these transgressions seem to vary widely. The evil passes quickly for some companies, but causes lasting damage for others.
President of the EU China Chamber of Commerce Jeorg Wuttke said it is not uncommon for foreign companies to run into Chinese sensibility. This is a long-standing challenge, and one that has grown with the economic importance of China and the changing attitudes of Europe.
"What has changed is that the perception and public opinion about China has deteriorated dramatically. And that, of course, increases the pressure on business on the front lines. interior ”, Declare M. Wuttke.
For some retailers like H&M, this is an enigma. Should they stick to their principles and risk their business in China, or give in and offend their customers elsewhere?
At the moment, H&M sells 94.8% of its clothing elsewhere, but China's growing wealth is likely to account for a large part of the company's growth in the years to come.
Mr. Wuttke thinks the goal seems to be to inflict short-term pain to make a political point rather than kick companies out of the job.
Boycotts are selective and most often target companies with high visibility commercial presence, an approach that maximizes the visibility of the backlash but also minimizes the impact on the Chinese economy.
Image source, Image caption, Retail giants have expressed concern about the alleged use of forced Uyghur labor in cotton production
It's easy enough for a retailer to restart operations , but it may not be the same for companies in other sectors, such as heavy industry.
"If they were to punish a chemical company or a company that produces machines, these guys have strengths in the field. If they leave, they do notwill not happen, ”he said.
Cultural errors or political statements?
Foreign companies may encounter problems with Chinese consumers in
Often these controversies fly away and consumers return. Balenciaga and Burberry, for example, have both offended consumers with clunky Chinese holiday campaigns.
"There are now enough instances to suggest that cultural missteps can be cured through thoughtful execution in the field and the passage of time," said Michael. Norris of the consumer research agency AgencyChina.
Even so, the two companies also encountered issues on other issues. And sometimes, cultural errors can be more serious as well.
The luxury brand italienne Dolce & Gabbana felt the wrath of Chinese social media when she posted three videos in 2018 showing a Chinese model struggling to eat Italian food, including cannoli and pizza with chopsticks.
The ad was widely seen as racist, and it sparked a backlash with several Chinese retailers pulling the brand's products.
The company's results since then suggest it could to have had an effect, with the Asia-Pacific market falling from 25% to 22% of total group revenue for the year ending March 2019 (although the figure of overall business of the company grew 4.9% to $ 1.54 billion).
The following year, the company's wholesale and retail sales in Asia, including China and Hong Kong, fell 35%. However, the results made no mention of the boycott and the period in question includes the first three months ofe 2020, when the Chinese economy was hit by the Covid-19 pandemic.
Foul or free throw?
Politics, on the other hand, presents a whole different challenge.
In 2019, the National Basketball Association of the United States suffered what its CEO described as "substantial " losses after an online comment from a team leader caused a reaction in China.
"Political positions or comments can jeopardize the future of a brand in China " Mr. Norris said.
After that Houston Rockets manager Daryl Morey tweeted his support for pro-democracy protesters in Hong Kong, public broadcaster CCTV and Tencent Holdings, which broadcasts NBA games in China, said they would stop broadcasting the Rockets matches.
Image source, Image caption, Le The position of the Houston Rockets on pro-democracy protests in Hong Kong alsont irritated Ch ina
The Chinese Basketball Association has suspended cooperation with the Houston Rockets, as have Chinese sportswear brand Li-Ning and club sponsor in China Shanghai Pudong Development Bank.
The Rockets stay on the bench.
"It took the better part of an NBA season to reestablish the Houston Rockets box- score and standings at Tencent Sports. However, to this day, the Houston Rockets clothing remains nowhere to be found on Alibaba 's e-commerce markets "Mr. Norris said.
A large sum of money
Korean companies may be facing opposition fiercest in 2017, when South Korea agreed to install an American missile system that Beijing said could be used to spy on China, even if it was intended to defend against North Korea.
The Korea Tourism Organization estimated that the sinking cost$ 6.5 billion to tourist operators nationwide (£ 4.66 billion) in lost revenue. Korea's cosmetics and clothing industries have also been affected. the central bank estimated that it reduced the country's economic growth by 0.4% for the year.
Perhaps the biggest loser was the Korean conglomerate Lotte, which provided land it owned in South Korea for the missile defense system.
The company has sold its chain of stores proximity to a Chinese company as a result of the controversy.
The losses suffered of around $ 1.7 billion in China in the 18 months since the start of the controversy, mainly losing out on its convenience stores in China, according to the Financial Times.
However, evenLotte has returned. In 2019, the company resumed work on a $ 2.6 billion real estate project in Shenyang.
Mr. Wuttke says it rarely seems foreign companies are permanently shut out of China tly. The key question seems to be how long the boycotts last.
"China wants the world to know about its anger. They are doing it. It 's very painful for business, but it is flying away ", he said. he stated.
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