Wed, Jul 13, 2022 page5

• Brands apologize quickly to Chinese, except on Xinjiang

  • Bloomberg
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  Amid a rising wave of nationalism, Chinese shoppers have mounted at least 78 boycotts of foreign companies since 2016, more than six times the number seen in the preceding eight years, a new study found.

  While consumer brands all face the same complex operating environment in China, how they get out of hot water differs depending on the issue, research by the Swedish National China Centre found.

  In general, companies quickly apologize when they are being boycotted for issues around territory China considers sovereign, but far less frequently when it comes to the topic of alleged human rights violations.

  

  A woman enters a Hennes & Mauritz AB store at a shopping mall in Beijing on March 24 last year.

  Photo: Reuters

  More than 80 percent of companies apologized upon facing backlash for actions or advertising seen as infringing on China’s territorial integrity, such as the status of Taiwan or Tibet, or the pro-democracy protests in Hong Kong.

  By contrast, only about one-quarter of firms expressed regret after making a stance against sourcing products from Xinjiang — the province where China is accused of human rights violations against the ethnic Uighur group.

  The varying degree of sensitivity at play is reflected in how the same company responded differently to boycott threats. Walmart Inc apologized in 2018 over a sign in one of its Chinese stores that listed Taiwan, and not China, as the origin of some products, but did not last year amid social media allegations that Xinjiang-sourced products were taken off shelves, the study said.

  The findings underscore how China’s 1.4 billion shoppers have gone from an untapped goldmine to a potential minefield for global consumer brands. With Asia’s biggest economy facing off with the US and others on everything from trade to cybersecurity and human rights to the origins of the COVID-19 pandemic, Chinese shoppers have become an economically powerful arm of Beijing’s political agenda, hurting revenue growth for companies from Nike Inc to Hennes & Mauritz AB (H&M).

  “The emergence of alternative domestic products in China and a rise in online nationalism are putting a lot of pressure on global brands,” said Hillevi Parup, coauthor of the study in an e-mail interview.

  “Consumer boycotts are on the rise in China and this trend does not appear to be going away anytime soon,” Parup asid.

  Despite the hostile atmosphere, nearly half of the targeted companies weathered controversies without a public apology, the study said.

  H&M — the biggest corporate target in the Xinjiang-related boycott wave last year — did not apologize, saying that it has always respected Chinese consumers and was devoted to its long-term growth in the country. The clothing brand is still not available on nearly all e-commerce platforms in China.

  The study also found that the public reaction to company apologies “appears arbitrary.”

  In some cases, an apology led to further backlash, with social media users calling out firms such as Hugo Boss AG for being “two-faced.”

  “An apology isn’t a safe bet,” Parup said. “Based on our observations, the best option may be to try to avoid the public eye altogether.”

  The varying apology rate could be due to intense scrutiny on Xinjiang’s forced labor issue in Europe and North America.

  While firms might be able to stomach the reputational cost of being less supportive of Taiwan’s sovereign claim, for example, “it is much harder to imagine that they would be comfortable with accusations of being implicated in what some western parliaments and governments have labeled genocide,” the study said.

  Intel Corp apologized in December last year after its opposition to Xinjiang labor sparked a backlash in China. Soon after, then-White House press secretary Jen Psaki said that “American companies should never feel the need to apologize for standing up for fundamental human rights or opposing repression.”

  The study also found that the economic payoff of toeing China’s line was unclear.

  Hugo Boss and Burberry faced Chinese consumers’ ire for statements related to Xinjiang. Hugo Boss apologized and Burberry declined to comment, but neither saw a significant drop in sales, the study said.

  The think tank examined boycott incidents between 2008 and last year. Besides the general intensification since 2016, researchers found that boycotts peaked in 2019, when the US-China trade dispute was playing out.

  The targeted attacks by Chinese consumers in the past few years have also displayed evidence of state support, the study said.

  State-run media, for example, supported a 2019 campaign against luxury brands, including Coach, Versace and Givenchy, for failing to respect China’s territorial integrity.

  “We have found evidence of state support in nearly a third of all boycotts, but this figure likely underestimates the true level of state involvement,” Parup said.

  The Swedish National China Centre was established last year and is largely funded by the Swedish government to inform policymakers and businesses about China.
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