Luxury Brands Want To Attract Chinese Consumers. But Why Do They Keep Getting It So Wrong?

A major first step for any brand seeking success in a particular market is to know that market. Between a U.S.-China trade war and anti-government protests in Hong Kong stoking tensions between Beijing and the city, companies seeking to attract shoppers in the mainland’s thriving luxury goods market must be particularly vigilant. Now is an exceptionally bad time to trip up.

Yet over recent months, luxury brands that have dominated the designer landscape for decades have fallen at the first hurdle when it comes to China, ruffling diplomatic feathers in Beijing and upsetting would-be customers. 

Such was the faux pas of the Italian fashion house Dolce & Gabbana in November, which spun itself into a PR crisis after its “tribute to China” social media marketing campaign (seen at the top) featured model Zuo Ye struggling to eat pizza, spaghetti and cannoli using chopsticks. The concept was short on research and cultural sensitivity, and it sparked a boycott from Chinese consumers that saw Alibaba and JD.com pull the brand from its sites and department stores in mainland China gett rid of D&G stock. The fiasco almost ruined Ye’s career

Not to mention that Stefano Gabbana plunged the brand deeper into controversy by appearing to perform a racist rant on Instagram, which the company said was the result of his account being hacked. The brand then cancelled its highly anticipated show in Shanghai. Nine months on and despite an apology, Dolce & Gabbana is still struggling to shake off the reputational damage. It wasn’t the first brand to be kicked off Chinese social media—Balenciaga felt the boot after footage of a security guard in a scuffle with a Chinese shopper in Paris last April went viral.

What’s a brand to do, then, when seeking to right its wrongs? “Recovering from these episodes is very hard. It is true that things come and go very fast on social media and the internet, that what is breaking news today is an old story tomorrow. Apologize, lay low for a bit and then slowly get back and try to gain back those consumers,” Alessia Grassi, a marketing lecturer at the University of Huddersfield, tells Forbes.

One After the Other

It turns out D&G was the Pied Piper of colossal PR blunders, leading the way as a raft of other designers stumbled into a portal of marketing nightmares. Burberry followed weeks later with its tone-deaf Lunar New Year campaign, a gloomy, family-portrait-style shoot that Weibo users likened to scenes in an Asian horror movie, according to Jing Daily. “This is a group of people who plan to kill this ultrarich grandma and keenly fight over her inheritance,” one user wrote. 

This month, Versace, Coach and Givenchy lined up to apologize to its Chinese customers for selling T-shirts which implied that Hong Kong, Macau and Taiwan were independent of the mainland, in a move perceived as a threat to China’s sovereignty. The shirts were taken off sale and, in Versace’s case, destroyed. But the damage was done—high-profile Chinese ambassadors Liu Wen, Yang Mi and Jackson Yee cut ties with the brands, hurting their local standing. Meanwhile, Swarovski was left red-faced when it implied on its website that Hong Kong is an independent country.



A Market Too Valuable to Lose

D&G was the example no one should have followed. After all, designers have been pumping more marketing dollars into the lucrative Chinese market. Young Chinese consumers who are happy to spend are too valuable to lose, while spending by Chinese consumers overall makes up a third of the global luxury shopping sector. Despite its wider economy slowing for the first time in 27 years this year, mainland China’s luxury goods market saw 20% growth for its second-straight year in 2018, to $25 billion (€23 billion) in sales, driven by rising demand. The scale of the industry is only growing, bucking the trend of slowing global economic growth. 

Top luxury brands are increasingly using social media to attract younger shoppers, but the relationship goes both ways, as astute shoppers can quickly become the arbiters of whom to follow. They are no longer just being told what to buy; they are deciding and influencing others to do so, too. 

“Today, with the power of social media and influencers, one small misstep can rapidly reverberate to have massive implications for companies very quickly,” Sarah Willersdorf, head of BCG’s luxury, fashion and beauty practice at BCG, tells Forbes. “This is especially true in China, where social media and influencers are the number one driver of luxury purchases.” So why are luxury brands getting it so wrong in the market they are trying to expand into? 

A strong sense of patriotism and national pride makes consumers attentive to anything that appears to undermine that. Athena Chen, senior editor at the trend forecasting company WGSN, tells Forbes: “Chinese consumers, especially the younger generation, are digital-savvy and well informed, with a strong sense of pride in their country. They do not appreciate the exoticization of Chinese culture, and brands need to ensure they do not appear patronizing toward Chinese consumers in their marketing messages.”

“Brands have to remember that when entering their market, they are guests,” Grassi says. “They should behave and respect the country, no matter what their personal beliefs are.” 

Understanding the Political Situation

Tensions between Beijing and Hong Kong are at an all-time high as anti-government demonstrators in the city have staged three months of protest, initially in response to a now-suspended extradition bill. Separately, a trade battle between the U.S. and China appears to have no end in sight as talks between Donald Trump and Xi Jinping remain deadlocked.

“There’s a lot of political instability going on, and you have to be aware of that and respectful of that and making sure that the words you use are correct, and that the way you describe any part of China is not going to offend anybody or cause any offense,” Fflur Roberts, an analyst at the market research firm Euromonitor, tells Forbes.

Investing in local experts is invaluable in avoiding damaging gaffes. Says Willersdorf: “All brands, including fashion and luxury ones, need to be incredibly careful when it comes to cultural sensitivities, period. Localized product, marketing collateral and events should all be, at a minimum, validated by and ideally co-created with local teams with a deep understanding of cultural norms in those countries.” Multinational companies who adopt a one-size-fits-all approach appear to cut corners. Chen said this is in part “due to global brands working to maintain consistency across markets, and can be difficult to get everybody up and down the line aware of what these sensitivities are.”

Tod’s 2018 collaboration with Chinese influencer Tao Liang—better known as Mr Bags—is proof that strategic co-creation can, indeed, secure the bag. The collection generated a staggering 3.24 million RMB ($460,000) in 6 minutes—beating the social media star’s own record of selling out in 12 minutes the year before, during his collaboration with Givenchy, according to the Business of Fashion.

There is hope where brands appear to be learning from their mistakes and providing additional training to employees, Chen says. Following Gucci’s “blackface sweater” scandal, CEO Marco Bizzarri announced a long-term diversity and inclusion plan, including a $5 million “changemaker,” scholarship and volunteer program “that will impact youth and the African-American community.” The move was in partnership with fashion designer Dapper Dan. The Kering-owned firm later announced it had hired U.S. lawyer Renee Tirado as its global head of diversity.

“Brands have to be credible. If they want to appear as caring for their consumers, they need at least to know their consumers. And think—sometimes it’s just a matter of stopping to think,” Grassi says.

“The only real way to ‘recover’ is to stop doing these mistakes.”

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I am a breaking news reporter for Forbes in London, covering Europe and the U.S. Previously I was a news reporter for HuffPost UK, the Press Association and a night rep

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