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The fallout from the political spat between the U.S. National Basketball Association and China is worsening, as more Chinese brands are pulling sponsorships and vowing to punish the sports league for comments made last week by the general manager of the Houston Rockets.
Daryl Morey, the Rockets general manager, on Friday posted a now-deleted tweet that expressed support for pro-democracy protesters in Hong Kong. The backlash from China was immediate and is ongoing, and the Houston franchise and the NBA have been in damage-control mode for days. On Tuesday, China’s state broadcaster, CCTV, canceled broadcasts of NBA games in China.
China’s growing economic might has meant that dozens of foreign firms and public figures have now been forced to publicly apologize — some would say grovel — after taking actions or making statements that offended China or its people. In many cases, the Chinese government as well as state and non–state media have fanned the anger.
For the global brands, the calculation is simple: “Hurt the feelings of the Chinese people” — a common refrain from officials in China — and face potentially enormous losses in sales, endorsements, market access or reputation.
Here, then, is a brief history of selected recent cases in which notable brands have found themselves seeking forgiveness after upsetting China or the Chinese people:
Dolce & Gabbana: Last November the Italian luxury brand released a series of video ads featuring a Chinese woman struggling to eat pizza and other “Western” food with chopsticks. This created some degree of discontent among social-media users, but that turned to widespread outrage when leaked messages emerged in which co-founder Stefano Gabbana defended the videos and made disparaging remarks about Chinese people.
The company was forced to cancel several fashion shows, celebrities refrained from wearing D&G clothing at public events, and nearly one year later the firm’s items are absent from several Chinese e-commerce sites. D&G also expects sales to continue falling this fiscal year, Reuters reported. All this despite a broad campaign by the company to rectify its brand status in a country that now commands one-third of luxury sales.
Marriott: In early 2018, Marriott International MAR, -0.23% listed Hong Kong, Macau, Tibet and Taiwan as independent countries on a survey it sent to members of its rewards program. Not only was it forced to apologize to the Chinese government, but it agreed to temporarily shutter its Chinese websites and apps, until it could “rectify” its blunder.
Separately last year, the company profusely apologized after an employee liked a social-media post about Tibet. The worker was quickly fired.
International airlines: Last year a succession of U.S. and other foreign airlines found themselves facing Beijing’s ire for listing Taiwan and Hong Kong as independent entities on their booking websites. The Civil Aviation Administration of China sent letters to a total of 44 airlines demanding they ensure their websites refer to Taiwan as a part of China. Though Taiwan is a self-ruled democratic state, many airlines complied. The Trump administration in the U.S. called Beijing’s move “Orwellian nonsense.”
Versace: Dolce & Gabbana wasn’t the only Italian fashion house to run afoul of Beijing. This summer, Versace CPRI, +0.16% released a shirt that listed Hong Kong and Macau as independent entities. The swift backlash resulted in the company issuing its “deepest apologies,” and even destroying the remaining inventory of the shirts. Versace’s Chinese brand ambassador, actress Yang Mi, terminated her relationship with the company.
Gap: The Gap GPS, +0.87% apologized last year after it was found to be selling a T-shirt featuring a map of China that omitted Taiwan. The American company apologized and said it “respects the sovereignty and territorial integrity of China.”
Zara: Spanish brand Zara, a unit of Inditex ITX, +0.47% , faced a different source of anger after it closed a store in Hong Kong on a day when widespread pro-democracy protests were expected. Mainland netizens interpreted the store closure as a solidarity boycott, though Zara said it simply expected staff to be unable to commute as transport was essentially shut down in much of the city.
The list goes on: This partial list could go on, but the circumstances are similar with other brands that have angered Beijing. The commonest source of wrath is offending China’s territorial integrity, something that for 70 years has been the country’s most sensitive issue.
Global brands, many of which are used to operating in freer countries with a wider berth for marketing foibles, must decide how much they value access to one of the world’s most important markets.
Tanner Brown is a contributor to MarketWatch and Barron’s and producer of the Caixin-Sinica Business Brief podcast.
