Minnie Wang
Dec 22, 2021

Crisis hits: Brands which landed in hot water in China this year

YEAR IN REVIEW: There were dozens of examples of brands and influencers falling foul of Chinese consumer expectations this year, resulting in boycotts, terminated contracts and store closures. We round up a few of the high-profile cases.

Crisis hits: Brands which landed in hot water in China this year

Two Chinese brands featured in our recent 'Biggest brand fails of 2021' story: Vitasoy and Pinduoduo. But these are just two of a long list of brands that experienced crises in the Chinese market this year. Almost all the brand crises went viral on Weibo hot topics and evolved into contract-ending incidents and multiple apologies. Here we’ve listed a few of the high-profile cases.

Brands fall short of consumer expectations

In March, several brands, including but not limited to H&M, Nike, Uniqlo and Burberry, faced boycotts and consumer ire amidst the Xinjiang cotton controversy, leading to online and offline store closures and Chinese celebrities and KOLs terminating their brand partnerships. As a result of the crisis, H&M's sales in China slipped 23% year-on-year in the second quarter of 2021. To save its previously third-largest market, H&M Group opened bricks-and-mortar stores for its sub-brands, Arket and & Other Stories.

From March to June, it seemed that whatever Chinese hotpot restaurant chain Haidilao did became a hot topic. When consumers complained about its average taste, founder Zhang Yong told shareholders it was a marketing issue, adding that marketing is something which "we don't pay attention to". Zhang then admitted that he was wrong about the chain's expansion strategy in the face of the pandemic, which forced Haidilao to close 300 stores before the end of the year. 

Chinese beverage brand Genki Forest (Yuanqisenlin, 元气森林) got into hot water because of inaccurate claims of “0 sugar” milk tea. Facing intense criticism from consumers, the brand apologised and changed the packaging to say “low sugar” instead. However, this was not the only incident Genki Forest faced. In October, the brand's online store incorrectly priced at 3.5 RMB (US$0.55) a sparkling water product worth 79 RMB ($12.40). The mistake generated thousands of online orders. Facing a loss of more than 2 million RMB ($314,000), the brand did not deliver the products, but instead refunded buyers and closed the online store. 

Genki Forest is not the only brand that encountered pricing mishaps this year. In November, at the Tmall global shopping festival, L’Oréal had to handle a pricing controversy for not honouring a lowest price promise. The brand quickly apologised and offered coupons to consumers who paid higher prices to buy the same products during the livestream of China’s top two KOLs, Austin Li and Viya. 

Celebrities fail and flop

L’Oréal managed to brush off the pricing crisis in a few days, but it then emerged that one of the brand's KOLs was deeply involved in tax evasion: popular streamer Viya is due to pay a penalty of 1.34 billion RMB ($210 million). Even though Viya and her husband apologised right after the news was released this week (December 20), this could end the top influencer's livestream career.

In November, another two influencers, Zhu Chenhui (known as "XueliCherie” ) and Lin Shanshan (known as "Lin Shanshan_Sunny"), were fined 65.55 million RMB ($10.3 million) and 27.67 million RMB ($4.34 million), respectively, for tax evasion and disappeared from the livestreaming and ecommerce scene. 

Not only did top influencers fail, but Chinese celebrities were also the subject of scandals. In August, Kris Wu was arrested for rape charges, causing dozens of world-class brands to end their co-operation with him, from Louis Vuitton to Porsche. 

In December, Infiniti dropped its new brand ambassador, pop singer Leehom Wang, just over 30 hours after announcing the partnership, after Wang’s ex-wife broke the news of their family scandals. Wang and his ex-wife fought against each other by sending several statements on social media channels. Three days later, he apologised, but not before losing almost all his contracts with brands.

Struggling with food-safety issues  

Apart from fails and flops by influencers, food safety emerged as another problem for brands in China this year. In August, China’s first publicly listed milk tea brand Nayuki lost $200 million in market value because a cockroach was caught by a reporter in a store. 

Even Starbucks suffered food-safety issues in China, when two stores in Wuxi, Jiangsu Province, were caught changing expiration dates and selling expired food. Starbucks apologised and said it would check over 5400 stores in China and offer staff training. 

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