Why the China t-shirt controversy is the cultural wakeup call luxury brands needed

Versace, Coach and Givenchy have all come under fire this week for selling t-shirts that appear to undermine China's territorial claims—just months after similar high-profile blunders from fellow luxury brands, Dolce & Gabbana and Burberry.

Indeed, the shirts—which listed Hong Kong, Macau and Taiwan as separate territories, violating the country’s ‘One China’ policy—have sparked such outrage in China that many brand ambassadors have cut ties with the companies in question.

It’s a vital lesson for brands in the importance of understanding your target markets on a cultural level. But what specifically about the shirts has so offended Chinese consumers?

Rising tensions in the region

The root of the problem lies in the fact that while the Chinese government considers the special administrative regions of Hong Kong and Macau and the self-governed island of Taiwan to be part of China, many in these areas want less involvement from Beijing. 

• Read more: Geography lessons: Brands keep failing an easy China test

The question of Chinese sovereignty has always been a heated issue—but sensitivities around China and Hong Kong particularly have intensified in the past two months with initial mass demonstrations in opposition to an extradition bill leading to widespread calls for greater democracy in the former British colony.

So, to many in China, these shirts aren’t just pricey fashion choices—they’re an unwelcome and untimely comment on Chinese sovereignty.

A premium problem

Across the globe, European and American luxury brands are representative of the western cultural imperialism that has long defined modern-day globalisation—so making assertions over Chinese territory in any way was never going to go down well. 

And their apparent ignorance of contemporary Chinese concerns could prove detrimental, for many reasons.

To begin with, China is by far the biggest luxury market in the world, with spend on the Chinese mainland also far outstripping luxe buying in Hong Kong, Macau or Taiwan. This makes China a vital asset for overseas brands looking for growth outside their lacklustre home markets.

At the same time, home-grown luxury brands in China are on the rise, which could pose a real threat to foreign players in the premium category. For a long time, overseas luxury brands have been status symbols in China—but if they don’t toe the political line, brands like Versace could find themselves usurped by local equivalents.

What’s more, luxury buyers in China are remarkably young compared with other markets, and growth in the market will be led by Gen Z and millennial consumers who don’t have the same history with foreign brands that their parents did—luxury names will have to work hard to convince these buyers to up their spending on big ticket items from these companies as their incomes grow with age.

Culture doesn’t stand still

Most of these brands have been established for many years, meaning they’ve had the chance to build a good rapport with international markets.  So why does the luxury category keep getting it so wrong in China?

Well part of the problem is exactly that—the length of time they’ve been around. Having managed for so long to maintain their appeal among elite consumers in China, these brands perhaps haven’t bothered to do their homework on the socio-political situation in the region and failed to adapt quickly enough to the changes that are afoot.

Another reason is that, for a long time, they’ve targeted the same highly privileged demographic there. But social media has exposed them to a much broader—and potentially less sympathetic—audience.

This might not seem like an issue, when you think about who the likes of Versace and Givenchy are targeting. But having their gaffes played out on a global stage could still serve to devalue premium brands. After all, part of their appeal lies in the fact that most people can’t have them. But if even consumers who can’t afford them start to turn against luxury brands, they’ll likewise lose their coveted status among those who wear them to demonstrate their social position.

Losing local brand ambassadors is also a blow for foreign luxury firms looking to establish relevance and credibility in China, particularly when those famous faces announce they are severing ties with brands to hundreds of millions of followers on social media.

Ongoing cultural analysis

Navigating the cultural nuances of different markets is a complex business. But luxury brands have no excuse for getting it wrong in a market as key to their survival as China.

Many premium brands are used to communicating to a global elite audience, with
boundaries between cultures becoming more and more blurred thanks to globalisation.

But as the luxury t-shirt controversy has demonstrated, brands that take this cultural synthesis for granted could suffer brutal consequences, especially as global geopolitical shifts lead to increased interest in local identities and a swelling of national pride across the world.

From now on, luxury brands are going to have to work harder to win people over, which means getting a better grasp on the cultural idiosyncrasies of their target regions.

That means engaging in regular cultural pitstops, where they work with experts to investigate how the social and political landscape in the regions they’re targeting is evolving, and in turn, the impact this having on the residents’ cultural subconscious, pinpointing potential future flashpoints.

In the age of instant online outrage, no brand can ever be fully protected from the damaging fall-out of unintentional slip-ups, but for luxury players in China, this should serve as a final cultural wake-up call.

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Clare Kane is project director at the cultural insights agency Sign Salad.