As the world’s leading luxury brands seem intent on self-destruction in their most important market, there are lessons for B2B marketers and brand strategists to learn when it comes to localization and managing a PR crisis.
According to McKinsey, in 2018 Chinese consumers accounted for almost a third of the global market for luxury goods. Yes, you read that right! 32% of global sales of luxury handbags, jewelry, clothes, champagne, watches, etc., were purchased by Chinese shoppers. This equates to $115 billion or 780 billion RMB. That’s not all, by 2025 this figure is expected to rise to 40%.
In a market where brand means everything, it seems that Versace, Gucci and Givenchy didn’t learn the tough lesson meted out to D&G earlier this year. The D&G backlash arose from an ad campaign featuring a Chinese model which was largely perceived as offensive in China. The mistake was further compounded when Mr Gabbana himself decided to double down on social media and further inflame the situation. Despite a subsequent apology, D&G’s runway show at Shanghai Fashion Week was canceled, the brand lost its Chinese brand ambassadors, and perhaps most damaging of all, Chinese e-commerce powerhouses such as Alibaba’s TMall and JD.com have yet to reintroduce the brand on their Chinese sites.
Now, we’ve recently seen Versace, Givenchy and others face accusations of cultural insensitivity leading to Chinese brand ambassadors cancelling contracts in light of the media and consumer backlash. This time however, all the brands involved have been quick to issue public apologies, but only time (and sales figures) will tell how much damage has been done.
But what has this got to do with China B2B marketing or brand strategy I hear you ask? Well, luxury brands might not be learning the lessons of their competitors’ mistakes, but there is plenty for B2B marketing managers to gain from their experience.
The first key point to take from this centers on localization. This may well be an increasingly globalized world, and centralized marketing has its benefits, but some regions, such as China, remain unique and dynamic and require specialist insight and expertise. If any of the above brands had consulted with a local team or consultant a lot of the subsequent trouble could have been avoided, either by avoiding the initial misstep in the first place, or by better managing the fall out once the proverbial hits the fan. We have worked on many client cases where smart localization of key messages has not only avoided controversy but also enhanced their business performance, which should be the overall aim of any China marketing, or B2B marketing strategy anyway! This can be a challenging balancing act for brands to do by themselves. You want to ensure that your brand resonates with the local audience as much as possible, without diluting what it is that made your brand successful in the first place. The importance of correctly drawn maps and usage of country names in the region is just a start – and even this easy fix seems to be difficult for so many brands.
The second is to make sure you have a crisis plan in place for the markets in which you operate. Anyone who has worked in marketing and communications for any length of time will have their own crisis comms horror story. Mine involves spending a day locked in a conference room with the production team of the BBC’s Watchdog show. The theme of all these stories will be how important a good, detailed crisis comms plan for each of your regions of operation is.
Our China President Mike put together a great post on this not so long ago focused on crisis comms planning for China specifically, but the fundamentals Mike outlined stand up everywhere and are always worth remembering:
Steps to Develop a Good Crisis Plan
- Set up a Response Team – who is in the room and also how to contact any of the key people in an emergency.
- Identify Spokespeople and Train Them – if there is a chance that the media will want to interview someone, that person should go through media training.
- Develop Processes – build a decision tree and processes of who should do what, and when. Who has authority to make decisions?
- Prepare News Releases and Social Media Material in Advance – pre-written templates and releases will save time.
- Brainstorm Scenarios and Responses – go through all of the possible scenarios that might happen and role play the response. Horizon scanning and issues identification will help narrow down the potential issues.
- Ensure the Global Communication Team and Local PR team is on the same page and that all material is ready in Chinese.
Brands make mistakes from time to time, always have, always will. Marketing in China makes it even harder for global CMOs and Communication Directors to deal with. But it is what happens in the aftermath that decides just how much damage has been done.