One year on: How are fashion’s boycotted brands faring in China?

At the beginning of 2022, H&M unveiled its first menswear concept store in Beijing. While such a milestone would normally be marked by a star-studded inauguration event, a fashion or artist collaboration, or, at the very least, some social media coverage, the opening was starkly understated. As local media described, it was hard to tell a new location had even been built without asking the staff.

But the desire to lay low is understandable, considering the past year the Swedish clothing company has had. In March 2021, H&M landed in hot water after it was called out by the Community Youth League on Weibo for “spreading rumors to boycott Xinjiang cotton, while making a big profit in China,” becoming a symbol of foreigners meddling in Chinese affairs. Nike and Burberry soon joined this growing list of offenders after their statements on Xinjiang were recirculated online.

Unlike some clumsy marketing campaigns, this was not a small faux paux. Seen as an attack on China, the fallout was swift and severe — and a year later, can still be felt to some extent. Looking at H&M, Nike, and Burberry, how much did this consumer boycott really set them back? And what are the lessons for other brands navigating crises in the market?

H&M

Although many brands voiced their concerns over China’s alleged human rights abuses, the fast fashion giant bore the brunt of the backlash. H&M was scrubbed off Taobao, JD.com, and Pinduoduo, its app was delisted, stores were wiped off online maps, and about 20 physical locations were shut. In the three months to May, H&M reported that sales in China fell 23 percent year-on-year — a staggering loss of $74 million. While the country was its fifth largest market in Q2 2021, it dropped out of the top ten the following quarter.

However, H&M has pledged to “[regain] the trust and confidence” of its Chinese shoppers. While its eponymous label has quietly gone about business (it hasn’t posted on Weibo since September), the group has ramped up development of its more expensive brands. In fall 2021, ARKET, known for its minimalist aesthetic, and womenswear brand & Other Stories both opened their first brick-and-mortar stores in Beijing and Shanghai, respectively. Prior to this, the two had tested the waters by launching on Tmall, attracting more than 1 million and 256,000 fans, respectively.

ARKET recently opened a café at its Beijing store, solidifying its image as a higher-quality brand. Photo: ARKET’s Weibo

But is expanding under a new guise enough? “There are reports saying some consumers still turned their back to the two brands having found their link to H&M, which shows the brand still hasn’t been fully forgiven by Chinese consumers,” said Arnold Ma, founder of China-focused digital marketing agency Qumin.

“On the other hand, the latter two have challenged the image of H&M as a ‘roughly-made’ fast fashion brand by providing better quality products at a higher price,” he continued. “So, the premiumization, to some extent, helps the two win over some Chinese consumers who pay more attention to quality and design.”

Nike

The world’s largest sportswear company was not spared from China’s ire, either. Nike lost brand ambassador Wang Yibo, was blurred out on local television programs, and saw plummeting Tmall sales of 59 percent year-over-year in April, although it still managed to make $1.9 billion in the market that quarter. But business has not quite returned to normal, as evidenced by the 24 percent drop in China sales in Q2 2022.

Yet these numbers disguise Nike’s many wins. Even back in March, Air Jordan 4 sneakers and Nike Dunk Lows were flying off virtual shelves. Thanks to its strong digital footprint, the brand also boasted a successful Singles’ Day, garnering 70 million views on its livestreams, gaining 13 million new members, and defending its spot as the No. 1 sports brand on Tmall. At the same, Nike has recruited more local influencers, including basketball player Yang Shuyu, sprinter Su Bingtian, and snowboarder Cai Xuetong, who have helped it regain credibility.

Nike has diversified its endorsements by teaming up with snowboarder Cai Xuetong (left) and sprinter Su Bingtian. Photo: Nike’s Weibo

Given its 40 years in China, Sarah Yam, the co-founder of Red Digital, noted that “Nike still has a strong brand heritage in China and this is pretty hard to exceed right now.” She predicts it may be 20 years or so before a local sportswear player can overtake the Western titan.

Burberry

Burberry similarly lost brand ambassadors and its collaboration with the popular video game “Honor of Kings” during the cotton crisis. However, it managed to flip the script: On July 21, the British house announced that it would donate 1.5 million yuan and 500,00 yuan worth of supplies to the Henan flood rescue efforts, becoming the first foreign brand to donate. Netizens praised the unexpected move, writing that they would “forever love Burberry.” In contrast, when H&M and Nike followed suit, netizens retorted they would not forget how the two had insulted China.

As such, the famed trench coat maker stated that the Xinjiang issue had “relatively limited impact on business,” with sales in the market surpassing pre-pandemic levels by over 55 percent in the March to July quarter. Building off this momentum, Burberry continued driving engagement through the first half of the fiscal year by creating highly localized campaigns, dedicated capsule collections, and teaming up with local Chinese artists. To further bolster its image as a responsible corporate leader, Burberry also partnered with local organizations to promote youth culture.

Burberry partnered with young Chinese artists to present the Burberry Generation one-year anniversary exhibition at TX Huaihai. Photo: Burberry’s Weibo

So, when Burberry opened its new flagship store at Shanghai Plaza 66 in November, it did not need to keep a low profile. Rather, the brand blasted the news on social media, racking up 18.2 million views on Weibo within five days. Sales have remained steady as well, with Burberry most recently announcing that full-price comparable store sales in China had risen 37 percent.

The bigger picture

While H&M, Nike, and Burberry have all pushed ahead in China, they have done so to varying degrees of success. Burberry, which has bounced back faster than the others, has partially benefited from being a luxury brand. As Yam, who has more than a decade of Chinese digital marketing experience, said, “It’s harder to replace — you don’t have another Burberry. For Nike, [consumers] can find the China version, Li-Ning, which is popular in China now. And for H&M, there’s so much fast fashion.”

More importantly, Ma points out that Burberry has always remained neutral on politics. “Burberry has chosen to focus on non-politicized marketing, while H&M has chosen to risk their China brand image in favor of improving their brand image among their global customer base.”

None of this is surprising, as China accounts for less than 5 percent of H&M’s global revenue, while Burberry’s China revenue accounts for almost half of their global total, Ma noted. Indeed, China is just one — albeit very important — market for these global companies. Recovery, therefore, not only entails reevaluating China tactics but also ensuring a strong global network for when a crisis eventually hits.