America Is Losing the Chinese Shopper

www.wsj.com

I’ve talked before about the importance of the Chinese consumer to American businesses. Targeting the Chinese shopper has been a key initiative for companies, and understandably slow. The Chinese, for their part, were once eager to spend on U.S. brands. Now that desire seems to have shifted thanks to a combination of political tensions and homegrown brands. This week a number of examples illustrated the tension that businesses face in China and how quickly the Chinese government and by extension its citizens can turn on companies. The Houston Rockets (and the NBA) have been a fan favorite in the country. This week following a tweet by the Rockets GM supporting the Hong Kong protesters “stores removed Rock­ets gear and spon­sors pulled deals with the NBA. All game broad­casts were can­celed. Searches for Rock­ets mer­chan­dise on e-com­merce sites yielded friendly er­ror mes­sages en­cour­ag­ing shop­pers to con­sider some­thing else— per­haps a toy rocket.” Kids are being told they are no longer allowed to watch NBA games in a country that has turned on a dime against an otherwise beloved brand. On the other side of the coin is Apple. The tech giant has been slammed for removing an app from the app store that was being used by the Hong Kong protesters, seemingly at the request of the Hong Kong police (read: Chinese government). Given “China now con­tributes roughly a third of global growth, and is the world’s sec­ond big­gest source of house­hold wealth...[and] is ex­pected to sur­pass the U.S. as the world’s big­gest con­sumer mar­ket in 2021” it’s no surprise businesses are treading lightly, trying to write and rewrite a playbook for success in the region. Entire corporate growth strategies have been built around winning in the Middle Kingdom. With that strategy more tenuous than ever, expect to see a lot more corporate hand wringing over the coming quarters.

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