A (later removed) tweet in favor of Hong Kong’s protestors pushed China to censure the NBA (and the commercial activities tied to it). The incident caused Nike grave concern, as the brand sells about 1/5 of all its goods in the People’s Republic. Meanwhile, analysts facing the additional diplomatic incident between Western brands and Chinese authorities state: “It’s China’s soft power and it can’t be avoided”.
The blame belongs to Daryl Morey. The general manager of the Houston Rockets, team that is doing well in the US-based basketball league, entrusted Twitter with a message that supported Hong Kong’s separatist wishes. The apologies expressed by Morey, his club and the NBA’s management weren’t enough. To answer the “insult”, China censured all transmission of the (otherwise very followed) NBA, cancelled events involving the public and, as reported by Fashion Network, removed all the league’s products from Alibaba and JD.com.
The problems are now Nike’s, main sponsor of the Houston Rockets and the NBA. The brand sells 16% of its total products in continental China: with revenue, during the quarter that ended in August, increasing by 22% (the 21st straight growth quarter). Analysts interviewed by the Financial Times stated that this incident cannot just threaten 30 years of market penetration efforts by the brand in the People’s Republic and the locals’ retention to the brand. Worse, it can damage the income statement.
From Dolce & Gabbana to Vans, the brands that ruin themselves with these types of incidents in China are now many. And that isn’t by chance. According to the New York Times, this is the symbol of Beijing’s soft power, a global force that counters (depending on the case), that of the United States by becoming its alternative. Soviet Russia was an easier enemy to face for Western players as it was based upon a “system” according to which all symbols of America (fashion, cinema, music) were banned. China, on the other hand, poses a challenge that is difficult “and lucrative”: it opens its borders to US-based companies and Western ones, “but all while the Communist Party increases its demands of submission to its will”. The result is that of a rich marketplace where brands need to periodically prove their humility. The subject may be political: the People’s Republic, concludes the NYT, uses its global economic influence to “hit anybody who tries to delegitimize the choices or authority of the government”.
Image from the NBA store that opened in Beijing last March