Your business view on economical, social and cultural trends in China

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Chinese consumers and geopolitics: companies be aware

Just once in a while Chinese get angry with other countries. So if you live in China and you want to protest some western countries interests, what do you do?

A few weeks ago my colleague was talking about how she was forced to cancel her trip to South Korea. She wanted to go for some kind of plastic surgery (a noise correction I believe), which is hot business nowadays. South Korea is famous for high quality plastic surgery. As crazy as it seems, as 18th birthday present some Korean parents even a give their daughter an plastic surgery operation. Nowadays Chinese fly to Seoul to get a plastic surgery operation, only to return a week later with something rebuiilt on their body. Anyways, her trip got canceled. One might think nothing new there as proper planning is always an issue in China, this time however the reason was of a very different nature: geopolitical.

Since South Korea has decided to install an American missile system on its soil, tensions in China run high. Not only the government reacts, so do Chinese citizens. Chinese consumer often use their economical power to protest against something they dislike. Chinese consumers are paying attention to global politics and they will get involved in their own way. If they don't like it, nationalism will boil over for a while and foreign companies in China get hurt. Chinese customers have their own way of reacting on events. Often Japanese companies are in the frontline of customer anger. Chinese consumers have repeatedly boycotted, or at least decreased their purchases of certain Japanese products in the past. Because of the events during the Second World War and the refusal of Japan to sincerely apologize for it, there is of course always some kind of latent anti-Japanese sentiment present. Occasionally however feelings get stirred up again and boil over which then gets expresses into various kind of angry behavior. The last time this happened was because of a dispute in September 2012 on the Diaoyu Islands which are claimed by both China and Japan. In several Chinese cities people in the streets burned Japanese flags and held demonstrations. Japanese companies or restaurants were partly destroyed. To avoid this fate, I saw Japanese restaurants (owned by Chinese) which hung out Chinese flags and wrote on their doors and windows that their restaurants were owned by Chinese. I also saw up close the demonstrations at the Japanese embassy in Beijing. In fact, fascinated by the whole spectacle (of course partly organized by the government) I often drove by, especially to observe the actions and feel the mood. My wife -although being Chinese- also get caught up in the turmoil. At that time she drove a Honda but experienced on several occasions she wasn’t not being served at certain gas stations. It could have been worse however, as some Chinese drivers experienced, when their Japanese cars were completely destroyed by angry citizens.

Recently another event stirred up things again. In 2016 people in several cities in China were protesting a ruling by the international tribunal in The Hague, therefore avoiding KFC restaurants. The ruling came down in favor of the Philippines in a case it had brought against China, all having to do with a dispute as to the rights to a disputed area in the South China Sea. What does this have to do with the US, you ask? People in China believe that the US pushed the Philippines to pursue the case against China, so they have targeted KFC locations in a dozen Chinese cities. The bastions of fried chicken were the sites of protests and a call for boycotts. KFC was paying the price, because the Chinese believe the arbitration would not have been brought without US encouragement. And a few weeks ago the riots in Paris, after the death of a Chinese citizen, stirred up emotions too. As mentioned in the beginning, since a few months now Chinese consumers avoid South Korean stores and brands as Lotte because of the planned deployment of a US missile shield. South Korean companies all over China are the target of sudden audits and the Chinese government has ordered the company's 3 trillion won ($2.6 billion) theme park project in northeastern China to be halted. Lots of my friends have put a halt on their purchases of South Korean products. Traveling to South Korea has been made difficult also (6 million Chinese tourists visit South Korea annually, so that certainly hurts).

What can you do as a company? Nothing really much... Wait and take the beatings I guess. Companies which get caught up in geopolitical affairs (although obviously not their fault) feel the burden in China...