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💔 Another day, another western brand kicked out of China

💔 Another day, another western brand kicked out of China
Photo by Alejandro Luengo / Unsplash

Brace yourself for a 2022 year buzzing with western brands getting kicked out of China. If not directly, at least because of an overnight devastating consumer revolt on national social media. I've been explaining since Trump and even more fuelled by Covid-19 that the country was closing down on itself.

China simply states that it doesn't need Western brands to deliver goods, electronics, entertainment, and services for its own market.

China Canceled H&M. Every Other Brand Needs to Understand Why
For global brands making big bets on China, the Swedish retail giant is an alarming cautionary tale.

Was H&M wrong to renounce working with some of its Chinese cotton suppliers over forced labor in Xinjiang? Certainly not. Some degree of real politics is necessary if you work in China, but they are red lines that brands shouldn't cross. For H&M, China is (was?) 3% of its worldwide sales. Suffering from devastating brand damage on 97% of the sales is probably more important.

The situation will get more complicated for brands that have overextended in China and cannot afford to lose significant market shares in this country. Whereas in the past, demands from the central party were very indirect, and pressure to play ball was essentially applied indirectly, take into consideration that president Xi Jinping didn't hesitate to kneecap Alibaba and a few other major national companies over political concerns. Whether you are Dior, Disney, or Coca-Cola, don't think you cannot be the next target for one minute.

Consider also that China is also getting there at an accelerated pace, even more than in the U.S., where the Patriot Act makes sure that the American government can access whatever data it fancies. By the end of 2022, I doubt that foreign companies will even be able to use foreign software tools or cloud services that China does not control.

As a foreign company in China, if you have major exposure to this market, reducing this exposure to a manageable potential loss would be wise. With that in mind, monitoring how Apple will manage its exposure this year will be fascinating.