Blunders of the Past (BLOP), Current and Actual or Future and Potential Blunders, Deadly Sins, International Business, Plainly interesting stuff	China, fashion, The Gap
#145 I just called to say, I'm sorry…
Apfel ⋅ July 23, 2018
When San Francisco-based US fashion retailer The Gap launched its "City T-shirt" series, it probably had high hopes that the China edition would please a vast consumer base across China. Attention did indeed come quickly, but not necessarily the kind that The Gap was hoping for. Within hours, Chinese social media users had posted photos of the T-shirt on the Chinese Weibo platform. The Gap, so user comments about the T-Shirt, was either just another ignorant foreign company or it was trying to make a political statement. The offending T-shirt depicted a map of the People's Republic of China (PRC) without including Taiwan, the island that Beijing claims as an integral part of the country, but which has been self-ruled for decades. The T-shirts also failed to show "Southern Tibet" — a territory the PRC claims in the Northeast of India. The Gap was quick to react: "We sincerely apologize for this unintentional error," said the company, that it respected China's sovereignty and territorial integrity, and that it intended to strictly follow the country's laws and rules. The Gap also promised to carry out "more rigorous reviews" to prevent similar incidents in the future. China acknowledged the apology and a spokesperson of Beijing's Foreign Ministry announced that it "will follow carefully their actions and remarks." Interestingly enough, The Gap was only the latest company to apologize to the PRC for ignoring its territorial claims. In 2017, German carmaker Audi had to issue an apology for using a map that omitted Taiwan and parts of western China at its annual meeting, and fashion brand Zara also drew Beijing's ire and apologized for listing Taiwan and Tibet as countries on its website. In January 2018, Chinese authorities even blocked hotel chain Marriott's websites and apps for several days after the company listed Tibet, Hong Kong, Macau and Taiwan as separate countries. Having more than 600 properties across Asia, Marriott was quick to apologize. Then, in February, German Mercedes Benz had to issue a similar apology for using a quote by the Dalaim Lama – spiritual leader of Tibet to some, but separatist to the PRC – in a social media post. And in April, China's Civil Aviation Authority issued a letter to three dozen foreign airlines demanding they stop referring to Taiwan, Hong Kong, and Macau as sovereign territories. In May, the US White House issued a statement calling the Chinese practice "Orwellian nonsense and part of a growing trend by the Chinese Communist Party to impose its political views on American citizens and private companies." While that may be a valid statement from a political vantage point, foreign companies also need to be pragmatic. Any company that is serious about doing business in countries where government or religion hold and enforce strong positions, has no choice but to understand these positions and then comply. Or, of course, to make a statement and stay away.
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Victoria Montanez
This event illustrates the rigor that companies need to maintain, not just while they figure out how to enter a foreign country but rather, in overall "foreign" matters. When it comes to China, we know that other companies have faced similar issues such as Marriott and Zara which also had to issue apologies. What I find most interesting and challenging is that on the one hand rigor is needed in following the "playbook" (corporate, product readiness, target market selection and market entry choice.. and then execution) and on the other agility is needed as much. How to balance those two remains a "crooked" line to walk, we all hear about being responsive to customer, yet few people want to talk about the "checks-and-balances". As a professional experience, I was part of Nokia when Microsoft acquired it. I recall a few similar examples, first, Microsoft showed a map in an "all-hands-event" welcoming Nokia employees that showed Helsinki (Finland's capital and Nokia's headquarters) in the wrong spot in Europe's map. I must admit that sometimes the speed that the business requires us all to engage in, does not allow for much room to fine-tune, or reviews. What is the minimum then? Who wants to be the bottleneck in a launch? Also, I was lucky enough to see Steve Ballmer in Nokia Headquarters in person as well. Ballmer, we all know, has his own style, where he is "loud", gesticulates more than one can possible imagine and is quite simply the opposite from the more stoic Finnish style. Could he have adjusted his own style? Customize if you will to allow for a more "harmonious" entry to Finland? Was he aware? More importantly, are we aware?
Sonja Hedlund
The Gap did issue an apology to China for erroneously omitting Taiwan and other territories from a map depicted on a t-shirt but how sorry were they? They pulled the shirt of shelves in the Chinese market and destroyed them, however, t-shirts were rumored to still be available in Canada for a mere $7.99 as well as other countries. The speed and reach of social media have compounded this issue more than in the past. The merchandising division of this retailer has now become political when determining product readiness. With the attractiveness of the Chinese market, there is little desire to offend the country with such economic clout and a large number of affluent consumers. How does this keep happening? Did the Gap not learn from the issues with Zara and Marriot and adapt? Similar to the current tariff situation there appears to be resistance in the US to have Chinese political views imposed on American corporations
Coming from a background in fashion, I found this specific blog post to be interesting. I've heard of similar examples like this happening where companies either don't do their homework, like in this case with The Gap. I've also heard of companies that specifically operate globally aren't sensitive enough to the various cultures that they're marketing to, and how their products or actions might come across in a different way than they intended. For example, I remember last year or the year before, fast fashion giant H&M had created a sweater for boys in three different colors with three different text on each color; and the two colors had white boy models and the third color's text read "Coolest Monkey in the Jungle" and it featured an African American boy model. The extent of outrage and backlash H&M faced couldn't just be washed away by an apology though. There were people going into stores in South Africa and thrashing the stores to the point that several stores ended up closing for good. This just goes to show how essential it is for international companies to be highly weary of everything the do, say, and produce because one unintentional slip could cause irreplaceable damage.
Manuel Schaffer
It keeps surprising me how large corporations still don't get the basics right when it comes to cultural and political awareness in foreign markets. With the quite obvious sensitivity – especially in Far East Asia – to territorial integrity, one would think that companies learned their lesson by now. While many corporations certainly improved on their preparation of entries in foreign markets, it seems that local input is still not valued or at least not considered enough. Furthermore, in my personal opinion, companies still underestimate the political component of markets.
Whereas companies usually know the markets close to their home and are rather easily able to maintain political neutrality, this proves much more difficult in foreign markets, especially those that strongly differ in cultural aspects. Consequently, in addition to reviewing their corporate and their product readiness with regard to internationalization, companies may also review the political sensitivity of their chosen target markets and react accordingly. In particular products or product groups with features that may touch such sensitive political issues (may it be for example retail products showing maps or country names, etc.) may undergo an additional internal approval or review procedure (considering advice of local employees/experts) to determine their fit to a specific market. This could help to avoid at least the 'most obvious' blunders in international business.
Finally, companies need to understand that political neutrality is not always possible. By conducting business in a particular market or by refraining from doing so they often make implied statements.
In addition to this maybe the best advice is probable to cultivate an essential trait when entering foreign markets: humility.
It keeps surprising me how large corporations still don't get the basics right when it comes to cultural and political awareness in foreign markets. With the quite obvious sensitivity – especially in Far East Asia – to territorial integrity, one would think that companies learned their lesson by now. While many corporations certainly improved in their preparation market entries, it seems that local input is still not valued or at least not considered enough. Furthermore, in my personal opinion, companies still underestimate the political component of markets.
Whereas companies usually know their home markets and manage to maintain political neutrality rather easily this proves much more difficult in foreign markets. Consequently, in addition to reviewing their corporate and their product readiness with regard to internationalization, companies may also review the political sensitivity of their chosen target markets and react accordingly. In order to avoid at least the 'most obvious' blunders, particular products or product groups with features that may touch such sensitive political may undergo an additional internal approval procedure (considering advice of local employees/experts) to ensure their fit to a specific market.
In addition to this maybe the best advice is to cultivate an essential trait when entering foreign markets: humility.
Tingting Wang
The China government has always opposed the exclusion of Taiwan and other territories when describing China, and social media has fueled this anger. Foreign companies that are eager to please China's growing wealthy client base are rushing to smooth out tensions with the government in the past years. For example, Gap, Audi, Zara, Mercedes Benz, etc. These foreign companies have found that they now need to participate in political conversations that did not require participation before. The companies are now involved in the regulatory and political activities when doing business in China, and it is essentially a consumer marketing decision that follows the geopolitical division of China and is the price for foreign companies to do business in China. Like Gap felt sorry for this unintentional mistake, and start conducting an internal inspection to correct the error as soon as possible. These T-shirts have been withdrawn from the Chinese market and destroyed. In conclusion, when doing business in any foreign country, the company had better follow the local regulatory.
#145 " I Just Called to Say, I'm Sorry"
Although being pragmatic is necessary during political discussions, having a real, in dept, understanding of the market your company is about to enter into can not be emphasized enough. Gap, Marriott, Audi, and even some airlines had a difficult time understanding that People's Republic of China (PRC) does in fact include Taiwan, the island of Beijing, and Southern Tibet. I do not believe these companies tried to make a global statement or trigger political disputes, but simply did not do their research and had a lazy design/marketing team. When errors like this do occur in international business the best thing to do is perform a quick and sincere apology and fix the issue immediately, and send the correct design out as soon as possible. The issue present is that they did in fact take the shirts off of the shelves in China but did not in other countries. This is considered a slap in the face to PRC and the people effected. It continues to surprise me how these types of mistakes slip through the cracks of such big well known and innovative companies.
First of all, I think this is a very good article. It explains the truth in a simple way and objectively describes the facts, but also makes readers with a business background have a deeper understanding of the operation and management of international brands in the Chinese market. Second, as a person born and growing up in China and receiving both Chinese and Western education, I think this represents that these international brands must understand China's special political system when operating in China, as described at the end of this article. If you do not want to abandon China that with such a huge market, brands need to understand how much politics has played a role in the lives of Chinese people. Although there are many businesses who simply believe that the market and products represent only a certain period of time, which should not have anything to do with politics, in China's 9-year compulsory education, each age stage must accept different degrees Political education, so the vast majority of consumers are likely to habitually link their products to politics.
Therefore, if international brands do not want to easily abandon the big cake of the Chinese market, they should really understand this market in the early stage of market research in order to know the biggest manipulator behind this market is only the consumer or a higher authority.
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