Prepare for Smashed Up KFCs and McDonald's

If I was running a visible American brand in China, I'd be thinking about lowering my profile right now. China could unleash nationalist riots in response to a trade spat. I don't know that they would do that, but a serious trade dispute with the U.S. would be more significant than Japanese history textbooks. I suspect it would be more negative than the South China Sea ruling by the Hague in 2016 (see below).

2005 anti-Japanese demonstrations
2012 China anti-Japanese demonstrations

In 2011 there were violent riots, including the burning of Toyota dealerships and the beating of a Chinese man into a coma because he drove a Japanese car and "looked" Japanese. China earlier shut off rare earth exports to Japan as well.

As for the 2016 anti-American incidents: Should investors fear China’s anti-American protests?
Shortly after the ruling, videos emerged online of Chinese citizens destroying their iPhones. One popular video on Weibo calls on Chinese citizens to break their iPhones, claiming “if you don’t smash it, you’re not Chinese!” A small Chinese firm in Zhejiang has reportedly taken up this cause and has banned its employees from purchasing iPhones.

Protests also broke in 11 Chinese provinces against Kentucky Fried Chicken (KFC) stores: several stores in Yangzhou and Lianyungang closed temporarily in response to safety concerns. Netizens have also pushed for boycotts and protests targeting Starbucks and McDonalds.

In the ugliest manifestation of this nationalist outburst, a Chinese citizen wearing U.S brand clothing was attacked and beaten on a subway in Dalian.

But the extent of this outburst against American businesses has been limited. Police broke up the rowdier protests, censors have weeded out mentions of boycotts, war, and the SCS on social media, and state-run media has been quick to disparage the protests. Aside from temporary closures, popular American stores like KFC and McDonald’s have remained open for business and busy with customers.

Nevertheless, some are concerned that the recent protests highlight how growing nationalism is creating serious political risks to foreign businesses in China, and that escalating tensions in the SCS will leave businesses increasingly exposed to these risks.

No comments:

Post a Comment