Wave Bye-Bye to the Chinese Market and Open Season on Woke Companies

I have discussed how foreign companies have to consider their profile when operating in China. I think the last post on it was here: 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).

ZH: Rabo: Very Important Developments Are Taking Place In China

In particular, very important developments may be taking place in China. Western sportswear and clothing retailers such as Nike, Adidas, and H&M have all made recent statements they are “concerned about reports of forced labor” in Xinjiang, or have stopped buying cotton from it completely. The Chinese response has been furious: official rhetoric is withering - “China is not to be messed with,” and those who do “will find that we are force to be reckoned with”; social media is filled with nationalist attacks and open calls from celebrities to boycott these firms; and H&M stores in China have suddenly disappeared from search engine location functions.

Yes, we’ve seen similar Chinese moves against foreign products before. Some Aussie agri exports are currently locked out; South Korean soap operas and Norwegian salmon have been in the past; and back in 2012 there were major anti-Japanese boycotts and protests due to the geopolitical backdrop. Yes, those earlier storms passed: but that was arguably a very different China, at least in the eyes of the West, and according to its own combative rhetoric. Indeed, ‘Wolf Warrior’ diplomacy --in the past few days alone-- has seen massively growing skepticism about China’s direction from Western diplomatic, military, and even businesses elites.

The problem is now on both sides. In China, the 2012 protests were quashed by the government, but this time round the Communist Youth League is actively trolling, and the diplomacy is blaring. The question in the minds of some who have read history is if this a - non-violent - replay of the anti-foreigner Boxer Rebellion rather than just a Boxer-Shorts Rebellion. In the West, the firms involved face a stark choice: stick to their professed social values and lose the China market, or accept China gets to dictate what they worry about - even when it reaches the alleged level of forced labour and genocide…and then try to explain corporate mottos like “Just Do It”. Could this even escalate to the level of the 2022 Olympics so we see the Para- and Parallel games? Probably not – but if it did, China has stated any boycotting countries will be sanctioned, dragging even more firms in. The risk is that this backdrop could accelerate existing moves towards decoupling of the global economy, which had been expected to be focused on semiconductors, but may now be on Lycra, sneakers, and socks and underwear value-packs too.

Western corporations that became "woke" and political are doomed. If they go silent on China, they lose Western customers. They lose "woke" customers who see them bending to China and they lose the normal people who ask, "You won't offend China, but you have no problem offending Western customers and meddling in our politics?" If the corporations make noise, they lose Chinese customers. Their only real option is to focus on their business, but that seems to be the least important item on their agendas.

Woke copmanies are weak because they are trying to be mass market, global brands. Their infection with Wokeism means they are anti-nationalist at a time of rising nationalism. They are also destroying their mass appeal. Nike sneakers are for Wokies, not for normal people, Christians, Muslims, etc. anyone with traditional ideas of the family. Across the economy, including banks like Bank of America, payment processors and platforms such as Paypal, Mastercard and Visa. They are turning off ~30-50 percent of American customers and who knows how many international ones once competition emerges.