With the anti-China sentiment among Indians, how should brands with Chinese connections deal with the outrage?
On the night of June 15, 2020, Indian and Chinese soldiers had a violent face-off in Galwan Valley that left 20 Indian soldiers dead, and several others injured. It was the deadliest clash between the two neighbours in over four decades.
The situation led to a tsunami of anti-China wave across India. The outrage comes at a time when the government itself is vouching for 'Made in India' products, with campaigns like 'Vocal for Local' and 'Atmanirbhar Bharat'.
According to Ministry of Commerce and Industry data, China accounted for nearly five per cent of India's exports, and over 14 per cent of imports in 2019-20. Smartphones, electrical appliances, auto equipment, finished steel products, etc., were some of the leading exports from China (to India).
At least half of the 30 Indian 'unicorn' startups are reportedly funded by Chinese investors. Prominent ones among them are Zomato, Swiggy, BigBasket, Flipkart, Paytm, OYO, and Ola.
However, after the Galwan Valley incident, social media platforms were rife with calls to ban the sale of Chinese goods, with hashtags such as 'BoycottChina', 'BoycottChina Products', 'BanChineseProducts', and 'BanChina'. Calls were also made to immediately ban platforms like TikTok and Club Factory.
As per a report published in The Quint, The91Apps, a Noida-based app developer, went ahead to launch a mobile application that reveals the country of origin of a product.
According to market research firm Counterpoint Research, four of the top five smartphone brands in India are Chinese. Xiaomi is at the top, followed by Vivo, Realme and Oppo. Xiaomi, Realme, and another Chinese smartphone brand OnePlus are aggressively launching new models, which will be accompanied by major advertising campaigns across mediums. But, the present atmoshphere can play spoilsport. The Indian T20 cricket league IPL said in a tweet that it would review its sponsors; its title sponsor is Vivo.
News channel Republic TV was recently caught in a fix when it hosted an 'anti-China' debate, but the sponsors of the show turned out to be Vivo and Xiaomi.
Brand endorsements by Bollywood celebrities, too, came under the scanner after the Confederation of All India Traders (CAIT) asked actors to stop endorsing Chinese brands. CAIT also urged the government to make it mandatory for e-commerce portals to display the 'country of origin' of products, while listing them on their websites.
Bollywood star Aamir Khan and cricketer Virat Kohli endorse Vivo; Ranbir Kapoor and Deepika Padukone endorse Oppo; Xiaomi has Ranveer Singh, and Realme has Salman Khan.
We went ahead and asked industry experts about the impact of the outrage on Chinese brands, their endorsements and advertising. What should the brands and endorsers in the line of fire do?
Rachna Lather, marketing communication consultant (former head of marketing, Motorola India)
Indian consumers, while patriotic, are value seekers at the core. They go for brands that give them the biggest bang for their buck, and not necessarily focus on the origin of the brand, or product. Today, it is almost impossible to buy/get services in India without some Chinese investment in a brand/product/service being consumed.
The current flare-up at the border, and the call for 'Atmanirbhar Bharat', have rekindled the anti-China rhetoric for the time being. But, as has been the case in the past, it's a short-lived one. As needs often overcome biases. The need for a better phone, TV, or even a shoe or a dress at lower budgets, is still likely to tip the scales towards Chinese brands.
Also, there is now an understanding that Chinese brands versus 'Made in China' are different concepts. Most products today are being assembled in India, hence they get the 'Made in India' tag.
However, given the current sentiments, it would make sense for brands to lay low for a few weeks till this dies down. As is being seen with Xiaomi and Vivo pausing their ongoing campaigns. It's prudent to stay out of the line of fire.
But more long-term endorsements won't get impacted by this. More than the brands, the advertising and media industry requires this infusion of sponsorship dollars badly at this time.
Most businesses have been impacted negatively by the lockdown, and advertising budgets are likely to be much lower than last year. So, it wouldn't be quite that judicious for them to upset the apple cart at the moment.
The rhetoric will change soon as media and consumers get new topics to focus on, and the brands start establishing their 'Made in India' credentials more strongly, and start building on the value being delivered.
For now, the brands need to just weather the storm, and prepare for a bounce back.
Upendra Namburi, CEO, Ideaearth (former chief innovation officer and marketing officer, Bharti AXA General Insurance)
The geographic plurality of our consumption is only increasing. Quite often, the country of origin is not as significant as it, perhaps, used to be. Commerce, trade, networks and logistics are closely intertwined. This is important to understand.
Also, what defines the nationality of a product? The head office, where is it manufactured, who's running it? It's not as clear, or easy to define as we would like it to believe.
There will be ripples for an interim period, but in the current environment, consumer preference isn't going to shift significantly, basis the origin country. Times are too tough, and even choices may not really exist.
In reality, most devices, which are being used to voice opinions on the conflict, have either been sourced, manufactured, or emerge from a Chinese brand. Consumers aren't really dumping them in droves. Consumers aren't really buying the nationality of the product.
Gone are the days when we used to position burgers as American food. Now, it's global. For great and genuine brands, they are far beyond nationality. It's about the price value benefit equation, which is going to matter.
I think it's too early to determine if there is going to be a long-term impact, or a shift away from Chinese products. There would be an impact only if there is a policy shift at the national level, which is going to take a while, if at all it does happen.
For brands, or endorsers, it would be best to stay genuine to the core values, and steer clear of any controversial conversations.
Lloyd Mathias, business strategist and angel investor
I believe the standoff between the two countries may have a short-term impact on many China-owned brands and apps that are widely in use in India. There could be pressure to keep off Chinese brands by overzealous fans, thereby impacting endorsements, too.
Also, many brands with an obvious Chinese connection may prefer to stay off media and defer launches, till the dust settles. This would be prudent in the current context, with emotions running high. So, advertising will be impacted, given that Chinese brands have an overwhelming presence across many categories, most notably mobile handsets and consumer durables.
Historically, these nation boycotts have been short-term, and have not impacted purchasing behaviour permanently. What actually does impact consumer preference and buying behaviour is more deeply entrenched beliefs like precision and quality of German engineering; manufacturing diligence of Japanese products; or price competitiveness of Chinese goods.
Jagdeep Kapoor, founder, chairman, and MD of Samsika Marketing Consultants
In any country, the consumers would be pro that country for the purchase of brands. In this case, the strong sentiment in India is pro-India, pro-India brands and, hence, there will be a negative impact on Chinese brands... The sentiment today is overriding many considerations of availability, economical price, and quality. This overriding sentiment, which is now a trickle, could turn into a flood.
Whenever there is a surge in national sentiment, all other factors appear a pale shadow. Indian manufacturers, and the 'Made in India' sentiment will get a boost. In fact, many (brands) are already highlighting their Indian origins.
... 'Made in India' got a boost due to the efforts of the current government, and now it has got a further boost due to efforts of another government.
The sectors will respond differently. In some product and service categories, the impact will be immediate, and in others, it will be gradual, but the impact will be definite. There will be opportunities created for Indian companies to put in that extra effort to bring in import substitution with greater vigour.
Ultimately, it is not the investment alone which will drive the market, it is the consumption which will change the landscape, and Indian consumers have started showing a shift due to the rift.
Harish Bijoor, brand strategy specialist, and founder, Harish Bijoor Consults
The current outrage will really not impact sales volume of Chinese brands of the telecom handset and electronics kind. There is a realisation at the end of the consumer that there is a little bit of China in everything around. If one needs to boycott Chinese brands, one needs to go frugal.
Brand endorsers are stuck between activist consumers and the manufacturer. They will suffer the ire of irritated consumers. But this too shall pass.