Why the Huawei Affair Hasn’t Cooked Canada’s Goose

China’s state-run Global Times echoed calls on Chinese social media for a boycott of the brand. The company called off plans to open its first store in Beijing’s trendy Sanlitun district. By Dec. 24, Canada Goose’s shares had slumped to $42.

Photo : Getty Image

 

China’s consumers are “beginning to take sides” in the U.S.-China trade war, with dire implications for some of America’s biggest companies. So says the redoubtable Jim Cramer, who fretted on CNBC’s “Mad Money” Friday that Apple’s disastrous first quarter in China, along with a Goldman Sachs report downgrading Starbucks because of “a number of points of caution on China,” are harbingers of rising nationalism among Chinese consumers.

The danger, Cramer seemed to suggest, isn’t just that the world’s second-largest economy is slowing, or that Apple’s phones are overpriced, or that Starbucks is struggling to adapt to China’s digital economy. Rather, it’s that as the trade war rages, Chinese consumers are demonstrating their patriotism by shunning American products.

Sorry, Jim, but I don’t see any evidence of that. There have been Chinese boycotts of Japanese products over the sovereignty of islands in the East China Sea, and of South Korean products over deployment of a missile defense system aimed at North Korea. For the most part, both campaigns were short-lived. More recently, Dolce & Gabbana’s China business self-destructed after the fashion label produced a series of culturally insensitive ads. But I don’t buy the assertion that Chinese consumers aren’t buying to protest U.S. trade policies. In general, I have found Chinese consumers to be far more complicated, independent and self-interested than they get credit for from Western investors.

Consider the case of Canada Goose, the Toronto-based purveyor of luxury parkas. In November the company’s share price soared to a record $72 after it raised guidance on earnings amid ambitious expansion plans in China. Then, on December 1, authorities in Vancouver arrested Huawei Technology’s chief financial officer Meng Wanzhou in response to a U.S. extradition request. Beijing decried Meng’s detention, and detained two Canadian citizens in China. Suddenly Canada Goose, whose parkas display the brand name on patches right on the shoulders, looked like a sitting duck. China’s state-run Global Times echoed calls on Chinese social media for a boycott of the brand. The company called off plans to open its first store in Beijing’s trendy Sanlitun district. By Dec. 24, Canada Goose’s shares had slumped to $42.

Then on December 28, without fanfare, the company opened the Sanlitun store anyway. Lines stretched around the block, despite sub-zero temperatures and $1,400 price tags. A headline in Hong Kong’s South China Morning Post said it all: “Chinese customers flock to Canada Goose’s first flagship store opening.”

Source :

Fortune

Be the first to comment

Leave a Reply

Your email address will not be published.


*


four × 2 =