The NBA has been facing some significant challenges in the Chinese market since Houston Rockets general manager Daryl Morey dipped his toes into the political situation between Hong Kong and mainland China by tweeting support for the Hong Kong protesters. The situation serves as an example of the ramifications of being perceived as culturally or politically insensitive, both in international markets and at home.
The Morey tweet was quickly deleted and the NBA (along with team management) distanced itself from the content and stressed it was not taking sides, while supporting Morey’s right to his opinion. But his words had already attracted the ire of the government, businesses, and consumers in one of the league’s biggest markets.
Sporting goods company ANTA halted negotiations to renew its NBA contract, and all of the NBA’s sponsors, from QSR chain Dicos to home appliance company Meiling to skincare brand Wzun, suspended their relationships with the league. The Rockets franchise, which was particularly popular in China due to its connection to Chinese athlete Yao Ming, was abandoned by sponsors including sportswear brand Li-Ning and SPD Bank. It was taken off CCTV’s broadcast schedule and Tencent’s streaming sites and had its team merchandise disappear from stores and from Alibaba’s and JD.com’s e-commerce and m-commerce platforms in China. The team even saw the price of its sneakers plummet on online marketplaces in the territory. Some of these actions may ultimately be temporary, but they will still have a significant business impact in the Chinese market.
The NBA is not the only licensor that has gotten into trouble recently for being perceived as culturally or politically insensitive:
- In another example involving the China-Hong Kong dispute, Vans found itself facing negative PR and under threat of a boycott after running a contest soliciting fan-created sneaker designs. One of the high-vote-getting entries featured a number of icons tied to the Hong Kong protesters, including a flower from Hong Kong’s flag and a yellow umbrella. Vans removed the design for being too political and violating the rules of the contest, which caused an uproar in Hong Kong. Sneaker retailer Dahood, which is Vans’ partner for branded stores in Hong Kong, suspended operations in three locations due to the incident making them a focus for protests.
- In the weeks leading up to the release of the live-action version of The Lion King earlier this year, an online petition asked Disney to abandon its trademark for the common Swahili phrase hakuna matata, which it had applied for in 1994 in conjunction with the original film and was granted in 2003. The Change.org petition, named “Say No to Disney! Stop the trademarking of African Languages,” is approaching 200,000 signatures as of this writing. The company had experienced a similar situation with Coco, when it tried to trademark the phrase Dia de los Muertos (Day of the Dead), the film’s original name. It backed down in that case and hired Mexican-American cartoonist Lalo Alcaraz (creator of the comic strip La Cucaracha), one of its vocal critics, as an advisor on the film. In a separate but similar case, Air New Zealand faced charges of cultural appropriation when it submitted a trademark application for a logo that includes the phrase Kia Ora, which is the name of its in-flight magazine. The term, which is used widely among all population groups in New Zealand, is from the language of New Zealand’s indigenous Maori people and roughly translates to hello or cheers. None of these situations seem to have affected sales, but did attract some negative press.
- Gucci introduced an $890 turtleneck sweater with a blackface-inspired balaclava (ski mask) collar as part of its autumn/winter 2018 collection. After a significant backlash on social media during Black History Month 2019, it removed the item. In similar incidents involving other fashion labels, Prada included blackface-themed keychains and toys in its Pradamalia line for holiday 2018, while Katy Perry’s footwear collection for spring 2019 included two blackface-style shoe designs. All were removed from the market, but the main damage to the brands was the hit to their image, at least temporarily. (Examples such as these go beyond cultural sensitivity and into the realm of racism.)
- Uniqlo took an ad off TV and device screens in South Korea when some viewers interpreted it as referring to Japan’s use of Korean women as sex slaves during World War 2, a claim the company denied. Uniqlo, which in Korea is a joint venture between corporate parent Fast Retailing and Korean retailer Lotte Shopping Co., has been at the center of a broader Boycott Japan movement in Korea that grew from a trade war between the two countries, which itself followed a court case that allowed Korea to seize Japanese business assets to compensate Korean victims of forced labor during Japan’s occupation in the first half of the 20th century.
- In a presentation to a Chinese audience that went viral, Christian Dior used a map of China that did not include Taiwan. Taiwan is a democracy that is independently ruled and is recognized by many countries around the world as a separate nation, but which China considers part of “one China,” along with Hong Kong and Macau. Dior apologized. Similar situations have happened with other brands, including Zara and Gap, which included a Taiwanless map of China on a t-shirt design.
- Kim Kardashian initially called her new shapewear brand Kimono and, upon announcing the venture in June, was accused of cultural appropriation for using the name of a traditional garment that is the national dress of Japan. She responded to the online backlash (and a letter from Kyoto’s mayor) by saying she always listens to her customers and fans and would change the name. In August Kardashian announced that the new brand would be Skims, and the first products hit stores in September.
- After a history of protests, the University of North Dakota underwent a long, emotional, and controversial process of changing its team name from the Fighting Sioux to the Fighting Hawks. It dropped the old name in 2012, after a statewide referendum, and implemented a cooling off period before selecting a new name in 2015. Other collegiate teams have gone through similar steps (e.g., St. John’s changing from the Redmen to the Red Storm). A number of pro leagues also use Native team names or mascots considered pejorative, but none have been altered to date. The jury is out on the impact of such controversies, but one study found sales of Washington Redskins merchandise fell 35% in 2014 after the team was in the news in 2013 due to its trademark being taken away as disparaging. That turned out to be a temporary dip. (The trademark was restored after a Supreme Court decision in a separate case in 2017.)
Each of these situations and others like them have their own unique characteristics, and the impacts vary in terms of severity and duration. Some cause a decrease in sales for a time, while others are primarily a matter of bad PR. Some fall into the what-were-they-thinking category, some involve purposely taking a divisive stand—with or without being prepared for the fallout—and some arise unexpectedly. It should also be noted that, in today’s environment, both the controversies themselves and any steps to address them are likely to raise strong feelings among consumers, half positive and half negative, complicating the decision-making process. The NBA and Rockets, for example, have received strong support on social media from many U.S. fans, while ANTA and Li-Ning have received the opposite.
Of course there are many examples of licensors that have taken cultural and political issues into account in advance, avoiding much of the potential controversy. Spanish football club Real Madrid, whose traditional crest includes a Christian cross, has expanded its licensing activities into the Muslim-majority Middle East. Its licensees in the territory, such as retail apparel partner Marka, use an alternative crest without the Christian iconography.