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A McDonald’s delivery man rides past an abandoned railway track near residential buildings in Beijing in May 2017. Photo: AP
Opinion
The View
by Stephen Vines
The View
by Stephen Vines

Why consumer boycotts of US brands in China might hit Chinese companies the hardest

Stephen Vines says if a patriotism-fuelled boycott of US products in China gets under way, the Chinese companies behind these brands would be the worst affected

Will the US-China trade war provoke consumer boycotts as the heat rises?

The answer in the case of American consumers is almost certainly not because awareness of Chinese brands is extremely low, and although Americans buy vast quantities of Chinese-made goods, many do so with little awareness of where these goods come from, not least because the final assembly of goods essentially made in China often takes place in the US.

Chinese consumers, by contrast, tend to be acutely aware of US brands, actively seeking them out, whether it involves buying hi-tech goods, such as smartphones, or heading off to a Starbucks for coffee. Will this brand awareness lead to consumer boycotts?

A survey likely to gladden the hearts of trade warriors in Beijing found that a clear majority – 54 per cent of respondents – drawn from 300 Chinese cities said they would “probably” or “definitely” boycott US-branded goods in the event of a trade war; only 13 per cent said they would not.

The survey was largely carried out before America’s July 6 imposition of additional tariffs on US$34 billion worth of Chinese goods. It was conducted by FT Confidential Research, a unit of the Financial Times newspaper.

Although this did not make the headline when the results were published, the survey found that the most likely boycotters were aged 25-29, had lower middle incomes and lived out of the major metropolitan areas. In other words, people who were less likely to be the main customers for US brands.

Watch: Are Chinese consumers less willing to buy American goods

Then there is the question of whether Chinese consumers, albeit motivated by patriotic pride, are actually likely to do what they say they will do. Surveys asking people whether they support what is regarded as action in defence of the national interest are most likely to produce results showing enthusiasm for so doing, but when it comes down to it, most folk do not think about politics when considering what to buy, especially in relation to relatively modest purchases of products, such as fried chicken, which are among the most high-profile of the American brand offerings.
China has, however, been here before with consumer boycotts, providing some precedents. The 2012/13-consumer boycott of Japanese cars in response to disputes over islands in the South China Sea had a very sharp effect, with Japanese brands suffering a 32 per cent sales tumble over a 12-month period. However, by 2016 Japanese cars imports were on the up again.
Last year, mainland media urged Chinese tourists to stay away from South Korea and called for a boycott of Korean goods in response to concern over the installation of a US-made missile system. This has had quite an impact but its duration is open to question.
A woman takes a selfie with her Starbucks drink in Beijing in May. Photo: AFP
If a boycott of US brands were actually to get off the ground, it would mainly hit the Chinese corporations who either operate US franchises or are in joint ventures with American companies. For example, McDonald’s, one of the most visible and successful US brands in China, is operated on the mainland in partnership with Evergrande Group, KFC is operated by Yum China Holdings. And Starbucks, which has suffered a sales slump unrelated to any boycott, has recently established a link with Alibaba Group Holding (owner of this newspaper) to facilitate delivery services.

So, a boycott of the more obvious targets would indeed impact the revenues of US companies, but they would more directly affect Chinese companies.

This, of course assumes that a boycott ever gets under way. That is not a given and it is interesting to note that Chinese state-controlled media, which egged on the South Korean boycott for purely political reasons, has so far not engaged in a similar campaign in respect to US goods and services.

This could still happen, but the more likely targets for Chinese boycotts are major products, such as aircraft, with purchases directly linked to government decisions.

Watch: Trade war threatens China’s love for American barbecue

A study of consumer boycotts from around the world undertaken by a researcher at the University of California, San Diego’s economics department concluded that the effects tend to be short-term and that the impact tends to be greatest on high-profile imported goods. Whether Chinese consumers will behave much like their counterparts in other parts of the world remains to be seen.

All that is certain is that the longer this trade war goes on, the more disruption it will bring and many of the victims will be bystanders who may have imagined they would be untouched by the turmoil.

So what’s the future for diet-busting burgers and fried chicken alongside over-roasted and heavily sweetened coffee drinks in China? Maybe if it does nothing else, the trade war will provoke a healthy pause and bring Chinese fast food buyers to their senses.

Stephen Vines runs companies in the food sector and moonlights as a journalist and a broadcaster

This article appeared in the South China Morning Post print edition as: Boycotts are mixed bag
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