China Targets Canada Goose, Maker of Posh Parkas
China's state-controlled CCTV revealed that authorities fined the company's affiliated operation in Shanghai about $70,000 (450,000 RMB) for "falsely advertising goods or services, deceiving and misleading consumers."
The Shanghai Huangpu District Market Supervision and Administration Department acted against the local outlet of Canada Goose Holdings Inc. of Toronto in June, a move CCTV made public on Sept. 2.
The National Enterprise Credit Information Publicity System (Shanghai) announced that Shanghai district regulators found that Canada Goose, which was marketing its products as filled with goose down, was using mostly duck to stuff its garments.
The regulators said the company advertised that it uses "Hutterite down," claiming it is the warmest down available. The Hutterites, a religious group in Canada similar to the Amish and Mennonites in the United States, enjoy a reputation for raising high-quality geese and ducks.
And while the Canada Goose marketing stresses the warming quality of the down it uses, Shanghai regulators said the place of origin has nothing to do with down's warmth.
On Sept. 8, other state-affiliated media outlets in China began criticizing the expensive parkas that as The New Yorker suggested, broadcast, "I earned the money, and then I spent the money. And now, here I am, warmer than you are."
The Economic Daily published a commentary titled Catching the Lying Canada Goose on Sept. 8, suggesting that Canada Goose had violated China's law regarding advertising standards. It continued to accuse the company of failing to credit Chinese buyers as savvy consumers who are capable of market research.
Calling on Chinese consumers to purchase goods from Chinese brands, the Economic Daily urged Chinese companies to seize the opportunity to expand market share.
The newspaper also said Xiji (Shanghai) Trading Co., operator of the Canada Goose Official Flagship Store on China's online retailer Tmall, had sales of $25.9 million (167 million yuan) in 2020. On the company's U.S. website, the most expensive Canada Goose parka, the Polar Bear International, costs $1,545. The same coat on the company's Chinese website costs $1,616 (10,400 yuan).
Canada Goose told Canada's CBC News on Sept. 8 that a technical error on a partner website caused confusion about the down.
"Earlier this year, a misalignment of text was found on a partner site, Tmall, in our (Asia-Pacific) region. The error was corrected immediately," the email to CBC said.
The company told CBC that it uses both goose and duck down, depending on the garment. Although Canada Goose is best known for its parkas, it makes other down and non-down products.
VOA Mandarin contacted Canada Goose but did not receive a response.
Consumer nationalism
Canada Goose is not the only company targeted by China's regulators. Earlier this month, Chinese regulators fined H&M, the Swedish multinational retailer, $51,000, claiming the company misrepresented that some of its products were sold exclusively in China.
This came after Chinese netizens attacked H&M in April for a statement expressing concern about allegations of Uyghur forced labor in cotton production in Xinjiang, a stronghold of the Muslim minority.
Major e-commerce websites removed H&M products, and dozens of Chinese celebrities ended their endorsement contracts with the company. Brands such as Nike and Adidas, which had expressed similar concerns about the situation in Xinjiang, saw China sales plummet.
Experts say that the surge in China's nationalist sentiment since the advent of the COVID-19 pandemic, coupled with Beijing's official policy of supporting domestic brands, could lead to consumer nationalism.
According to its official website, Canada Goose currently has 21 stores in China, making it one of the fastest expanding brands in the Chinese market. The company has nine stores in Canada.
"The campaign fits in with 'equality' themes recently emphasized by President Xi. Foreign brands are something like private schools — patronized by higher income Chinese households," Gary Hufbauer, an economist at Peterson Institute for International Economics, told VOA in an email. "Domestic brands are seen as the preference of ordinary people."
Analysts believe that as tensions increase between China and the West, Chinese nationalists are equating the purchase of Western brands to approval of Western values. To reject foreign brands is to resist foreign influence, according to the nationalists.
Amid the nationalists' push, Beijing is actively promoting domestic brands and promoting patriotism in the shopping decisions among Chinese consumers.
In July, Chinese sports brand Erke became famous overnight after donating about $7.6 million (50 million RMB) to the flood-stricken central Henan province. Chinese netizens heralded the move, and Erke experienced its biggest single-day sales jump.
"Foreign companies are facing a less receptive environment in China," Hufbauer added. "Official statements are often hostile to the United States, with the result that buying foreign brands, especially U.S. brands, seems unpatriotic to ordinary Chinese."
Caught in the middle
Canada Goose entered the Chinese market in 2018 when the relationship between Ottawa and Beijing began to fray. Canada detained Huawei Chief Financial Officer Meng Wanzhou on a U.S. extradition request for fraud in December 2018, and China subsequently took custody of two Canadians — Michael Kovrig and Michael Spavor — over espionage charges. Spavor was sentenced to 11 years in prison last month.
The Chinese Consulate General in Montreal said Sept. 11 that the current Canada Goose action is related only to market regulations and disputed any "political interpretation of the case."
Wang Qing, a professor of marketing and innovation at Warwick Business School in London, told VOA via email that the Chinese government has emphasized the importance of building strong Chinese brands for several years. "We have seen real improvement of domestic brands in terms of quality and brand image," she said.
Yet she argued that currently, the competitive edge between Chinese and Western brands are different.
"In the short term, there is no real threat to high-end foreign brands, as most Chinese brands are value for money. They do not compete directly with foreign brands," she added.
Reuters contributed additional reporting.