Top Banner

Branding, Trends
September 23, 2012 | 2 Comments

Post-trauma: Foreign brands and China’s flag

Seven Eleven. Flag, rant, disregard.

Seven Eleven. At Sixes and Sevens.

Last week was a hard one for Japanese brands (and people) in China. Dozens of companies had to shut their stores and factories across the Middle Kingdom in fear of violent mobs. This week, everyone seems to be back in business, but lessons have been learned: Japanese-owned franchises are working hard to explain how Chinese they actually are, and even Korean stores are making sure no one mistakes them for Japanese. 

7-Eleven is the world’s largest franchise operation, even bigger than McDonalds. The company was founded in the US, but has been under Japanese ownership since the early 1990s, following an acquisition by Ito Yokdao (now known as Seven&i Holdings). Last week, violent protests forced Seven&i to shut down its branches in Beijing and Chengdu, including 7-Eleven convenience stores and Ito Yokdao department stores and supermarkets. 7-Eleven has a English name, but protesters learned about its Japanese origins from media reports and online discussion boards. Those picky enough to care could learn that Beijing’s 7-Eleven franchise is a Sino-Japanese Joint-Venture while Shanghai’s is wholly-owned by a Taiwanese company and Guangzhou’s is owned by pure bloods from Hong Kong (here, in Chinese).

But angry mobs are not known for conducting detailed research. For those who didn’t bother to check online, 7-Eleven Shanghai now offers on-location ownership information. The company’s stores now sport a Chinese flag on their window together with a note that clarifies each store’s legal and diplomatic status. The note specifies that the Shanghai stores are owned by Tongyi Group (and not by some Japanese devil). It goes on to explain that ownership includes both the daily management of the store and the initial investment in setting it up. So far, the new branding strategy seems to work and Shanghai’s 7-Eleven stores have faired better than the ones in Beijing.

Lotte. We're Korea, ok?

Lotte. Flag, rant, disregard.

Japanese brands and Chinese consumers are the main casualties of the latest nationalist flare-up, but the Koreans are also worried. During the the anti-French demonstrations of 2008, some Korean businesses suffered from being mistaken for Europeans. This time around, the East Asians are prepared. Lotte, Korea’s largest retailer, responded to the anti-Japanese protests by hanging Korean and Chinese flags on the facade of its stores in Beijing. By doing so, the brand reaches deep into the Chinese psyche and emphasizes the two countries’ shared history as victims of Japanese (and, erm, Communist) brutality.

Last week’s events left us disturbed (and cut our access to fresh Uniqlo underwear). We hope the recent branding adjustments by Japan and Korea’s retail giants will help bring things back to normal. If covering up with flags does not help, they can always try the opposite strategy. As Sola Aoi showed last week, sometimes, the best results come from being honest and taking everything off.

Tags: , , , , , , , , , , ,

  1. Branding here is crucial, but the strength of brands like 7-11 and Uniqlo might come back to bite these companies in the ass. How about MUJI? Toyota? Sony? These are companies that have branded themselves as distinctly Japanese; I’m sorry if I don’t agree a show of ‘papers’ can turn away an angry mob. This country and Japan are bracing for something serious.

  2. It actually works against some of the mobs, but it will definitely not shelter Japanese brands from declining sales to less-angry and better-informed buyers. And, of course, it will not save China from the consequences of fanning the flames.