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Can D&G recover from its China crisis?

Dolce & Gabbana’s most recent scandal, caused by a culturally insensitive advertising campaign, has harmed its business in China. Drapers investigates whether the damage can be reversed and what lessons can be learned.

Dolce & Gabbana posted a video advert showing a Chinese model struggling to eat Italian food with chopsticks on social media on 19 November. It instantly sparked backlash. Two days later, fashion whistleblower Diet Prada – an Instagram account that highlights new designs that are very similar to existing pieces – published offensive messages allegedly sent by designer Stefano Gabbana on Instagram.

In a statement Dolce & Gabbana said: “Our Instagram account has been hacked. So has the account of Stefano Gabbana. Our legal office is urgently investigating. We are very sorry for any distress caused by these unauthorised posts, comments and direct messages. We have nothing but respect for China and the people of China.”

The Italian label was forced to cancel its fashion show in Shanghai on 21 November, as high-profile celebrities and models withdrew. Dolce & Gabbana had reportedly spent RMB200m (£22.5m) on the show.

Key Chinese stockists have since pulled the brand including JD.com, Lane Crawford, Taobao and Yoox Net-a-Porter. The retailers were contacted by Drapers for comment but have yet to confirm how long the ban will last.

Greater China accounts for a third of global luxury sales, a 2017 report by McKinsey & Co shows. The controversy could damage Dolce & Gabbana’s bottom line for years to come, believe industry experts.

“The damage is already big sales-wise but the bigger problem is the damage that has been done to Dolce & Gabbana’s image. It takes years to win the trust of Chinese consumers and apparently only minutes to lose it again,” said Elena Gatti managing director at ecommerce agency Azoya DACH. “In my opinion, Dolce & Gabbana will disappear in China for quite some time. However, Chinese consumers love luxury goods from abroad and, with time, it might have a chance to recover.”

This is not the first time the design duo has been embroiled in boycotts. In 2015, celebrities asked people to avoid the brand after they made comments saying they opposed gay adoption.

Christian Ward, head of media and marketing at retail research agency Stylus, said the brand has not learnt lessons from past mistakes: “This incident is symptomatic of their approach as a luxury brand because they’ve mis-stepped before. A future-thinking brand would have tried to establish themselves in a different market on a more equal level, but this just isn’t their mentality. This is a big wake-up call that this isn’t how it works any more.”

Gatti added that this incident was exacerbated by the Chinese approach to social media: “Dolce & Gabbana has possibly underestimated the power of the Chinese social mindset. Chinese people are so connected socially that if you insult one, you have – within minutes – insulted an entire nation.”

Sandy Chu, retail and buying editor at trend forecaster WGSN, agreed that brands need to be aware that what happens in one market, can now travel globally in seconds: “People are navigating across social media channels and languages, so something that happens [in one country] can easily be amplified across languages and countries in real time.”

Dolce & Gabbana’s mistake is an opportunity for other luxury brands to consider their marketing voice more carefully, Ward argued. “People think that everyone is so easily offended nowadays but it’s actually much more nuanced, serious and important than that. Cultural dialogue is evolving so quickly that brands will inevitably make mistakes. But, if they make mistakes, [they should] start a more collaborative approach.”

Luca Solca, head of luxury goods at investment company Exane BNP Paribas, agreed: “Being global requires brands to be very aware of the multiple viewpoints different people can have on their products and communication. This possibly calls for a multinational, multicultural, diverse leadership organisation able to perceive and integrate different sensitivities.”

Dolce & Gabbana was contacted for comment.

 

The Drapers Verdict

Cultural insensitivity is proving to be a costly mistake for Dolce & Gabbana, particularly as it has been called out for controversial comments before. Values are increasingly important to consumers and issuing a generic apology is not sufficient any more – brands need to show they are taking affirmative action to make amends.

For those doing business in diverse markets, a diverse team is essential and a collaborative approach to marketing initiatives on the ground could save them from a scandal.

China is a hugely important growing market, particularly for luxury goods, but if brands do not take the time to understand consumers in this market, and work with people who do, they will not succeed.

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