Assignment Case Study D;G

Case Study What Luxury Brands Should Learn From Dolce & Gabbana’s Hong Kong PR Disaster One of the biggest stories of this past weekend in Hong Kong was a massive, Facebook-organized protest of the Italian fashion house Dolce ;amp; Gabbana, after a security guard prevented locals from taking photographs outside of its flagship store in Tsim Sha Tsui. Checking into the story, a photographer from the Apple Daily reported on January 5, 2012 that he was told by a security guard that only mainland Chinese or foreign tourists were allowed to take photos outside the store, with another guard allegedly threatening to break his camera.

Within hours, the story had set off a firestorm of criticism in the city, with angry Hong Kong locals taking to Facebook to speak out about what they saw as tantamount to discrimination, leaving hundreds of messages on Dolce ;amp; Gabbana’s wall demanding the brand apologize or pack up and leave Hong Kong altogether. Over the weekend, more Facebook users in Hong Kong joined together to organize a protest of Dolce ;amp; Gabbana’s Tsim Sha Tsui flagship, creating a “10,000 People Photograph D;amp;G Event” page now “liked” by nearly 20,000 fans. Around 1,000 protestors actually took to the streets yesterday.

According to Hong Kong Standard, the protest turnout was so great that the store was forced to shut its doors before 3:00 p. m.

as the crowd gathered, with other shops nearby closing early as well as crowd spilling over. Protesters carried cameras and snapped photographs of the store as others held placards denouncing the photo ban and demanding an apology from D;amp;G. Despite the massive turnout, as of last night Dolce ;amp; Gabbana had only issued a terse, unsigned statement rather than an apology, reading, “We wish to underline that our company has not taken part in any action aiming at offending the Hong Kong public. This is unlikely to assuage the protesters’ anger in any way. As the HK Standard notes today, rumors have abounded for months that luxury brands like D;amp;G have become so reliant on well-heeled mainland Chinese tourists that Hong Kong locals have essentially become “second-class shoppers”: A well-known mainlander, possibly a government official, was reportedly shopping in the store last month when he noticed people outside taking photographs.

A complaint was made to D;amp;G because the customer feared netizens would link the shopping spree to corruption.

Then D;amp;G instigated the ban. D;amp;G’s statement strongly denied making any racist or derogatory comments. “Controversial statements reported in the Hong Kong press have neither been made by Dolce ;amp; Gabbana nor its staff”. “It is regrettable that Dolce ;amp; Gabbana has been brought into this matter,” said one of the company spokespersons. However, Harbour City, the landlord and management company of the shopping mall, apologized on its Facebook page on Friday.

D;amp;G’s store did not return calls yesterday and no one came forward to meet the protesters.

As more Hong Kong residents take to social media platforms like Facebook to create “boycott D;amp;G” groups and flood the brand’s official page with furious comments, D;amp;G will very likely have little choice ultimately but to issue a formal apology, but its silence up to this point is only worsening the situation. Bad PR is actually building on bad handling, with one Hong Kong online forum sharing screenshots from the Facebook page of an alleged staff member at D;amp;G’s Tsim Sha Tsui flagship, accusing protesters of having “mental problems” and following “herd mentality. The issue is even being raised among Hong Kong government officials, with chief executive candidate Henry Tang Ying-yen saying D;amp;G should consider locals taking photos outside its store as a compliment, adding, “People take photos because they like the products. The store should welcome this instead of turning people away. ” Saying he plans to raise the issue in the Legislative Council, tourism official Paul Tse Wai-chun demanded that D;amp;G apologize for “discriminating against locals.

Though it’s only a matter of time before D;amp;G presumably issues a blanket apology and looks to move on, the worm-like pace of its communications strategy (if it even has one in China) has clearly done a great deal of damage in Hong Kong. The brand’s overt focus on the mainland China market in recent months — it plans to open around 30 stores in the country within the next two to three years — and perceived kowtowing to wealthy mainland Chinese tourists at its Hong Kong locations has become a simmering issue in the former British colony, and this most recent incident has only made the situation worse.

So what can luxury brands learn from the (ongoing) D;amp;G saga in Hong Kong? First off, despite the importance of Hong Kong as a key market to benefit from growing mainland Chinese tourism, being perceived as “playing favorites” to the detriment of locals should be avoided at all costs. Recently, racy photo-spreads in Beijing and rosy talk of their love for cities like Shanghai and Hangzhou by owners Domenico Dolce and Stefano Gabbana, and rumors in the Hong Kong press about mainland Chinese officials throwing their influence around at luxury boutiques only serves to stir the pot further.

Another important thing for brands to remember in Hong Kong is that the city’s more open press and Internet vis-a-vis the Mainland, and wide rate of English-language fluency, allows for PR issues to spread (arguably) more quickly and (certainly) more globally than they would in mainland China.

The hundreds of angry comments now posted in English to Dolce ;amp; Gabbana’s Facebook wall from Hong Kong attest to this.

In contrast, other recent China-related PR crises — such as complaints by former workers at Gucci China that the brand was operating essentially a sweatshop in southern China — remained largely localized and were less widely reported in the global English-language press. Ignoring Hong Kong’s Internet-mobilized sense of solidarity against what many perceive as belittlement is the worst thing a luxury brand can do, and as such every brand operating in Hong Kong (or, really, anywhere) needs a defined and localized crisis management plan.

Taking the high rate of penetration of global social media platforms like Facebook and Twitter in Hong Kong (and the city’s more open tabloid and online press) into consideration is key, as is the understanding of how locals are reacting to the influx of extremely wealthy mainland Chinese tourist-shoppers now populating shopping districts like Tsim Sha Tsui and Central.

Whether the allegations against D;amp;G in Hong Kong are actually true or not has become a secondary issue.

The brand’s failure to come out with at least an apology and a vow to investigate the claims within the first 24 hours of the initial article is now at the forefront. No matter how this issue ultimately plays out, it will likely serve as a valuable case study for other luxury brands operating in Hong Kong for years to come. Sources: Hong Kong Standard, Sing Tao, and Daily Telegraph Essay Questions ;amp; Guidelines: Write your own responses in no more than three A4-pages (12-fonts).

Word limit: 800 words. You are welcome to carry out further information search on the incident, its development and outcome.

1. What kinds of “lessons” can other business companies learn from this incident with regard to public relations, so that they can be wiser if something like this happens to them 2. In what ways would you consider this company could do better in this situation?