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MarketScreener Homepage  >  Equities  >  Euronext Paris  >  Christian Dior SE    CDI   FR0000130403


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Dior Gets Caught Up in China's Latest Map Flap

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10/17/2019 | 09:14am EST

By Julie Wernau

BEIJING -- Christian Dior apologized on Thursday after Chinese consumers criticized the French luxury brand for using a map of China that excluded Taiwan.

What set the French luxury brand apart from a long list of Western brands that have angered Beijing in recent weeks and months: Dior's map of China didn't appear on a product or a website, but rather in a closed-door presentation to college students. Dior is owned by LVMH Moët Hennessy Louis Vuitton.

The outrage over the map and the quick apology from Dior show how the navigation by brands around issues that can rub China the wrong way is becoming ever trickier. It followed a major confrontation between the National Basketball Association and China that quickly threatened the league's millions of dollars in business interests in the country.

Unlike other recent flare-ups, which mostly involved social-media postings, brand web sites or the products themselves, the Dior incident occurred at a recruiting event at Zhejiang Gongshang University in the eastern Chinese city of Hangzhou and then made its way online.

In a video posted online of a question-and-answer session following the presentation, a female student asks why a map of China doesn't include Taiwan, a self-governed island that China considers an inalienable part of its territory. The Dior representative replied that the picture was too small, implying that it was hard to show anything except the Chinese mainland. The student responded: "Taiwan island isn't smaller than Hainan," referring to an island province in southern China. Another Dior representative then added that Taiwan, Hong Kong and the Chinese mainland together formed "Great China."

That was apparently too little, too late for China's internet users. The topic "Dior statement" was among the most viewed on China's Twitter-like microblogging service Weibo on Thursday, with about 260 million views.

Dior said in a Chinese-language post on its own Weibo account that it would "seriously investigate" the incident.

"Dior first extends our deep apologies for the incorrect statement and misrepresentation made by a Dior staff member at a campus presentation. Dior always respects and upholds the One China policy, strictly safeguards China's sovereignty and territorial integrity, and treasures the feelings of the Chinese people," the company statement read. Dior didn't respond to requests for further comment.

One social-media user, who called himself " Zhang Xiaoqi loves sharing," and who identified himself on his personal Weibo account as an employee of the propaganda department of Zhejiang Gongshang University, retweeted three posts about the Dior incident.

Commenting on one post claiming that Dior had held presentations on several campuses but that only students from Zhejiang Gongshang University had protested, he replied: "This is obligatory. We now see the red heart of our students."

Underscoring the risks for Western companies seeking to do business in China and across Asia, film censors in Malaysia, Vietnam and the Philippines all took aim this week at the animated movie "Abominable," a co-production between DreamWorks Animation and Pearl Studio, a Chinese production studio. The film includes one brief scene portraying a map that shows China's controversial "nine-dash line," which marks its territorial claims in the South China Sea.

The NBA received a crash course earlier this month in how triggering China's anger can engulf a brand after the Houston Rockets's general manager posted a Tweet in support of Hong Kong demonstrators. Rockets merchandise effectively disappeared overnight from stores and e-commerce sites, while broadcasts of NBA preseason games were canceled. The controversy received widespread attention, bringing East Asia's fraught geopolitics straight into Americans' living rooms.

China is on track to become the world's largest retail market by 2021 and is one of the most critical markets for luxury brands. In recent weeks, brands have been called out for everything from advertising campaigns viewed by Chinese consumers as sympathetic to Hong Kong demonstrators to drop-down menus that listed Hong Kong, Macau or Taiwan as "countries" rather than as a part of China.

Successful Western brands in China have had to move quickly to keep up with upstart domestic competitors, which has meant giving people on the ground in China more autonomy. But that strategy can backfire, says Martin Roll, an independent business and brand adviser and author of the book "Asian Brand Strategy."

"A very small misstep which is unintentional can completely backfire and hijack your trajectory for the next five years," he said.

Apologizing too assiduously carries its own risks, too. U.S. sports fans and politicians lashed the NBA after its expressions of regret over the Rockets general manager's tweet, arguing that Western companies operating in China shouldn't fall in line with the country's policies simply to protect market share.

--Fanfan Wang contributed to this article.

Write to Julie Wernau at Julie.Wernau@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
CHRISTIAN DIOR SE 0.70% 458.6 Real-time Quote.36.39%
LVMH MOËT HENNESSY VUITTON SE 0.09% 403.6 Real-time Quote.56.18%
UNITED PARCEL SERVICE -0.93% 123.14 Delayed Quote.26.26%
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Financials (EUR)
Sales 2019 53 223 M
EBIT 2019 11 368 M
Net income 2019 3 006 M
Debt 2019 1 358 M
Yield 2019 1,56%
P/E ratio 2019 27,0x
P/E ratio 2020 24,6x
EV / Sales2019 1,55x
EV / Sales2020 1,37x
Capitalization 81 190 M
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Technical analysis trends CHRISTIAN DIOR SE
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Mean consensus HOLD
Number of Analysts 1
Average target price 453,00  €
Last Close Price 450,20  €
Spread / Highest target 0,62%
Spread / Average Target 0,62%
Spread / Lowest Target 0,62%
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Sidney Toledano Vice Chairman & Chief Executive Officer
Bernard Arnault Chairman
Florian Ollivier Chief Financial Officer
Renaud Donnedieu de Vabres Independent Director
Christian de Labriffe Independent Director
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