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Hong Kong Politics Test Business -- WSJ

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07/18/2019 | 02:50am EDT

By Joyu Wang and Chuin-Wei Yap

A broad stripe of businesses from global titan Nike Inc. to a local bakery is finding that taking sides, or even appearing to, in Hong Kong's protests against China's growing reach can spur popularity -- or trigger an angry backlash.

In recent weeks, companies have had to quickly recalibrate marketing decisions after getting entangled in local politics. Companies in China halted sales of a new Nike sneaker after its designer posted on social media expressing support for the biggest rallies in Hong Kong's history. A Japanese sports beverage got a marketing bounce as the protesters' drink of choice when it cut advertising with a local broadcaster over perceived pro-government bias, only to distance itself amid calls in China for a boycott. A local cake maker, meanwhile, reported a big bump in sales -- and profanity-laced threats -- when she began making protest-themed pastry.

As Hong Kongers take to the streets by the millions to protest legislation that would have allowed extradition to China along with other grievances, businesses are getting a reminder that behind the polarizing loyalties of the protests lies the more complex task of accommodating the sensitivities of the world's second-largest economy.

At rallies in Hong Kong, protesters often brandish Pocari Sweat, an energy drink from Japan, and its empty bottles cover the aftermath of clashes with police. The company that makes the drink, Otsuka Pharmaceutical Co., earned favor among protesters after pulling its ads from Television Broadcasts Ltd., the dominant Hong Kong broadcaster, which protesters accuse of being pro-Beijing. A Hong Kong-based Otsuka social-media post at the time hinted at sympathies for the protests. Otsuka's corporate headquarters in Tokyo hastened to disagree.

"The decision to withdraw commercials from TVB was made based on marketing strategy and wasn't aimed at sending any political message," an Otsuka spokeswoman said in a phone interview.

TVB said Otsuka's decision was "deeply regrettable."

In mainland China, some social-media users called for a boycott of the Japanese drink. In Hong Kong, protesters continue to provide Pocari free marketing, in one case by making the drink the unofficial mascot of a night mass run to show support for the movement.

"It shows that we don't like the extradition bill, and we think that it should be withdrawn." said John Ellis, a 41-year-old trail runner who works in the investment industry.

Otsuka's predicament is similar to the quandary Nike found itself in weeks earlier. Nike's Japanese collaborator, Undercover, provoked an outcry on Chinese social media after posting a photo of Hong Kong protesters, since deleted, with the words "no extradition to China." Undercover and Nike were poised at the time to launch a new sneaker in markets including China.

Days later, Chinese retailers including sportswear giant Pou Sheng International Ltd., which owns China's popular YYSports brand, said on social media that they received an "urgent notice" from Nike to halt sales of the Undercover sneakers. Nike and YYSports didn't immediately respond to requests for comment.

Nike has been embroiled in U.S. political disputes too. The company withdrew a line of shoes featuring an early version of the American flag after NFL star-turned-activist Colin Kaepernick objected to the design.

China has a range of sensitivities that global businesses must learn to negotiate. Last year, U.S. hotel giant Marriott International Inc. had to briefly shut its website and mobile app in China after circulating an online guest survey that listed Hong Kong, Taiwan, Tibet and Macau -- all claimed by China -- as separate countries. Marriott said it was a mistake.

The Italian fashion house Dolce & Gabbana last year had to scrap a Shanghai fashion show and remains unwelcome on Chinese e-commerce websites after some Chinese viewers felt a promotional video was racist. The couturier apologized.

In Hong Kong, where police conduct has been a focus of some protests, the local operator of Japanese fast-food chain Yoshinoya Holdings Co. raced to limit damage after a post appeared on its Facebook page last week making fun of the city's police.

After the franchise owner, a pro-Beijing businessman, took to local media to publicly express his support for the Hong Kong government, protesters covered at least one Yoshinoya storefront with hundreds of sticky notes demanding a boycott of the restaurant.

"Yoshinoya should be ashamed of pleasing commies," one note said. Yoshinoya didn't respond to requests for comment.

One local bakery is profiting from riding on protester sentiment.

Naomi Suen, who runs the 35-year-old Wah Yee Tang bakery, began carving protest messages on traditional seasonal pastries, called mooncakes, to boost the morale of protesters.

"It was just for fun, and I want to make them happy," she said.

Ms. Suen said sales at her bakery have risen 20% from two weeks earlier, when she started selling the political mooncakes.

Not everyone is buying the confection. Ms. Suen said she got profane phone calls as a result.

"They are never my patrons anyway," Ms. Suen said. "It won't affect my business."

She has faced a backlash of sorts. Ms. Suen's pastry molds are made in mainland China. When she tried to get a new set of protest-themed molds made recently, her vendor declined to make them, she said.

--Megumi Fujikawa, Natasha Khan and Ese Erheriene contributed to this article.

Write to Chuin-Wei Yap at chuin-wei.yap@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
FACEBOOK 1.34% 186.17 Delayed Quote.42.02%
MARRIOTT INTERNATIONAL 1.36% 130.57 Delayed Quote.20.27%
NIKE 1.06% 81.13 Delayed Quote.9.43%
OTSUKA CORPORATION -0.78% 3825 End-of-day quote.30.50%
OTSUKA HOLDINGS CO LTD -0.74% 4291 End-of-day quote.-2.98%
POU SHENG INTERNATIONAL (HOLDINGS) LTD 2.70% 2.28 End-of-day quote.50.99%
TELEVISION BROADCASTS LIMITED 2.76% 12.66 End-of-day quote.-15.60%
YOSHINOYA HOLDINGS CO LTD 0.13% 2245 End-of-day quote.26.34%
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