Unfair treatment of Chinese consumers? Canadian luxury winter apparel brand draws flak in China

With winter fast approaching, Chinese residents are again buying down jackets to keep warm. Canada Goose, a Canadian luxury winter apparel brand that has been in the market since 2018 and has an increasing number of outlets in the country, has come under the spotlight yet again.

An incident concerning a no return policy drew the ire of netizens. This is the third time the company has faced negative publicity in its three years in China. But instead of being forced to exit the Chinese market because of backlash, boycotts and criticisms, even from the state media, the brand has become more popular.

On 30 November, Shanghai Morning Post reported that a Shanghai resident with the surname Jia had bought an 11,400 RMB (S$2,449) down jacket from a Canada Goose retail store. After she got home, she discovered that the brand logo was badly sewn, the stitching was crude, and the jacket had a strong smell.

But Madam Jia could not return the item, and her subsequent efforts to assert her consumer rights were futile as well. She recalled that an employee had asked her to sign an "exchange policy" when she made her purchase.

The first clause of the document states: "Unless otherwise provided by applicable laws, all products sold at Canada Goose's retail store in China mainland are strictly non-refundable."

On 30 November, a reporter from The Beijing News called Canada Goose's Sanlitun store in Beijing. An employee said that products sold at retail stores are non-refundable because customers buy the products after they have physically seen them. However, a one-time exchange can be made within 14 days. The employee explained that purchases made online could be returned unconditionally within seven days as the buyers were unable to check the product.

The reporter then called Canada Goose's pop-up store in Chongqing's IFS Mall. An employee there said that all products sold at the retail stores are non-refundable, and that this regulation is applied across all their stores in the mainland.

The topic "Canada Goose stipulates that products sold in mainland China retail stores cannot be returned" immediately made its way to the list of top searches on the internet. Many netizens made snide remarks such as "Aren't they being too haughty and dictatorial?", "Go back to Canada!", and "This is cheating!" Some netizens even claimed that in other countries, Canada Goose does allow products to be returned unconditionally within 30 days.

Before the company could issue a clarification, China National Radio chastised Canada Goose on the evening of 30 November for treating customers differently based on geographic region, and accused them for having double standards and being arrogant. The commentary even suggested that Canada Goose believes it can gloss over any problems with the quality of its products and its service standards with the brand's good reputation. It added that China's own local brands of down jackets have long taken flight with their quality and design - if Canada Goose refused to improve itself and stayed lost in its daydreams, what remained would be a floor of goose feathers.

On 1 December, the Shanghai Consumer Protection Commission said that it had summoned Canada Goose to explain its exchange policy.

That same day, Canada Goose released a statement on its official Weibo account. No apology was given and it said matter-of-factly that its "no return policy" in mainland China was just a rumour and that the first clause of its "exchange policy" states that "all products sold at Canada Goose's retail stores in Chinese mainland are refundable, subject to applicable laws". Some media outlets interpreted this to mean that the brand is retracting what it said earlier. However, if we compare the earlier clause and the current clarification, we would find that the brand has simply reiterated its "exchange policy" in another way.

The statement also emphasised that each product sold in retail stores is inspected by professionally trained salespersons before payment, and checked by customers on-site.

But the Shanghai Consumer Protection Commission was still not satisfied with the explanation and summoned Canada Goose over the matter again last week. The China Consumers Association also said in a statement: "If the brand sees itself as a big brand, and engages in double standards, and discriminates against mainland consumers, it will fail in this market."

It is worth noting that amid the wave of criticism against Canada Goose, some Chinese netizens have also raised doubts about the incident. From the loose threads visible in the photograph of the jacket that Madam Jia wanted to return, netizens pointed out that the jacket seemed to have been torn apart by someone, saying that "the current trend of public opinion is to create trouble for foreign capital". Other netizens also shared their successful attempts at returning their product: "The employees were very nice throughout the process and it was basically fuss-free. You can return your jackets!"

Canada Goose was also embroiled in a PR crisis in September this year. At the time, the Shanghai Huangpu District Market Supervision and Administration Department fined Xiji (Shanghai) Trading Co, a Canada Goose-related company in China, 450,000 RMB for misleading consumers through an advertisement.

The authorities alleged that their down jackets which cost tens of thousands of RMB were actually stuffed with duck down instead of goose down. Furthermore, the brand emphasised the place of origin to highlight the fact that its products kept people warm, but there was no factual basis for this.

Following this, state media repeatedly criticised the brand, with government-affiliated Economic Daily saying on 8 September, "The moon isn't rounder in foreign countries, and foreign down jackets aren't warmer."

On 9 September, the people.cn website echoed the mantra that foreign brands do not necessarily represent high quality, and foreign down jackets are not necessarily warmer than China's. On 13 September, Beijing Business Today even asserted that the down apparel market is already saturated, Chinese brands are quickly taking over the market, and the era where foreign brands are able to effortlessly outcompete Chinese brands has ended.

In November, the Shanghai market regulation department announced its administrative penalty decision regarding Canada Goose. The authority's extensive and detailed scrutiny of Canada Goose's publicity materials has some netizens calling it the textbook for selecting and purchasing a down jacket.

When China-Canada relations went into a deep freeze following the arrest of Huawei senior executive Meng Wanzhou in Vancouver on 1 December 2018, there were already calls to boycott Canada Goose in China. Some analysts predicted that this down apparel brand that had just entered the Chinese market would fail.

Perhaps sensing a possible crisis, Canada Goose delayed its opening by two weeks. Back then, Zaobao reporters went to its Beijing Sanlitun flagship store on 30 December, and found that over 30 people were queueing outside the store. An employee even said that the waiting time was around 30 minutes.

At that time, Zaobao reporters recalled seeing numerous consumers walking out of the store with shopping bags in hand. A female Beijing resident in her 30s said that she bought a 7,000 RMB down jacket because she previously bought one in the US and thought that the quality was excellent. She had heard that Canada Goose may have delayed its opening because of Meng's arrest, but shared that the incident did not affect her decision to buy a down jacket from the Canadian brand at all. "Isn't it just a piece of clothing?" she mused.

Based on Canada Goose's fourth quarter fiscal 2021 results, its direct-to-consumer (DTC) revenue in mainland China increased by 101.4%. On the company's website, Canada Goose has 14 retail stores in mainland China, exceeding the number of stores in Canada (nine), its place of origin.

National Business Daily reported that at the beginning of the year, people had to queue for a period of one to three hours at Canada Goose's Shanghai store before they could enter, and down jackets costing nearly 10,000 RMB almost went out of stock. Not long ago when Canada Goose released 1,000 RMB face masks that practically have zero protection against the coronavirus, Chinese consumers also snapped them up.

Avery Booker, co-founder of Jing Daily, a publication focused on China's luxury industry, told Canadian media The Globe and Mail, "They haven't really done anything wrong - it's just their turn. If you look at them objectively, I think they've done everything right in China as a foreign brand."

He further analysed that in the winter clothing and winter sports arena, China does not "have many established local brands", and Canada Goose is "still the hottest winter brand in China". Hence, during the period prior to the Winter Olympics, officials are scrutinising Canada Goose to help shift the people's attention to local brands.

Including its most recent incident involving its no return policy, Canada Goose has had at least three PR disasters in China. Not only were they attacked by countless netizens, they were also criticised by state media, and experienced waves of calls to boycott the brand. But even so, there is no news so far that the company's revenue in China took a hit or that they are being forced to exit the Chinese market.

So why is it that Canada Goose was able to survive so many crises? What antibodies does it have? From another perspective, if down jackets that cost 10,000 RMB are of poor quality, or if competitors are able to surpass them in terms of price-performance ratio, will market mechanisms allow such a company to survive?

A reasonable guess is that, behind the loud calls to boycott the brand and to support local brands, Chinese consumers who have remained silent and who have a higher purchasing power will still go for the Canadian brand until they are able to find a better alternative in terms of quality and price. After all, our bodies do not lie, and it is important to keep warm during the winter. Amid the ongoing pandemic, it is not good to catch a cold or run a fever.

Undeniably, while the down jackets of this brand established in 1957 are expensive, many customers are satisfied with the brand and are willing to pay for its products. However, Canada Goose has received too much negative publicity. It has to watch each step it makes in the future as if it's walking on thin ice.

On the other hand, it may be like what Chinese state media have said - Chinese down jacket brands are improving and may just have a share of Canada Goose's pie in the future through better quality and more affordable winter apparel.

Professor Zheng Yongnian, founding director of the Advanced Institute of Global and Contemporary China Studies of the Chinese University of Hong Kong (Shenzhen), has made clear how Chinese brands can upgrade themselves. When asked to share his thoughts about the rise of local Chinese brands, Zheng told the 21st Century Business Herald during an interview that brands are not created like online traffic, through capital injections or celebrity endorsements, as these modes of engagement are driven by short-term gains. He said that world-renowned brands are not a product of hype but of continuous improvement through building a culture around the brand and the strength of designers' creations. Therefore, the raising of cultural standards is very important for both the consumer and manufacturer alike.

Meanwhile, on the night of 9 December, Canada Goose said on its official Weibo account that it would continue to strictly abide by Chinese laws and regulations, while providing high-quality products and customer experience to consumers. It has updated and clearly spelt out its return policy for its mainland stores which states that it allows exchanges within 14 days for purchases made in retail stores if the products are still in good condition.

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