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| How China made Victoria's Secret a pawn in its ruthless global game | How China made Victoria's Secret a pawn in its ruthless global game |
| (about 1 month later) | |
| The lingerie brand’s star model Gigi Hadid got into trouble over a gaffe that a more seasoned business traveller to China might have anticipated. So what hope for future forays into this repressive state? | |
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| Mon 20 Nov 2017 19.04 GMT | |
| Last modified on Mon 4 Dec 2017 08.28 GMT | |
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| As a movie plot, it would work better for Johnny English than James Bond: the lingerie brand Victoria’s Secret saw its launch in China mired in controversy when the People’s Republic refused to issue visas to invited celebrities and journalists. Katy Perry was barred for seemingly supporting the independence of Taiwan, while model Gigi Hadid transgressed by squinting in a way some Chinese people thought was racist, while posing with a fortune cookie that looked like Buddha. Add in China’s standard unpredictability when it comes to issuing press visas and you have loss of face all around. | As a movie plot, it would work better for Johnny English than James Bond: the lingerie brand Victoria’s Secret saw its launch in China mired in controversy when the People’s Republic refused to issue visas to invited celebrities and journalists. Katy Perry was barred for seemingly supporting the independence of Taiwan, while model Gigi Hadid transgressed by squinting in a way some Chinese people thought was racist, while posing with a fortune cookie that looked like Buddha. Add in China’s standard unpredictability when it comes to issuing press visas and you have loss of face all around. |
| Victoria's Secret is the largest lingerie company in the US. Founded by Californian businessman Roy Raymond in 1977, it was named after Queen Victoria (although how a British queen famed for wearing head-to-toe black inspired lingerie remains unclear) and was an instant success, making almost £400,000 in its first year. However by 1982, the company was facing bankruptcy despite its £2.5m turnover. Its acquisition by US brand The Limited the same same year led to huge expansion. The business grew from four shops in 1982 to 100 in 1986, an expansion credited to the strategy of targeting female consumers directly, although the bulk of it business was through its mail order catalogue. In 1992, VS introduced perfumes and by 2017, it had more than 1,000 stores in the US alone. | Victoria's Secret is the largest lingerie company in the US. Founded by Californian businessman Roy Raymond in 1977, it was named after Queen Victoria (although how a British queen famed for wearing head-to-toe black inspired lingerie remains unclear) and was an instant success, making almost £400,000 in its first year. However by 1982, the company was facing bankruptcy despite its £2.5m turnover. Its acquisition by US brand The Limited the same same year led to huge expansion. The business grew from four shops in 1982 to 100 in 1986, an expansion credited to the strategy of targeting female consumers directly, although the bulk of it business was through its mail order catalogue. In 1992, VS introduced perfumes and by 2017, it had more than 1,000 stores in the US alone. |
| Every year, VS hosts its own catwalk show in a different city. London last hosted the show in 2014, and in 2017 the models flew to Shanghai. The first show was held in 1995 at the New York Plaza and starred some of the world's top models, including Stephanie Seymore, Veronica Webb and Beverly Peele. Since then, the brand has propelled the careers of Gisele Bundchen, Tyra Banks, Claudia Schiffer, Naomi Campbell, Eva Herzigová and, more recently, Adriana Lima, Alessandra Ambrosio, Kendall Jenner and Gigi Hadid. The show typically features around 100 'outfits' with themes such as Exotic Traveller, Dream Girl and Gilded Angel and is located in a different city each year. Some of the biggest names in pop perform mid-show too, from Taylor Swift to Harry Styles to The Weeknd. Is the show bigger than the shop? It's certainly a force of its own, and career-changing event for the models who walk in it. | Every year, VS hosts its own catwalk show in a different city. London last hosted the show in 2014, and in 2017 the models flew to Shanghai. The first show was held in 1995 at the New York Plaza and starred some of the world's top models, including Stephanie Seymore, Veronica Webb and Beverly Peele. Since then, the brand has propelled the careers of Gisele Bundchen, Tyra Banks, Claudia Schiffer, Naomi Campbell, Eva Herzigová and, more recently, Adriana Lima, Alessandra Ambrosio, Kendall Jenner and Gigi Hadid. The show typically features around 100 'outfits' with themes such as Exotic Traveller, Dream Girl and Gilded Angel and is located in a different city each year. Some of the biggest names in pop perform mid-show too, from Taylor Swift to Harry Styles to The Weeknd. Is the show bigger than the shop? It's certainly a force of its own, and career-changing event for the models who walk in it. |
| The brand routinely comes under fire from feminist groups who say VS is objectifying women. It has also been accused of promoting an unhealthy body image to impressionable young fans (especially through its Pink diffusion line, whose marketing targets teenagers) as well as its adult fanbase. The gruelling preparation schedule for the annual event has also been harshly critiqued, with Adriana Lima revealing in 2011 that she cuts out solids nine days before the show and liquid in the last 12 hours. "No liquids at all, so you dry out. Sometimes you can lose up to 8lb just from that," she said. | The brand routinely comes under fire from feminist groups who say VS is objectifying women. It has also been accused of promoting an unhealthy body image to impressionable young fans (especially through its Pink diffusion line, whose marketing targets teenagers) as well as its adult fanbase. The gruelling preparation schedule for the annual event has also been harshly critiqued, with Adriana Lima revealing in 2011 that she cuts out solids nine days before the show and liquid in the last 12 hours. "No liquids at all, so you dry out. Sometimes you can lose up to 8lb just from that," she said. |
| In a bid to equate the underwear it sells with high fashion, VS routinely teams up with the fashion industry types to give designer sparkle to the brand's aesthetic. Swarovski crystals regularly appear on pieces, while the 2017 show sees the brand collaborating with Balmain creative director, Olivier Rousteing, for a tartan-heavy collection inspired by punk. Its real kudos lies with Sophia Neophitou-Apostolou, editor-in-chief of 10 Magazine, who has been the show’s creative director for over five years. | In a bid to equate the underwear it sells with high fashion, VS routinely teams up with the fashion industry types to give designer sparkle to the brand's aesthetic. Swarovski crystals regularly appear on pieces, while the 2017 show sees the brand collaborating with Balmain creative director, Olivier Rousteing, for a tartan-heavy collection inspired by punk. Its real kudos lies with Sophia Neophitou-Apostolou, editor-in-chief of 10 Magazine, who has been the show’s creative director for over five years. |
| This is a hot topic where VS is concerned. Each year, a select group of models are given "angel" status, and are generally better paid than their "model" counterparts. You can spot an "angel" by their 10kg catwalk wings. | This is a hot topic where VS is concerned. Each year, a select group of models are given "angel" status, and are generally better paid than their "model" counterparts. You can spot an "angel" by their 10kg catwalk wings. |
| Victoria’s Secret staff are said to believe their emails are being watched. To which seasoned business travellers to China might respond: why do you think we’ve been carrying burner phones and disposable laptops there for years? | Victoria’s Secret staff are said to believe their emails are being watched. To which seasoned business travellers to China might respond: why do you think we’ve been carrying burner phones and disposable laptops there for years? |
| This is serious business. Demand for high-end women’s underwear is surging in China, as real wages rise and women’s social attitudes change. Sales volumes have doubled in five years, to $18bn (£14bn). For reference, the combined efforts of all the queues of sheepish men outside Britain’s knicker shops this Christmas will drive the UK total to just $2bn. But the average Chinese retail outlet still prefers functionality over seductiveness – with shop window displays that would make the ladies underwear section at Marks & Spencer look risque. Into this gap have surged numerous online-only Chinese underwear brands, selling designer garments at less than half price of the equivalent VS product. But their presence in the malls, where the young salaried women shop is still minimal. So battle is commenced – with the Chinese brands engaged in a price war against each other, while being relentlessly boosted by the state-owned media against the foreign competition. The ultimate prize is significant: whoever wins brand supremacy, once China’s 200 million young adult women are prepared to buy bras at $90 (£68) a time, will be raking in large profits. | This is serious business. Demand for high-end women’s underwear is surging in China, as real wages rise and women’s social attitudes change. Sales volumes have doubled in five years, to $18bn (£14bn). For reference, the combined efforts of all the queues of sheepish men outside Britain’s knicker shops this Christmas will drive the UK total to just $2bn. But the average Chinese retail outlet still prefers functionality over seductiveness – with shop window displays that would make the ladies underwear section at Marks & Spencer look risque. Into this gap have surged numerous online-only Chinese underwear brands, selling designer garments at less than half price of the equivalent VS product. But their presence in the malls, where the young salaried women shop is still minimal. So battle is commenced – with the Chinese brands engaged in a price war against each other, while being relentlessly boosted by the state-owned media against the foreign competition. The ultimate prize is significant: whoever wins brand supremacy, once China’s 200 million young adult women are prepared to buy bras at $90 (£68) a time, will be raking in large profits. |
| Under Xi Jinping, everything is political. Hadid was hounded across Chinese social media for having “mocked Asian people”, according to the newspaper Jing Daily, which added that the company’s “insufficient response” – ie refusal to sack her – was “a slight to the national pride of Chinese millennials”. She has since apologised for her actions, saying “ I have the utmost respect and love for the people of China.” | Under Xi Jinping, everything is political. Hadid was hounded across Chinese social media for having “mocked Asian people”, according to the newspaper Jing Daily, which added that the company’s “insufficient response” – ie refusal to sack her – was “a slight to the national pride of Chinese millennials”. She has since apologised for her actions, saying “ I have the utmost respect and love for the people of China.” |
| Xi, whose “thoughts” were enshrined in the party constitution in October, has effectively turned the brittle nationalism of Chinese cyberspace into government policy. China is building a new physical infrastructure across Central Asia and into Europe, buying up assets as far as Greece and the Balkans and building up its military to match the US’s presence in the region. Xi has cracked down on all potential opponents, issuing a series of warnings to anybody who might be thinking of opposing him. And he has ordered the party cadres to learn actual Marxism – not the neoliberal management theories people thought were Marxism under his predecessors. | Xi, whose “thoughts” were enshrined in the party constitution in October, has effectively turned the brittle nationalism of Chinese cyberspace into government policy. China is building a new physical infrastructure across Central Asia and into Europe, buying up assets as far as Greece and the Balkans and building up its military to match the US’s presence in the region. Xi has cracked down on all potential opponents, issuing a series of warnings to anybody who might be thinking of opposing him. And he has ordered the party cadres to learn actual Marxism – not the neoliberal management theories people thought were Marxism under his predecessors. |
| The impossibility of knowing how this will play out is summed up in the Chinese bureaucracy’s habitual use of the word “while” – often inserted between two entirely opposed objectives. For example, Xi will “lower Chinese barriers for foreign investors, while strengthening domestic innovative capabilities in digital, engineering, genetic, aerospace, cyberspace, and smart technologies”. How many Chinese barriers should foreign businesses expect to encounter if they want to invest in such capabilities? They are left guessing, as are the organisers of Victoria’s Secret who reportedly could not even get a permit to film on the street outside the venue where their fashion show was to be staged. | The impossibility of knowing how this will play out is summed up in the Chinese bureaucracy’s habitual use of the word “while” – often inserted between two entirely opposed objectives. For example, Xi will “lower Chinese barriers for foreign investors, while strengthening domestic innovative capabilities in digital, engineering, genetic, aerospace, cyberspace, and smart technologies”. How many Chinese barriers should foreign businesses expect to encounter if they want to invest in such capabilities? They are left guessing, as are the organisers of Victoria’s Secret who reportedly could not even get a permit to film on the street outside the venue where their fashion show was to be staged. |
| The game China has played with globalisation up to now has been logical and, if we consider how brutally its own markets were torn open in the 19th century, karmic. It has protected its own industries and consumer sector behind a string of unofficial barriers, and with a slew of soft loans and politicised investments that a regular capitalist government could never get away with. | The game China has played with globalisation up to now has been logical and, if we consider how brutally its own markets were torn open in the 19th century, karmic. It has protected its own industries and consumer sector behind a string of unofficial barriers, and with a slew of soft loans and politicised investments that a regular capitalist government could never get away with. |
| Above all, it used the Great Firewall, which western companies initially accepted as part of the political setup, as a protective economic barrier behind which it could create global-scale tech and internet companies. But China’s intended next steps in shaping its domestic market will take this principle a whole lot further. | Above all, it used the Great Firewall, which western companies initially accepted as part of the political setup, as a protective economic barrier behind which it could create global-scale tech and internet companies. But China’s intended next steps in shaping its domestic market will take this principle a whole lot further. |
| Sesame Credit, set up by Ant Financial, an offshoot of Alibaba (known in China as Zhima Credit) is one of a number of credit scoring systems that look designed to make Orwellian self-surveillance a reality. It is one of a number of credit scoring agencies recently set up to seeking to aggregate user behaviour to offer incentives. Tencent’s rival service collects data users’ from social media. Both companies are using user data in a way that would not be possible in the UK. | Sesame Credit, set up by Ant Financial, an offshoot of Alibaba (known in China as Zhima Credit) is one of a number of credit scoring systems that look designed to make Orwellian self-surveillance a reality. It is one of a number of credit scoring agencies recently set up to seeking to aggregate user behaviour to offer incentives. Tencent’s rival service collects data users’ from social media. Both companies are using user data in a way that would not be possible in the UK. |
| The private initiatives are seen as precursors to a government plan, in 2020, to launch a comprehensive social credit system. As well as creditworthiness, it will measure political loyalty based on online behaviour. People with low scores won’t get job offers, loans or high-speed internet; people who network with people with low scores will also get downgraded. The project, which is awaiting regulatory approval, has been decried by human rights groups as a mass surveillance tool. But it is nothing compared to what China is planning with artificial intelligence. Last month, the Chinese state issued a strategy designed to achieve global leadership in AI by 2030. As part of the plan, the private sector is ordered routinely to share its user data with the state. This puts China in the unique position among major powers of having no formal barriers to state exploitation of private commercial data. If it succeeds, China will create a consumer market whose customer data is completely interpenetrated with state surveillance mechanisms, and a population whose behaviour can be predicted right down to their choice of underwear. | The private initiatives are seen as precursors to a government plan, in 2020, to launch a comprehensive social credit system. As well as creditworthiness, it will measure political loyalty based on online behaviour. People with low scores won’t get job offers, loans or high-speed internet; people who network with people with low scores will also get downgraded. The project, which is awaiting regulatory approval, has been decried by human rights groups as a mass surveillance tool. But it is nothing compared to what China is planning with artificial intelligence. Last month, the Chinese state issued a strategy designed to achieve global leadership in AI by 2030. As part of the plan, the private sector is ordered routinely to share its user data with the state. This puts China in the unique position among major powers of having no formal barriers to state exploitation of private commercial data. If it succeeds, China will create a consumer market whose customer data is completely interpenetrated with state surveillance mechanisms, and a population whose behaviour can be predicted right down to their choice of underwear. |
| In these circumstances it is right to ask: what is left of the idea of a global marketplace? The Shanghai branch of Victoria’s Secret will look like any other branch in the world – but it will be selling into a marketplace whose dynamics it cannot properly see, in which its customer data is not protected from the state, and where every purchase, every search inside its online store is recorded, as of right, by the government – as with any business operating in China. | In these circumstances it is right to ask: what is left of the idea of a global marketplace? The Shanghai branch of Victoria’s Secret will look like any other branch in the world – but it will be selling into a marketplace whose dynamics it cannot properly see, in which its customer data is not protected from the state, and where every purchase, every search inside its online store is recorded, as of right, by the government – as with any business operating in China. |
| Ten years ago, it was only corporations such as Google who had to decide whether they could ethically continue operating in markets distorted by state surveillance. Today that dilemma is beginning to confront the most basic, physical consumer brands trying to operate in China – and, as mass surveillance technology is deployed, it will get worse. | Ten years ago, it was only corporations such as Google who had to decide whether they could ethically continue operating in markets distorted by state surveillance. Today that dilemma is beginning to confront the most basic, physical consumer brands trying to operate in China – and, as mass surveillance technology is deployed, it will get worse. |
| On the internet, there is already Balkanisation; there is the Chinese tech market and the rest of the world. Soon, right down to issues such as choice of styles or colours in fashion, global companies will be selling into two kinds of market. In one, consumers really do exercise choice, and consumer data is for the use of the seller only; in another, China, every micro-level consumer choice is scanned by the mass surveillance programmes in case it signals disloyalty. | On the internet, there is already Balkanisation; there is the Chinese tech market and the rest of the world. Soon, right down to issues such as choice of styles or colours in fashion, global companies will be selling into two kinds of market. In one, consumers really do exercise choice, and consumer data is for the use of the seller only; in another, China, every micro-level consumer choice is scanned by the mass surveillance programmes in case it signals disloyalty. |
| Victoria’s Secret clearly blundered into an issue it could not anticipate, but the experience should prompt all businesses operating in China to ask the question: with every sale I make, am I now providing a repressive state with the means to keep my customers under surveillance? | Victoria’s Secret clearly blundered into an issue it could not anticipate, but the experience should prompt all businesses operating in China to ask the question: with every sale I make, am I now providing a repressive state with the means to keep my customers under surveillance? |
| • This article was amended on 30 November and 4 December 2017 to correct some details about Sesame Credit, which had been based on information in a report that was found to be incorrect after publication. The company was not setup by Alibaba and Tencent. Sesame Credit was setup by Ant Financial, an offshoot of Alibaba. Tencent runs a different credit scoring service. In addition, Sesame Credit does not measure political loyalty based on user data. | • This article was amended on 30 November and 4 December 2017 to correct some details about Sesame Credit, which had been based on information in a report that was found to be incorrect after publication. The company was not setup by Alibaba and Tencent. Sesame Credit was setup by Ant Financial, an offshoot of Alibaba. Tencent runs a different credit scoring service. In addition, Sesame Credit does not measure political loyalty based on user data. |
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