Swatch Faces Backlash in China Over Controversial Ad, Shares Drop
Swatch apologized and removed ads featuring an Asian model in a perceived 'slanted eye' pose after facing outrage in China. The company's shares dropped 2.70% in early trading, adding to a more than 50% decline since early 2023. China, Hong Kong, and Macau account for 27% of Swatch's sales, but the company has been struggling with difficult market conditions in the region. Swatch's overall revenue fell by 14.60% to 6.74 billion Swiss francs. The company also faces a 39% US tariff, further complicating its global operations.
*this image is generated using AI for illustrative purposes only.
Swiss watchmaker Swatch has found itself embroiled in controversy following an advertising campaign that sparked outrage in China, one of its crucial markets. The company issued apologies and swiftly removed advertisements that featured an Asian male model in what was widely perceived as a 'slanted eye' pose, reminiscent of racist taunts.
Market Impact
The fallout from this incident was immediately felt in the financial markets. Swatch's shares experienced a significant drop, falling as much as 2.70% in early trading following the controversy. This decline adds to the company's ongoing challenges, as its stock has already seen a substantial decrease of more than half since early 2023.
Company Response
Recognizing the severity of the situation, Swatch took prompt action to address the issue:
- The company posted apologies on both Weibo and Instagram platforms.
- All related advertising materials were removed worldwide.
Challenges in the Chinese Market
The controversy comes at a particularly challenging time for Swatch in the Chinese market:
- China, along with Hong Kong and Macau, represents a crucial region for Swatch, accounting for 27.00% of the group's sales.
- The company has been facing persistently difficult market conditions in China.
- These challenges contributed to a significant decline in Swatch's overall revenue, which fell by 14.60% to 6.74 billion Swiss francs.
Additional Hurdles
Beyond the recent controversy and weak demand in China, Swatch is grappling with other significant challenges:
- The company now faces a 39.00% US tariff, adding pressure to its international operations.
- The combination of market difficulties and regulatory hurdles poses a complex scenario for Swatch's global strategy.
This incident underscores the importance of cultural sensitivity in global advertising campaigns, especially in key markets like China. For Swatch, navigating these challenges while maintaining its market position will be crucial in the coming months.
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