Chaina Case Study

Export Marketing
Assignment # 01
Q-Read the passage and answer the questions? If you need further information
about the situation then use Google, to explain your answer? (5)
Abstract:
In May 2008, Moet Hennessy Louis Vuitton SA (LVMH) dropped American

actor Sharon Stone, the face of Dior, from its China campaign after she suggested
that the May 2008 earthquake in China was a result of bad karma, for their alleged
mistreatment of Tibet. Stone's remarks were seen as insensitive and the company
immediately disassociated itself from her. Experts said this incident went a long
way to show the limitations of celebrity endorsements.
Issues:
 International marketing
Dior entered China just when China introduced its "Open Door" policy in 1979. It
was the first premium Western cosmetics brand to set up a direct China
subsidiary. This helped it to develop the market. LVMH's first store opened in
Beijing in 1992 when China started opening up its retail industry. China was a
strong market for Dior, and the luxury goods firm had 31 LVMH brands officially
available in China, with 68 outlets in over 35 cities, with 11 in Beijing alone. The
company had devoted a lot of time and thought to choosing new locations for its
stores and to understanding the Chinese market.
 Cultural and cross-cultural influences
the brand is believed to be highly effective at inspiring Chinese youth to express
the cultural values and philosophy they stand for, which transcends the traditional
cultural norms. That is an important ability for luxury brands to master if they
want to stay relevant with this young population. Chanel and Swarovski are the
next two most relevant luxury labels among China’s millennial youth,
respectively. “Dior is good at inspiring expression (of these shifting cultural
values) that goes beyond the tradition and norms. Plus, [the brand] also has good
visual campaigns that are appealing to young people.”
 Cultural sensitivity
the Western and European markets, companies were pumping resources into
China to take advantage of what was being termed as the world's next economic
superpower. In such a scenario, nobody wanted to upset the Chinese with remarks
on their so called bad behavior. Stone's comments did little to help the European
companies that were trying hard to woo the Chinese. Experts pointed out that if
Dior wanted to survive in a foreign market, it was extremely important for it to be
culturally sensitive
 Sales promotion - Celebrity endorsement
Companies had very little control over the celebrity's image, and it could cause
them immense damage if the star were to pass stray comments or behave
irresponsibly. This was not the first time that a celebrity had been dropped by a
particular brand for behaving irresponsibly or for attracting undue controversy.
 Public relations
the French cosmetics brand Lancôme was involved in a public relations (PR)
battle after Denise Ho, a Hong Kong singer who had publicly expressed anti-
China remarks online, performed at a mini-concert hosted by the brand. The case
even caught the attention of Global Times, the state-run newspaper, who wrote a
critique of the collaboration. Meanwhile, Chinese consumers residing in the
company’s home country, France, launched an online petition calling for a
boycott of the brand. Even though Lancôme immediately cancelled Ho’s
attendance and released a public apology to Chinese consumers, the brand lost
many loyal customers for the issue.
Introduction
In May 2008, Moet Hennessy Louis Vuitton SA (LVMH), a luxury goods

company with over sixty brands in its portfolio, dropped Hollywood actor Sharon
Stone (Stone), the face of its Christian Dior (Dior) brand, from its China
campaign...
Question:
1. Critically analyze Christian Dior's decision to use celebrity endorsement to

promote the Christian Dior brand. Discuss the pros and cons of using celebrity
endorsements to promote a brand.
Ans : The last two paragraphs of this article helps me the most to answer this
question. There is a risk involved every time a company uses a celebrity to
endorse. People will look at the views of the celebrity and have a bias on the
company because of it, whether positive or negative. It should be important to
look at the views of a celebrity to make sure they are a right fit for the message a
business is trying to portray if they need an endorsement. They also need to act
personable, as Stone did not by being insensitive, but they need to also have some
sort of way the customers can personally relate to them or look up to them, aka
not just by being a pretty face. Another example I can think of is where Kat Von D,
a makeup and tattoo artist, is a strong supporter of not vaccinating her children
which is an unpopular opinion these days. Many people will not spend money on
her products because they do not want to support that mindset.
Stone's comments predictably raised a furor in China. Xinhua, the state-run

Chinese News Agency, called Stone "The public enemy of all mankind" and there
was talk of banning her movies in China as well. Ng See-Yuen, founder of the
UWE chain and chairman of the Federation of Hong Kong Filmmakers, was
quoted in The Beijing Times as saying that his chain would not show any Sharon
Stone movie. Angry protesters also damaged billboards featuring the actor. The
company was quick to pull down her billboards.

Stone immediately issued an apology, stating that she felt "deeply sorry for my
inappropriate words and acts, which have hurt the Chinese people's feelings" and
offered "deepest condolences and sympathy to the victims of the quake". She also
said she was willing to participate in the efforts to help them. However, by then,
the harm had been done.

Experts said that this particular incident went a long way to show the limitations
of celebrity endorsements. Companies had very little control over the celebrity's
image, and it could cause them immense damage if the star were to pass stray
comments or behave irresponsibly. This was not the first time that a celebrity had
been dropped by a particular brand for behaving irresponsibly or for attracting
undue controversy.

"Celebrities are real people; they have opinions… [When Stone made that
comment] she was talking as Sharon Stone, not the direct representative of the
brand," said Graham Hales, of the Interbrand consulting firm in London.
However, the potential harm it could do to the Dior brand in China was enormous
and the company lost no time in dissociating itself from Stone. Some
commentators quipped that Stone being dropped from Dior's China campaign was
due to her 'own bad karma'.
2. Discuss the company's strategy in China in the backdrop the Sharon Stone
controversy. What should the company do to address the bad publicity arising out
of the issue?
Ans : Louis Vuitton SA (LVMH), a luxury goods company with over sixty brands
in its portfolio, dropped Hollywood actor Sharon Stone (Stone), the face of its
Christian Dior (Dior) brand, from its China campaign. The decision to drop Stone
was taken after a comment made by her kicked up a huge controversy in China.
Stone had said, "And then all this earthquake and all this stuff happened, and I
thought, is that karma-when you're not nice that the bad things happen to you?''--
suggesting that the deadly earthquakes in China that left about 68,000 people dead
and thousands of others homeless, were karmic "justice" for China's mistreatment
of the Tibetans.

Coming as they did against the backdrop of China's deadliest earthquakes in 32
years, Stone's remarks were viewed as insensitive and the company promised to
immediately disassociate itself from her.

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Export Marketing

In May 2008, Moet Hennessy Louis Vuitton SA (LVMH) dropped American

In May 2008, Moet Hennessy Louis Vuitton SA (LVMH), a luxury goods

1. Critically analyze Christian Dior's decision to use celebrity endorsement to

Stone's comments predictably raised a furor in China. Xinhua, the state-run

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