The Big Story

China's anti-anti-forced labor movement is out of control

Every few days right now, a new Western company operating in China joins a growing list of targets for nationalist ire on Chinese social media. Their crime: having stated at some point that they would not source cotton produced by forced labor in the Western region of Xinjiang, or that they were at least concerned about it. (China has long denied human rights abuses targeting Muslim Uighurs there, usually in less-than-convincing ways. One example: Foreign Ministry spokeswoman Hua Chunying recently tweeted that conditions on Xinjiang cotton farms were better than those on a Mississippi plantation in 1908.)

• Sweden-based H&M was targeted after the Communist Youth League surfaced a 2020 statement that merely expressed concern over allegations of forced labor in Xinjiang's cotton industry.
• U.S.-based Nike was targeted for a 2020 statement on Xinjiang cotton as well. The South China Morning Post has reported the Tencent-run League of Legends Pro League, China's largest esports league, has ditched its partnership with Nike, the jersey sponsor of the league's 17 teams.
• U.K.-based Burberry was targeted for being part of an initiative that suspended Xinjiang cotton purchases in 2020. Tencent removed Burberry-designed outfits for characters in Honour of Kings, the world's most popular mobile game, only days after Tencent had announced a promotion with the British luxury brand.

But what happens in Chinese social media doesn't stay there, and the online ire has already led to boycotts impacting company bottom lines.

• By the end of last week, H&M had been all but removed from the Chinese internet. The Swedish clothing company's online stores vanished from ecommerce platforms, its physical shops had disappeared from maps and ride-hailing apps and its app had been removed from online stores.
• Social media outrage is officially now a tool of international relations. Witness how it's being used to punish companies for sanctions carried out by their own governments, perhaps with the hope they will try to pressure their lawmakers to take it easy on Beijing.

Grassroots propagandists are aiding the state and also responding to its signals. The Communist Youth League provided the spark on social media; people then raced to fill in the blanks with expressions of outrage that the state could then share and spread, amplifying its already loud voice.

• That doesn't mean nationalists don't believe what they say. Remember that most of them have been reared in an avowedly "patriotic" education system that has repeatedly reminded them of depredations, both real and imagined, at the hands of foreign powers.
• Of course, the space for disagreeing with the official line on the Chinese web has been shrinking for most of the past 10 years, so it's hard to tell how many people at least question Beijing's version of what's happening in Xinjiang.

There's a hidden danger here for Chinese authorities. Traditionally, Beijing tries to keep nationalism in check, lest people begin to blame Beijing for being "soft" on foreign countries or companies. That said, propaganda authorities have gotten better at turning the proverbial dials up, and then down again.

On Protocol | China

• Whatever happened to Meitu? The face "beautification" app changed Chinese online culture, making it near-obligatory for a generation to make their faces slimmer and eyes bigger online. But it's turned a scant profit since its 2016 IPO and is now thrashing about to find a business model, even if that means plowing millions into crypto. Zeyi Yang explains where it all went wrong.
• China Big Tech's "good old days" of shady tactics are coming to an end. Chinese regulators have been retooling to take on the platform economy and quash anti-competitive practices such as blocking content from other platforms. Shen Lu walks us through the worst offenders.

A MESSAGE FROM GODADDY

Greg Goldfarb, who is VP of Products and Commerce at GoDaddy, admires the resilience and ingenuity of small business owners. "It is amazing to see entrepreneurs figuring out the new context really quickly to adapt and survive." We sat down with Goldfarb to talk about the rise in ecommerce, the impact of COVID-19, the major trends emerging this year and more.

Read the interview

Straight From China's Web

• China's weird platform for anime nerds is now a marketer's dream. Analyzing Bilibili data, research firm CBNData found branded accounts on the youth-targeted video platform surged 124% in 2020 versus the prior year. And they look nothing like their bland predecessors on other platforms: Telecom operator China Unicom has uploaded dozens of videos of customer service employees performing anime dances; DingTalk, the Alibaba-owned office communication tool, released a hilarious, meme-stuffed music video in mid-March that's garnered 28 million views.
• Luckin Coffee is back, thanks to "private traffic." Remember Luckin? Since its massive book-cooking fraud got exposed in 2020, China's homegrown Starbucks competitor has stayed out of the spotlight. But a recent analysis found the company's performance has actually been improving. Luckin has used a flurry of online and offline promotions to lure customers into WeChat groups and "VIP communities." It's a strategy based on what's called "private traffic," a concept that Protocol's Shen Lu has unpacked.

One Company You Should Know

HISTO brings tech-led diagnosis to China's aging masses

HISTO is a tech-focused pathology diagnosis company that recently raised its series B, led by Haier Biomedical. HISTO plans to invest the new cash into R&D (to improve its diagnostic tech), domestic expansion and global talent recruitment. The growth opportunities for health care in China, a rapidly aging country, are immense, with the estimated potential market for pathology diagnosis in the country exceeding $6 billion. HISTO has a lot of upside: The competitive landscape is currently fragmented, with few major domestic competitors.

China Goes Global

• In Latin America, Xiaomi fills a Huawei-sized void. Chinese smartphone brand Xiaomi just became the third biggest smartphone seller in Latin America after Samsung and Lenovo's Motorola. Huawei, burdened by sanctions, slipped to fifth place. But there's still room to grow: There are twice as many smuggled Xiaomi phones in Brazil as legally imported ones, an anonymous source told Chinese tech outlet Chuhai Post. It seems Xiaomi is tolerating this for now because of huge sales, and likely hopes that it can persuade black market buyers to go legit when they upgrade.
• Didi hitches a ride to South Africa. Chinese ride-hailing company DiDi Chuxing kicked off operations in Cape Town, South Africa on Monday. This is the second South African city to have DiDi offer ride-hailing services, after it announced its expansion to the country in early March. DiDi began to expand globally in 2015 and now operates in 14 countries outside of China.

A MESSAGE FROM GODADDY

Greg Goldfarb, who is VP of Products and Commerce at GoDaddy, admires the resilience and ingenuity of small business owners. "It is amazing to see entrepreneurs figuring out the new context really quickly to adapt and survive." We sat down with Goldfarb to talk about the rise in ecommerce, the impact of COVID-19, the major trends emerging this year and more.

Read the interview

One More Thing

This changes...nothing.

Xiaomi CEO Lei Jun announced big plans during the Chinese smartphone maker's 2021 New Product Launch on Tuesday, including confirmation that his company (like seemingly every other Chinese tech giant) was entering the EV business. But Lei caused the most online chatter when he unveiled Xiaomi's new logo, one created by renowned Japanese graphic designer Kenya Hara. The big reveal: a very, very subtle tweak to the logo's shape, rounding up the logo's four corners. Swarms of people ridiculed the barely-changed design. "It's art," one Weibo commenter sneered. "It has undergone a radical change on the inside." Yet Lei's PR move arguably worked, since everyone — including Protocol | China! — is now talking about it.