BY
ALEXANDER E. GALE
Africa-Press – Eritrea. Companies are well aware of the reputational damage and financial losses targeted boycotts and consumer activism can cause. Infamously, when Bud Light partnered with trans influencer Dylan Mulvaney, the backlash to the beer brand’s promotion was so strong that parent company Anheuser-Busch’s market value dropped by £4.8 billion in just a few days.
In addition to the more familiar myriad of social, cultural, and domestic political issues that have galvanised consumer activists – like the Mulvaney controversy – consumers are taking a greater interest in events that transpire beyond their borders. This presents a new and complex source of geopolitical risk that corporate entities cannot afford to ignore.
According to a 2022 report from the Edelman Trust Barometer, which surveyed 14,000 individuals across 14 countries, 59% of respondents believe that businesses should include geopolitical responsibilities in their agendas. Another study published in the International Interactions journal in the same year revealed that consumers exhibit a 2-6% lower likelihood of purchasing products originating from countries perceived as ‘hostile’ compared to those viewed as ‘neutral’ or friendly. This underscores the effects of geopolitical perceptions on consumer behaviour and business operations.
The Israel-Gaza Conflict Ignited Several Boycotts
The growing impacts of geopolitical events on consumer behaviour are demonstrated even more sharply by several controversies in recent years. The Israeli-Palestinian conflict has consistently stirred up strong emotions on the world stage and frequently results in demonstrations and heightened activist activities across the Middle East, Europe, and North America. However, since Hamas’ terrorist attacks on 7 October and Israel’s subsequent military operations in Gaza, the conflict has led to a notable surge in consumer activism and boycotting.
One of the companies most effected was the American fast food giant, McDonald’s. The multinational fast food chain found itself mired in controversy when its franchise in Israel announced plans to distribute thousands of complimentary meals to Israeli military personnel, leading to calls for a boycott from individuals angry about Israel’s actions in Gaza. In response, franchise owners in Muslim-majority nations such as Kuwait, Malaysia, and Pakistan issued statements to dissociate themselves from the policy.
McDonald’s CEO Chris Kempczinski later commented that the company’s performance in some overseas markets in the fourth quarter of 2023 had been adversely affected. Business took the biggest hit in the Middle East but was also impacted in countries with either a Muslim majority or sizeable minority, including Malaysia, Indonesia, and France.
Prominent global corporations such as Starbucks and Coca-Cola faced similar consumer activist-driven backlashes in response to their stances on the ongoing Israel-Gaza conflict. The boycotts are often spearheaded online by independent activists on social media and more organised groups such as the Boycott, Divestment, and Sanctions (BDS) movement. Notably, the BDS movement has been criticised by some for being anti-Semitic and the Israeli government insists that foreign governments should ban it. The group defends itself by arguing that it is anti-Zionist, not anti-Semitic.
Activists Targeted Companies in Russia After the Ukraine Invasion
The Russian invasion of Ukraine in February 2022 triggered a wave of consumer resistance against companies maintaining operations in Russia. The Ukraine conflict resonated the most deeply with Western consumers.
Among these, Fast Retailing, the parent company of Uniqlo, initially chose to continue its presence in Russia. Tadashi Yanai, the firm’s CEO, initially defended this decision, emphasising that ‘Clothing is a necessity of life. The people of Russia have the same right to live as we do.’
Nevertheless, the company soon encountered significant social media backlash, with many expressing their discontent through the #BoycottUniqlo campaign. Within a short period, Uniqlo reversed course and announced a “temporary suspension” of its operations in Russia. By May 2023, Uniqlo confirmed its exit from Russia and the sale of its business there.
Much of the consumer activism surrounding the Ukraine War is organic, orchestrated by independently acting social media users posting on social media. However, the Ukrainian government has also been very actively campaigning for boycotts against companies that decided to remain in Russia after the Russian invasion.
In March 2022, barely a month after Vladimir Putin’s military forces poured across the border into Ukraine, the Ukrainian ministry of foreign affairs published a list of 50 global brands that retained business operations in Russia. ‘Every Ruble paid in taxes to Russia turns into deaths and tears of Ukrainian children,’ the ministry insisted on Twitter. Several websites and social media campaigns, some organised by the Ukrainian government and others by NGOs, can be found on the internet calling for companies to leave Russia. Those that do not, may risk facing boycotts.
Chinese Consumer Activists Are Driven by Economic Nationalism
Over the past decade, consumer activism has become an increasingly prevalent phenomenon in China. Many boycotts have been targeted at foreign companies. Between 2008 and 2021, Chinese consumers boycotted at least 90 companies, according to research conducted by the Swedish National China Centre.
Last year, a significant portion of Chinese consumers, representing 43%, reported that they had boycotted a foreign brand or company. This figure increased to 47% among China’s youngest generation of adults.
As several high-profile case studies indicate, Chinese consumers may react to perceived slights or offences against their country by boycotting the offending business. For example, in 2019, during Hong Kong protests, Cathay Pacific Airways faced backlash from mainland Chinese customers over perceived political differences. This led to an online boycott, resulting in a monthly drop of around 20% in passenger volume from mainland China, as reported in the China Economic Review. However, the financial impact of the boycott eased within a quarter.
Implications
In an increasingly interconnected world, driven by high-speed communications and a rapid news and social media information sharing cycle, awareness of controversial events on one side of the planet very quickly spreads to another. As various examples show, consumers care about these issues and will sometimes punish companies they deem to be doing wrong.
This presents a new kind of geopolitical risk that multinational corporations must grapple with. At the end of the day, the allegiance of most major businesses is to profit, but it is becoming increasingly difficult to stay politically neutral, even for businesses that have little interest in geopolitics. With the world stage becoming an increasingly contested space, the scale of this challenge is only set to expand.
moderndiplomacy
For More News And Analysis About Eritrea Follow Africa-Press
