What a ban on virtual private networks in China would mean for luxury brands

CHINA. An alleged ban on virtual private networks (VPNs) in China – which help users access foreign websites – could negatively impact luxury brands, according to Jing Daily.

The leading digital publication on luxury consumer trends in China, and a partner in an information-sharing alliance with The Moodie Davitt Report, said smaller and emerging luxury brands would be hit particularly hard by a ban.

VPNs help users bypass China’s Great Firewall, a powerful online censorship system that restricts citizens’ online activities within the border of China and means they cannot access selected web services.

There has been plenty of speculation this year that the Chinese government will ban the use of VPNs, Jing Daily reported. In January, the Ministry of Industry and Information Technology said it was implementing a new initiative to regulate and tighten control on VPN service providers. Operations would only be legal if providers had a government-issued licence.

The Jing Daily report, written by Angelina Xu, explores possible solutions for luxury brands should VPN usage be banned or heavily restricted

In June, popular VPN provider GreenVPN announced it had shut down and urged users to apply for a service fee refund. Then in late July, Apple removed apps that provide VPN services from its App Store China.

VPN usage in China is particularly strong among Millennials, and gives them access to social media sites used by luxury brands for global marketing campaigns such as Instagram, Facebook, Pinterest, Youtube, and Whatsapp.

“These platforms are not the predominant social media platforms luxury brands use to target Chinese consumers, and many luxury brands with an established fan-base and populace in China such as Gucci, Louise Vuitton, and Hermes already have their well-developed .cn Chinese official websites. Furthermore, a majority of them also have Chinese social media platforms like WeChat and Weibo set up,” said the Jing Daily report.

“However, the situation is quite different for smaller and emerging brands that are becoming progressively sought after by Chinese Millennials—a powerful force that’s revolutionising the Chinese luxury market and redefining the concept of luxury as a whole.”

Jing Daily quoted Jackie Chen, Social Media Content Manager at Hong Kong-based PR agency ChoZan, as saying a VPN ban would “undoubtedly” make it even more difficult for those in Mainland China to access foreign websites.

He said: “They may have to take extra and even more complicated steps if they want to visit these websites in the future. Generally, most people wouldn’t bother so much when they just plan to purchase an item.”

Chen doesn’t see the ban having a great impact on those brands who have already entered China because most of them have their own official online platforms, a Chinese social media presence and other sales channels.

However, Chen noted claims from internet users in Mainland China that certain brands’ global .com official websites are “spotty and frequently unreachable without using a VPN service. Some have speculated that the new VPN policy might point to an even tighter online censorship initiative from the government which might yield more .com websites unreachable from inside the mainland.”

A VPN ban would “undoubtedly” make it even more difficult for those in Mainland China to access foreign websites.

Chen advised luxury brands that are still operating outside of China and have a steady number of online Chinese consumers to “test whether their website will be affected by the ban before they decide whether they want to set up their official presence in mainland China”.

Looking at solutions, Chen said emerging luxury brands will need to increase exposure and grow followers at the initial stage. “Thus a semi-closed platform like WeChat might not be the best option,” he noted. In this case, he believes Weibo would be a better choice due to its open and public nature.

“When it comes to entering China, many brands will think of WeChat first. As a multifunctional platform, WeChat can satisfy most needs for brands in terms of social networking, marketing, advertising and even e-commerce,” said Chen. “However, WeChat is merely an option and there are still many additional ways for these foreign luxury brands to set up their presence in Mainland China.

“As for sales channels, they can set up their official stores in large e-commerce platforms like Tmall and JD or cross-border e-commerce platforms like NetEase Kaola and Xiaohongshu. They can also consider building up their own official Chinese website, which may take more time and effort, but with fewer restrictions.”

This article was originally published on JING DAILY, a Moodie Davitt Report content partner.

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