This week we were all treated to the visual spectacle that is the annual Victoria’s Secret Fashion Show broadcast, recorded before a live audience last week. In a stark departure from the usual U.S. or European venues, this year’s lingerie extravaganza took place in Shanghai, China, marking the global brand’s first foray into the Asian continent.
As expected, the show was filled with crystals, lingerie, fanciful wings, and popular musical guests performing their hits as the models, or Angels, sashayed down the runway at Shanghai’s Mercedes-Benz Arena. One expects certain things from one of the planet’s most recognizable lingerie brands, like push-up bras and gravity-defying wings. But Victoria’s Secret’s amateurish foray into Chinese geopolitics surprised everyone.
China Is a Lucrative But Dangerous Market
What brought Victoria’s Secret to Shanghai in the first place? China is an $18 billion lingerie market, with dozens of brands vying for a share. For comparison, the United Kingdom lingerie market is worth about $2 billion, with France at $3 billion, and the United States at around $12 billion, meaning China’s is already worth more than the other three combined.
Alongside other major brands, like La Perla, VS, which recently opened a shop in Shanghai, is vying to be the main choice for about 200 million young female Chinese consumers, who could push the Chinese lingerie market to as much as $33 billion within the next few years. Although local competition is heating up, brands like VS enjoy widespread name recognition, putting them ahead of the rest in a country where there is still no major domestic lingerie brand.
As most businesses know, operating in China is an experience rife with geopolitical risks, defined as complexities in a company’s business and security environments, which can substantially affect operations. Major firms entering the Chinese market know that life is tough, and it’s even tougher when you don’t have the right information provided by first-rate geopolitical risk analysts.
Although the actual show mostly went off without a hitch, save for one tragic fall by Chinese model Ming Xi, there were plenty of problems behind the scenes that suggest VS needs a much better team of geopolitical risk analysts. The long litany of issues shocked observers of the major brand, which should be far more adept at handling geopolitical issues.
Major Visa Problems for Victoria’s Secret Models
Victoria’s Secret is known for planning its shows well ahead of time, choosing and announcing its featured models in August. Visas for VS models have usually been issued without much fuss by authorities in places like the United States, United Kingdom, and France, the locations of past shows. Yet just before the show, four VS models, from Russia and Ukraine, were denied visas to China without explanation.
Then, following a September video that seemingly showed her mocking the Buddha, which sparked a huge outcry in China, Gigi Hadid was also denied a visa, causing her to miss the show at the very last minute. Since China is well known for denying visas on the basis of social media comments, whether it’s support for the Dalai Lama, a free Tibet, or anything deemed insulting to the leadership, it’s surprising that Victoria’s Secret was left without five of its angels so last minute.
This is particularly shocking regarding mega-star Hadid, who should have been strongly cautioned about doing anything that could be interpreted poorly in China, especially once she was chosen to walk the show. Similarly, it was surprising that VS initially chose Katy Perry as a featured musical act. Katy is no stranger to controversy, including her 2015 choice to wear a dress festooned with sunflowers, the symbol of Taipei, Taiwan’s capital, an act seen as controversial in China.
It came as no surprise then, that Perry was denied a visa and banned indefinitely from China just before the show, like other acts have been in recent years for their support of the Dalai Lama, etc. More surprising than the visa issues, however, was the seeming naiveté by VS employees who expressed suspicions that their electronic communications were being monitored.
Any business traveler to China knows two things: everything is monitored, and burner devices are encouraged. The shock among VS staff suggests they weren’t properly briefed on the dangers, and therefore likely didn’t take recommended precautions to avoid discussing sensitive or proprietary information.
The Data China Collects Is Used for Oppression
This is especially problematic given that the state surveillance apparatus is known for sharing the information it collects with domestic firms. State exploitation of commercial information about lingerie doesn’t seem too critical, but that exploitation extends to all sectors, including tech, pharma, defense, and other vital sectors.
Moreover, under a new plan by Chinese authorities, information about purchases is collected and used to assign citizens a political loyalty score. Imagine being given a lower political loyalty score for preferring lace cheekinis to cotton boy shorts. Any firm operating in China must confront the fact that the data it’s forced to share with Chinese authorities are being fed into a mass surveillance apparatus that will likely be used for political repression.
This whole debacle suggests that either Victoria’s Secret has a very poor risk-monitoring team, or they don’t bother to take their team’s insights seriously. Either, or both, tells us this won’t be the last time VS is embarrassed abroad. It’s true that many geopolitical risk experts are easily dismissed as no-men, only seeing only pitfalls where executives see flashing dollar signs. That drives me to re-define geopolitical risk as geopolitical flux, incorporating both the risks and the opportunities.
Other firms should learn from the VS experience and ensure they have the best information possible, and the best geopolitical risk experts advising them, to avoid a similar fate. It’s clear that President Xi Jinping and his vision for China, which is newly enshrined in the constitution, are here to stay. Uncertainty over how that vision will be implemented will keep foreign firms on their toes, but they can be far better informed than VS was. Naiveté is harshly punished in China.