22 January 2020
In trying to defend its business in the mainland, Yi Fang has alienated customers in Taiwan and Hong Kong. Photo: Facebook
In trying to defend its business in the mainland, Yi Fang has alienated customers in Taiwan and Hong Kong. Photo: Facebook

Politics a growing headache for firms operating in Greater China

Yi Fang Fruit Tea, a well-known tea brand from Taiwan, has angered netizens in Taiwan and Hong Kong after expressing support for the “one country, two systems” principle and condemning the anti-extradition bill protests in Hong Kong. It underscores how tricky it is to do business in the Greater China region.

Yi Fang was founded by Ko Tzu-kai in Taiwan in March 2016. Right from the beginning, it has been aggressively expanding into the mainland market through franchising.

The tea brand now owns 1,200 outlets across the world, of which nearly 90 percent are on the mainland. It has 100 shops in Taiwan and 20 in Hong Kong.

Several Yi Fang stores in Hong Kong joined the general strike on Monday, as people tried to put pressure on the government to respond to their demands, including the complete withdrawal of the now-suspended extradition bill and the setting up of an independent commission of inquiry to look into recent violent incidents.

In response, Yi Fang posted on its Weibo account a statement on the same day expressing its “firm support for One Country Two Systems” and its “opposition to violence and strike”.

The company stated that it has terminated contract with store operators who have joined the protest.

The statement has drawn public backlash in Taiwan and Hong Kong.

The “one country, two systems” concept is rejected by nearly 90 percent of Taiwanese.

Many Yi Fang franchisees accused the company of “only seeking profits and having no conscience”. Netizens urged local consumers to boycott the brand.

Yi Fang’s parent company issued a statement on Tuesday saying that it is “deeply apologetic for alarming and agitating the public”. It explained that the Weibo account was managed by its mainland franchisee and the earlier statement that provoked the backlash was mainly due to “different stances to social issues of franchisees in different regions”.

However, according to the company’s registration data, the so-called mainland franchisee is actually a subsidiary owned by the parent.

Apparently, Yi Fang is trying to defend its business in its biggest market, even if pleasing mainland customers means alienating those in Taiwan and Hong Kong.

Although such a stance makes sense, Yi Fang should remember that the brand became popular in the mainland largely because of its Taiwan roots. Severing itself from Taiwan could backfire in the long run.

The incident illustrates why handling politically sensitive issues has become a growing challenge for those operating across different markets in Greater China.

This article appeared in the Hong Kong Economic Journal on Aug 7

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist