Singapore, November 26, 2018 – Dolce & Gabbana is going out of fashion in China. Like many companies, the Italian label cashed in on the mainland’s ambitious urbanites. A disastrous advertising campaign has turned into a prime example of how fast the same shoppers can unravel a brand.

The designing duo, whose garments are worn on Hollywood’s red carpets, are no strangers to controversy. They have been accused in the past of being off-color, including by glamorizing rape. The latest imbroglio involved videos showing a Chinese model struggling to eat spaghetti and a giant cannolo with chopsticks. Screenshots also circulated across China’s popular Twitter-like Weibo service alleging that Stefano Gabbana used a poo emoji to describe the country.

Blowback was understandably swift and harsh. The company shut down an extravagant fashion show in Shanghai at the last minute. Stores, online and physical, dumped D&G items.

It could prove an expensive blunder. Closely held Dolce & Gabbana is widely reported to have notched up $1.5 billion in revenue in the year to March 2017. If the proportion of Chinese sales approximates those of rivals, some $500 million could be at risk.

In trying to mitigate the damage, there have been clumsy apologies. The company also said Gabbana’s account had been hacked. Any rebuilding will require an incredible feat of crisis management.

This is a keen reminder for foreign brands operating in China. Political pressure is one hazard, as Korean companies discovered last year. There are also ones of less discernible origins, as with an online smear campaign of hotels earlier this month. Social media can be especially devastating when a company botches the message.

What’s further exposed is how easy it can be to misread Chinese consumers, underestimate the market’s significance or take it for granted. Italy’s Deputy Prime Minister Luigi Di Maio came under fire earlier this month for referring to Xi Jinping as “President Ping”. Prada and others have slipped up on local trends.

It doesn’t take a marketing genius to know how profitable even a small portion of a large and upwardly mobile population can be. Clearer now is just how quickly those same promising buyers become liabilities. – Reuters