Russia’s invasion of Ukraine in February 2022 prompted a consumer backlash against several companies that chose to continue conducting business in Russia. In March of that year, Fast Retailing, the parent company of Japanese clothing retailer Uniqlo, decided to remain in Russia. The firm’s CEO, Tadashi Yanai, initially defended the decision, stating that ‘Clothing is a necessity of life. The people of Russia have the same right to live as we do.’ 

However, the company soon faced a backlash from consumers on social media, with many sharing their displeasure as part of the #BoycottUniqlo campaign. Within days, Uniqlo reversed its decision and announced it would ‘temporarily suspend’ operations there. In May 2023, Uniqlo announced it would leave Russia and sell its business there.

The Ukrainian government has also repeatedly urged consumers to boycott companies continuing to operate in Russia, adding further pressure on such firms. Such a move demonstrates how boycotts – typically thought of as a non-government affair led by citizens – can be leveraged by states as part of a hybrid warfare strategy.  The pressure seems to be working. According to a Yale School of Management report issued in January 2024, over, 1,000 companies have reduced or halted their business operations in Russia.



Case Study 2: The Israel-Gaza Conflict 

After Israel launched its ground invasion of Gaza on 27 October 2023, in response to terror attacks by Hamas on 7 October, several companies were targeted by pro-Palestine activists and boycotted for their perceived support for Israel.

McDonald’s reported this year that its performance in some overseas markets in the fourth quarter of 2023 had been ‘meaningfully impacted’ by the Israel-Gaza conflict. According to CEO Chris Kempczinski, business was most adversely affected in the Middle East region, with Malaysia, Indonesia, and France also taking a hit.

The fast-food retailer faced criticism after its Israel-based franchise announced giving away thousands of free meals to Israeli military members, sparking calls for a boycott from those upset by Israel's actions in Gaza. This prompted franchise owners in Muslim-majority countries like Kuwait, Malaysia, and Pakistan to release statements distancing themselves from the company.

McDonald’s is not the only company to face a backlash. Major multinationals like Starbucks and Coca-Cola have also faced boycotts prompted by their stance on the Israel-Gaza conflict. The boycotts are primarily enacted by consumer activists acting of their own volition and organised groups like the Boycott, Divestment, and Sanctions (BDS) movement, who seek to put pressure on Israel by dissuading companies and investors from operating in the country.

Case Study 3: Chinse Consumer Activism

Consumer boycotts of foreign companies have become increasingly prevalent in China over the past ten years. A study conducted by the Swedish National China Centre identified 90 boycotts by Chinese consumers between 2008 and 2021. 

Boycotts primarily targeted companies from North America, Europe, Japan, or South Korea in the apparel, automotive, and food and beverages sectors. These were often sparked by perceived challenges to China's governance in Hong Kong or sovereignty over Taiwan, criticism of China's human rights record in Xinjiang, or perceived prejudice in business communications. Occasionally, foreign companies became scapegoats for decisions made by their home countries' governments.

One prominent example occurred in 2019. Amid protests in Hong Kong, some of Cathay Pacific Airways’ customers in mainland China felt that the company’s values were opposed to their political values after the opinions of some employees had been widely publicised. Online users called for a boycott of the airline. According to research published in the China Economic Review, the airline suffered a monthly decrease in passenger volume from mainland China by approximately 20%. The financial impact of the boycott began to subside within a financial quarter.

Predict, Prevent, Respond: A Strategic Framework

As the three case studies demonstrate, the efforts of consumer activism can be immensely damaging, both in terms of reputational damage and a company’s bottom line. It is in the interest of firms to adopt strategies to mitigate these risks to avoid floundering in confusion when unforeseen events demand an immediate reaction.

‘Predict, Prevent, Respond’ (PPR) is a strategic framework that companies can adopt and adapt based on their specific needs to mitigate risks arising from geopolitical events and consumer activism. PPR is intended as a loose framework and guide, so companies should feel unconstrained to mould it to their needs. The purpose of PPR is to get corporate entities thinking about geopolitical risks and consumer activism with a longer-term strategic mindset to avoid the pitfalls of a purely reactive approach.

Predict

Geopolitical risks are difficult to predict, and it is even harder to predict what current events will resonate with consumers enough to prompt a boycott. However, companies can use a combination of internal analysis to identify potential vulnerabilities and open-source intelligence (OSINT) to predict geopolitical events on the horizon that might prove controversial for the company.

• Geopolitical vulnerabilities analysis: Many companies already conduct geopolitical risk assessments. These assessments must now also examine the risks associated with consumer activism. In-house analysts or external researchers can start by identifying the most unstable geographical regions a company operates in. Naturally, these are the most likely potential flashpoints for a crisis to occur and subsequently cause a consumer backlash. A thorough examination of the company’s financial dealings and interactions with foreign governments, institutions, and non-government organisations should also be undertaken to identify potential points of controversy. Contingency plans and measures to mitigate risks can then be implemented to limit the chances that the firm is caught off-guard by an unforeseen controversy.
• Using OSINT to keep on top of social movements: Open-source intelligence (OSINT) is increasingly used by governments and non-state actors to monitor civil unrest and social movements in cyberspace. The corporate world is also increasingly aware of the value of OSINT for identifying potentially lucrative trends, especially on social media. Since most boycotts and consumer activist movements are dependent on social media to spread awareness, companies can use OSINT – specifically social media intelligence (SOCMINT) – to monitor what current events are gaining traction online. This approach can help companies identify controversial geopolitical events that could ignite a consumer backlash or boycott against the company. Ideally, this is a process that should be conducted continuously by in-house analysts or a hired third party.

Prevent

Based on the intelligence gathered in the Predict stage, companies can implement preventative measures to decrease the likelihood of facing a future consumer backlash. In practice, this will likely necessitate a risk-reward analysis to be conducted for each area of geopolitical risk identified in the prior stage.

For example, Company X is a large multinational brand with multiple retail stores across Country Y. During the Predict stage, analysts identified business operations in Country Y as a reputational vulnerability due to Country Y’s poor human rights record. OSINT collected from social media sources has identified growing awareness of human rights abuses by the government of Country Y on social media. Social media users from Country Z, where Company X is based, are especially active in their online condemnation of Country Y. 

Decisionmakers in Company X will now have to weigh the rewards associated with conducting business as usual in Country Y against the risks of a potential backlash by consumers in Country Z and elsewhere. They will need to consider questions like:

• Do the company’s core customers care about this issue? What are the odds of reputational damage occurring?
• Is it worth sustaining reputational damage to protect revenue sources in the area of heightened risk?
• How damaging is a boycott likely to be? Would losses incurred by a boycott match or exceed losses from scaling down or ceasing business operations in the risk area?
• Are there steps that can be taken to mitigate the risks of a controversy that would not require fundamental changes to business operations? – e.g. donations to a relevant charity.

Respond

Due to the volatility of geopolitics and the uncertainties associated with foreseeing consumer and activist behaviour, it is possible that a company will face a consumer activist backlash even if it has done its due diligence in the Predict and Prevent phases of the PPR framework. Simply put, not all eventualities are predictable or preventable. This is why it is of paramount importance to consider the Response phase before it is necessary.

Although companies will not be able to foresee a future controversy in exact detail, a preparatory framework for suitable responses to a crisis can be prepared by conducting scenario planning and analysis exercises. Since consumer activism primarily poses a threat to a company’s well-being through reputational damage, public relations (PR) professionals should take the lead in these exercises.

According to Associate Professor of Marketing Laetitia Mimoun, companies should consider three factors when responding to a geopolitical crisis:

1. The brand’s identity, values, and mission: How engaged is the company with social and cultural issues? Is a certain political, ethical, or ideological stance core to a brand’s identity?
2. The target consumers’ values and motivations: How politically active are company’s target customers? What are their core beliefs?
3. The competitive environment: Are there industry standards for political and social involvement? How are competitors responding to geopolitical issues?

Consistency is key in PR strategies. A sudden change in stance on prominent geopolitical events can make a company appear insincere. Similarly, a brand known for social justice may face backlash if associated with entities lacking respect for human rights. Here are basic PR guidelines for companies navigating geopolitical consumer activism:

• Maintain a consistent message.
• Tailor messaging according to audience and platform. The overall message should remain consistent but may need to be delivered differently according to context. For example, a press release will require a different approach to a social media post.
• A brand’s identity and values should mirror those of its target consumers. Many geopolitical issues are highly divisive so companies should identify what their target consumers believe about them. The values and beliefs of people outside that target audience, who are unlikely to buy a product or service, matter much less than core customers.