A wave of international brands are currently severing ties with Chinese actor and singer Li Yifeng. The Chinese star was detained on September 11 for soliciting prostitutes on multiple occasions. According to a Weibo post by the Beijing Municipal Public Security Bureau, the Chinese star has confessed to the criminal allegations.
Shortly after the news broke out, luxury fashion house Prada and luxury watchmaker Panerai announced the immediate termination of Li’s ambassadorship. Since then, other brands including L’Oréal, RemyMartin, Asics, and Budweiser have also ended business relations with the celebrity.
Meanwhile, news of his arrest has exploded on Chinese social media. On Weibo, the hashtag “What can Li Yifeng’s fall from grace teach celebrities?” amassed 500 million reads and over 23,000 forum discussions reflecting on the moral responsibilities that come with stardom.
Such a scandal is not an isolated case in China. The past few years alone have seen several incidents of renowned celebrities such as Kris Wu and Zhao Wei breaking the law for personal and financial misconduct. As a result, the Chinese government has been cracking down on the entertainment industry, banning film stars with “incorrect” politics, capping salaries, and reining in celebrity fan culture.
When a celebrity’s reputation shatters, the companies endorsed by the celebrity can equally suffer by mere association. According to research conducted by two marketing professors at the University of Connecticut, companies that made no public statement and took no action following a brand ambassador’s misconduct generally did poorly. Conversely, companies that addressed the situation head-on not only mitigated losses but also came out ahead.
While it is impossible to completely avoid the likelihood of a scandal, some measures can be taken to minimise risk. For instance, brands can use social media history to conduct their due diligence when selecting celebrities. Another approach is to draw up a highly-detailed contract with strong moral clauses and a establish a clear exit plan.
Overall, the Li Yifeng scandal brings clear takeaways for endorsers and brands alike. Celebrities who are to blame for an incident should always apologise quickly and sincerely. In the meantime, brands can conceptualise possible scenarios to devise a general action plan that can be employed if needed. Done swiftly and appropriately, a response to such incidents can be an opportunity for growth in market value.