Orwell's 2017: How China made Victoria's Secret a pawn in its ruthless global game

The lingerie brand’s star model Gigi Hadid got into trouble over a gaffe that a more seasoned business traveller to China might have anticipated. So what hope for future forays into this repressive state?

By Paul Mason

Models celebrate at the end of the 2017 Victoria’s Secret fashion show in Shanghai, China. 

Gigi Hadid

As a movie plot, it would work better for Johnny English than James Bond: the lingerie brand Victoria’s Secret saw its launch in China mired in controversy when the People’s Republic refused to issue visas to invited celebrities and journalists. 

Katy Perry was barred for supporting the independence of Taiwan, while model Gigi Hadid transgressed by squinting in a way some Chinese people thought was racist, while posing with a fortune cookie that looked like Buddha. 

Add in China’s standard unpredictability when it comes to issuing press visas and you have loss of face all around.

Victoria’s Secret staff emails are being watched. 

To which seasoned business travellers to China might respond: why do you think we’ve been carrying burner phones and disposable laptops there for years?
This is serious business. 

Demand for high-end women’s underwear is surging in China, as real wages rise and women’s social attitudes change. 

Sales volumes have doubled in five years, to $18bn (£14bn). 

For reference, the combined efforts of all the queues of sheepish men outside Britain’s knicker shops this Christmas will drive the UK total to just $2bn. 

But the average Chinese retail outlet still prefers functionality over seductiveness – with shop window displays that would make the ladies underwear section at Marks & Spencer look risque. 

Into this gap have surged numerous online-only Chinese underwear brands, selling designer garments at less than half price of the equivalent VS product. 

But their presence in the malls, where the young salaried women shop is still minimal. 

So battle is commenced – with the Chinese brands engaged in a price war against each other, while being relentlessly boosted by the state-owned media against the foreign competition. 

The ultimate prize is significant: whoever wins brand supremacy, once China’s 200 million young adult women are prepared to buy bras at $90 (£68) a time, will be raking in large profits.
Under Xi Jinping, everything is political. 

Hadid was hounded across Chinese social media for having “mocked Asian people”, according to the newspaper Jing Daily, which added that the company’s “insufficient response” – ie refusal to sack her – was “a slight to the national pride of Chinese millennials”. 

She has since apologised for her actions, saying “ I have the utmost respect and love for the people of China.”
Xi, whose “thoughts” were enshrined in the party constitution in October, has effectively turned the brittle nationalism of Chinese cyberspace into government policy. 

China is building a new physical infrastructure across Central Asia and into Europe, buying up assets as far as Greece and the Balkans and building up its military to match the US’s presence in the region. 

Xi has cracked down on all potential opponents, issuing a series of warnings to anybody who might be thinking of opposing him. 

And he has ordered the party cadres to learn actual Marxism – not the neoliberal management theories people thought were Marxism under his predecessors.
The impossibility of knowing how this will play out is summed up in the Chinese bureaucracy’s habitual use of the word “while” – often inserted between two entirely opposed objectives. 

For example, Xi will “lower Chinese barriers for foreign investors, while strengthening domestic innovative capabilities in digital, engineering, genetic, aerospace, cyberspace, and smart technologies”. 

How many Chinese barriers should foreign businesses expect to encounter if they want to invest in such capabilities? 

They are left guessing, as are the organisers of Victoria’s Secret who could not even get a permit to film on the street outside the venue where their fashion show was to be staged.
The game China has played with globalisation up to now has been logical and, if we consider how brutally its own markets were torn open in the 19th century, karmic. 

It has protected its own industries and consumer sector behind a string of unofficial barriers, and with a slew of soft loans and politicised investments that a regular capitalist government could never get away with.
Above all, it used the Great Firewall, which western companies initially accepted as part of the political setup, as a protective economic barrier behind which it could create global-scale tech and internet companies. 

But China’s intended next steps in shaping its domestic market will take this principle a whole lot further.
Sesame Credit, a credit-scoring agency setup by Alibaba and Tencent, is designed to make Orwellian self-surveillance a reality. 

As well as creditworthiness, it measures political loyalty – based on user data gathered by China’s two biggest internet companies. 

People with low scores won’t get job offers, loans or high-speed internet; people who network with people with low scores will also get downgraded. 

The project, which is awaiting regulatory approval, has been decried as a mass surveillance tool. 

But it is nothing compared to what China is planning with artificial intelligence. 

Last month, the Chinese state issued a strategy designed to achieve global leadership in AI by 2030. As part of the plan, the private sector is ordered routinely to share its user data with the state. 

This puts China in the unique position among major powers of having no formal barriers to state exploitation of private commercial data. 

If it succeeds, China will create a consumer market whose customer data is completely interpenetrated with state surveillance mechanisms, and a population whose behaviour can be predicted right down to their choice of underwear.
In these circumstances it is right to ask: what is left of the idea of a global marketplace? 

The Shanghai branch of Victoria’s Secret will look like any other branch in the world – but it will be selling into a marketplace whose dynamics it cannot properly see, in which its customer data is not protected from the state, and where every purchase, every search inside its online store is recorded, as of right, by the government – as with any business operating in China.
Ten years ago, it was only corporations such as Google who had to decide whether they could ethically continue operating in markets distorted by state surveillance. 

Today that dilemma is beginning to confront the most basic, physical consumer brands trying to operate in China – and, as mass surveillance technology is deployed, it will get worse.
On the internet, there is already Balkanisation; there is the Chinese tech market and the rest of the world. 

Soon, right down to issues such as choice of styles or colours in fashion, global companies will be selling into two kinds of market. 

In one, consumers really do exercise choice, and consumer data is for the use of the seller only; in another, China, every micro-level consumer choice is scanned by the mass surveillance programmes in case it signals disloyalty.
Victoria’s Secret clearly blundered into an issue it could not anticipate, but the experience should prompt all businesses operating in China to ask the question: with every sale I make, am I now providing a repressive state with the means to keep my customers under surveillance?