University of Southern California Dissertations and Theses

The importance of cultural sensitivity for luxury brands

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The importance of cultural sensitivity for luxury brands

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Content Copyright 2021 Zhirong Zhang

THE IMPORTANCE OF CULTURAL SENSITIVITY FOR LUXURY BRANDS

by

Zhirong Zhang

A Thesis Presented to the
FACULTY OF THE USC ANNENBERG SCHOOL FOR COMMUNICATION AND
JOURNALISM
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
MASTER OF ARTS
(STRATEGIC PUBLIC RELATIONS)

May 2021

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Table of contents

Abstract………………………………………………………………………………...…………iii
Chapter I. Background Introduction……………………………….... ……………………………1
Guccio Gucci S.p.A. apologized and pulled “racist” sweater…………………………..…1
Dolce & Gabbana S.l.r..canceled China show amid “racist” ad controversy……………..2
Chapter II. Problem Statement: Insensitivities deep-rooted in traditional luxury brands…………3
Chapter III. Causes Analysis……………………………………………………….……………...5
Chapter IV. Changing industry dynamics………………………………………………..………13
Chapter V. External forces that drive for cultural sensitivity ……………………………….…. 18
Chapter VI. Practices in other fields……………………………………………………………..26
Unilever plc: One of the most successful transnational companies………………………27
The Coca-Cola Co.: Moving from local market to international market………………...29
Starbucks Corp.: Recovering from racial insensitivities……………………...….31
Chapter VII. Suggested Communication Solutions……………………………………..……….33
Conclusion……………………………………………………...………………………………..41
Bibliography………………………………………………………………………..……………43
Appendix…………………………………………………………………...…………………….53

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Abstract
This paper explored and described the factors involved in global luxury conglomerates’
struggles in adapting different cultural sensitivities in the globalization context. Cultural sensitivity
is becoming increasingly part of the core communication competency for transnational businesses
—— allowing them to understand their global audiences and maintain positive brand images in
the highly competitive market. Based on multi-method research including case studies and
documentary evidence, this paper analyzed the causes for the entrenched cultural insensitivities in
the luxury fashion industry. Later, the paper revealed the changing industry dynamics as well as
the external forces that existed that are pushing those luxury conglomerates to encompass the
capability to adapt to various cultural sensitivities. With references from practices adopted by three
of the most well-known global conglomerates, suggested communication approaches are provided
for transnational luxury companies to respond to the increasingly culturally diverse context.

1
I. Background Introduction
1. Gucci apologized and pulled “racist” sweater
Italian luxury brand Gucci S.p.A. came under fire during Black History Month in 2019 after
shoppers accused its $890 “balaclava” jumper from its Fall-Winter 2018 collection of “resembling
blackface (@karyndeshields, 2019)”. The sweater features a roll-up collar that covers the bottom
half of the face with a wide red lip outline around the mouth. According to the brand, the turtleneck
sweater was inspired by “vintage ski masks” and is a tribute to Leigh Bowery and his camouflage
art (Michele, 2019). Criticism of the design spread quickly on social media, with some calling for
a boycott of Gucci.
Gucci immediately removed the sweater from its stores and website, while releasing a
statement on Twitter in the midst of the uproar that read, "Gucci deeply apologizes for the offense
caused by the wool balaclava jumper." The statement concluded, "We consider diversity to be a
fundamental value to be fully upheld, respected, and at the forefront of every decision we make."
The Italian fashion brand also pledged that going forward it would work to increase diversity and
strive to turn the incident into “a powerful learning moment for the Gucci team and Beyond (Gucci,
2019)”.
Gucci then announced a series of initiatives it was launching to foster in-house diversity and
inclusivity, including a multi-year $5 million Changemakers Fund, and a $1.5 million scholarship
program, along with a global employee-volunteering framework that will help the company fulfill
its commitment to facilitate diversity in both the company and the fashion industry (Gucci, 2019).
The controversy over Gucci’s jumper revealed how quickly a well-established brand’s missteps
can be amplified to hurt its reputation and bring it backlash.

2
2. Dolce & Gabbana canceled China show amid “racist” ad controversy
In November 2018, the Italian fashion brand Dolce & Gabbana S.r.l. launched three videos on
social media to promote its upcoming runway show in China, dubbed “The Great Show”. The
videos featured an Asian woman in a Dolce & Gabbana dress attempting to eat pizza, spaghetti,
and cannoli. In the background was a male voice, in a mix of Mandarin and awkwardly
mispronounced English, advising her how to eat the dishes properly. The voiceover mocked when
the woman appeared not to know what to do with the Italian food. The videos sparked immediate
outrage on Chinese social media with some accusing D&G of racism and cultural insensitivity (see
Appendix1).
As criticism poured in, the fashion label removed the videos from Chinese social media within
24 hours and issued an apology soon thereafter. However, criticism grew as a screenshot of an
alleged chat leaked between one of the brand’s co-founders, Stefano Gabbana, and an Instagram
user in which Gabbana called China “a country of (five poop emojis)” and “ignorant dirty smelling
mafia” (@michaelatranova). The screenshot went viral with the hashtag #boycottDolce. Within
two hours, hundreds of celebrities withdrew their attendance from the show, with several high-
profile Chinese celebrities shunning the brand.
Gabbana declared that his Instagram account “had been hacked (Gabbana, 2018)”, and the
designer duo released a video on social media to express their love for China. However, the
apology worsened the situation and led to a major consumer boycott. China’s Cultural and Tourism
Department called off the show (Zheng & Pan, 2018), while products from Dolce & Gabbana were
removed from all of China's major e-commerce platforms, including T-mall of Alibaba, JD.com,
and Yoox Net-A-Porter (Long, 2019). The fallout from the controversy was swift and harsh. As
of now, Dolce & Gabbana is still trying to clean up the mess it made.

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II. Problem Statement: Insensitivities deep-rooted in traditional luxury brands
Currently, more and more transnational companies in the luxury sectors have been
struggling to adapt to sensitive issues across different racial or cultural communities, which shows
that cultural sensitivity has become a minefield that is fueling serious controversies. Francois-
Henri Pinault, the chairman of Gucci's parent company Kering, admitted in an interview that the
company "didn't understand the sensitivities of the African American community" (Dalton, 2019),
which directly led to the design of the problematic sweater. However, there are a plethora of people
in a transnational company like Gucci and Dolce & Gabbana, but why was there no one to
understand and point out the insensitivities for the brand?
Traditional global luxury brands, which usually are from Europe, often have their brand culture
rooted in information from European media. Although racism and cultural discrimination can be
worldwide problems, depending on the history and social context of different communities,
different cultures, geographies, and races can each have different concerns. It is difficult to have a
deep understanding of a different community through local mainstream media, as some reports on
foreign culture can be misinformation or stereotyping. These transnational companies usually
incorporate the biased understanding of foreign cultures and other races into their products and
make communication strategies based on such interpretation.
While there is a problem with learning to understand the difference between cultures, the lack
of representation and diversity at the industry’s core also explains why the same mistakes seem to
keep happening time and time again. According to The Cut, only 3% of the members of the Council
of Fashion Designers of America are Black, and 10% of the designers at the Fall/Winter 2019 New
York Fashion Week are Black (Wagner, 2018). Companies cannot bring diversity into their

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products without enough representation inside the team. Therefore, how to adapt diverse cultural
sensitivities into creativity can be an important discourse for brands.
The rapid development of the global economy has boosted the rise of consumerism,
creating more international business opportunities for companies. But at the same time, consumers
also are having growing awareness. They do their research on the brands and they are making a
personal statement through their choices. Products and services are no longer the only
measurements for consumers, as they begin to care more about the intrinsic value of the brand
behind the brands. Especially for a brand conducting business in a foreign country, it is important
to have sensitivities for the specific culture and customs in that markets, as the popularization of
social media has given the public today a greater collective voice than ever. If the brands and the
industry ignore those intangible cultural factors, the missteps can not only cost a company in terms
of its financial situation but more importantly, can damage its reputation. People will tell the story
online and keep the company accountable for its insensitivities. Although online engagement does
not necessarily equate to sales, it will be hard to boost sales if a brand cannot maintain its reputation
on social media platforms. The price for violating consumer trust is especially high in the luxury
industry where the brand's leveraged value lies primarily in its reputation and brand image.
Oftentimes, brands are moving too far on being edgy and creative that they make mistakes.
Although some may argue it is hard for transnational companies to understand other cultures
comprehensively, and the stage of debate on different issues varies in different countries, cultural
deafness is no excuse for insensitivity. Especially as the younger generation is becoming more
socially aware, the price for cultural unawareness can be increasingly unbearable. Transnational
companies with stores and consumers all across the globe have to develop long-term proactive
strategies to promote diverse voices that have not been properly represented in the past.

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III. Causes Analysis
Over the last few years, a bunch of big-name luxury houses, like Gucci and Dolce & Gabbana,
have been caught and convicted for cultural insensitivity, and these are only the most recent
examples. Without question, they are all some of the most successful luxury brands in the industry
and have all achieved remarkable business in the past. So, why did so many of them continue to
cross the line and make culturally insensitive mistakes? Or, why did their traditional business
approaches become suddenly unacceptable? Below are the main reasons why racism is so
entrenched in the luxury fashion industry:
• Discrimination heritage
• Race and cultural tokenism at the industry’s core
• Changing market situation
• Misinformation from local mainstream media about different cultures
• Diversity fails internally
• An especially obstinate problem for the fashion industry
• Changing environment exposes the problem in a hard way

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• Discrimination heritage
The “toxicity” in the fashion industry is not surprising at all. In the late 1600s, the French king
Louis XIV renovated the city of Versailles and established a court culture with “a strict and lavish
dress code (Avins, 2017)”. From then on, in Europe, a man’s dressing was equated with his power.
Clothing was used to confer people's jobs, their social status, as well as their position within the
community. As such a way of communicating identity through dress became prevailing in the
world of capitalism, the luxury sector was established. The industry’s love of hierarchies has been
practiced throughout its history. For a long time, the industry tolerated no dark skin, fat bodies,
wrinkles, or anyone from the non-aristocratic class. Basically, such elitism and the preaching of
classification had shaped the industry. Those standards were embedded in the culture of luxury
fashion for as long as the industry has existed.
The audacious celebration of social dominance sprang up in Britain, France and Italy as the
Second Industrial Revolution infused capital into the expanding European aristocracy in the late
19
th
and early 20
th
centuries. Such performance of wealth and classification further integrated into
the everyday lives of the burgeoning upper class. The monolithic standard of beauty was thus
rooted deeper in society along with the infiltration of luxury products into more aspects of life.
As industrialization brought money to the United States and promoted the growth of the new
money, the idea of wearing wealth disseminated across the world. Emerging wealthy classes in the
new world gradually began to have enough money to imitate the practice of those European
aristocrats. It was not long until the aesthetic ideals of the wealthy white European got further
disseminated to the rest of the world as Europe’s colonial power spread across the globe. It’s fair
to say that the veneration of specific types, most likely whiteness and wealthiness, had been central

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to the industry’s vision and its marketing. The toxic culture of exclusivity embedded in the many
luxury brands, along with the intersected racism, had built the sector’s initial customer base.
• Race and cultural tokenism at the industry’s core
The industry created and scaled up its business with the intent of celebrating the holistic
white beauty standards. In the meantime, tokenism had been a widely applied tool to signal bold
ideas. Brands skillfully used symbols and images to box and stereotype various cultures.
Oftentimes, races were employed as "an exotic or comedic flourish to signal otherness (Kennedy,
2019)". Because fashion is a creative industry, for a long time, it has been acceptable for those at
the top, especially the designers to act erratically or even sometimes be abusive, all in the name of
art.
Such institutionalized lack of diversity in design, production, and marketing shaped the racism
in the industry in subtle ways. Eventually, stylists only know how to style certain kinds of models,
products are made to cater to certain audiences, and advertisements are made to celebrate certain
ideals. Thereby, the biased aesthetics of race created the longstanding influence in the visual
language used in the industry. When everyone got used to worship a certain type of beauty and
regard that as a standard, the negligence of “otherness” was therefore justified.
• Changing market situation
Brands that look for constant growth cannot give up on getting into the wallets of the
newly-growing upper class. With the rapid development of the emerging market in East Asia, the
Middle East, or the undeveloped areas in their existed market, like the Black communities in the
United States, traditional luxury brands all start to expand their target audiences. However, those
new elites have cultivated a new value system to communicate their social status based on the
changing social, cultural and environmental awareness. Conventional material goods are no longer

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just tools to signal social position with the industry completely extended beyond its European root.
Traditional luxury brands started their way to turn themselves into global juggernauts and luxury
has truly become a global industry with global consumers. To obtain the orders of the new markets,
brands often draw inspiration heavily from the aesthetics of these exotic cultures. For the most
part, the toxicity in the industry is nothing new. In an industry known for its iron-clad exclusivity
and denigration of aspirational consumption of non-elites, insensibilities are not exceptional.
Those brands are just extending their practices of the aesthetic ideals of the wealthy white
European further.
• Misinformation from local mainstream media about different cultures
As communication systems reach every aspect of our life, mass media matters now more than
ever. The media are no longer only entertainment and information venues. They are now
persuasive and pervasive, which is why they have turned into powerful social forces that shape the
recognition of the whole society. It has a huge capacity to exert influence on how minorities are
represented, as well as how the majority see the world and how they think. However, these media
are usually controlled by the white capitalist class due to historical reasons. Therefore, despite the
liberal democratic principles of free speech, media are still used to protect the entrenched political
and racialized status quo. Writers have much influence on how messages are processed and how
much value those messages are given, leaving rare opportunities for minorities to express
themselves and justify their images. Those in power use certain frames, and in doing so they can
intentionally highlight certain messages and leave out other information, which leads to the
inadequate representation of racial minorities in traditional mainstream media. On the other hand,
the lack of diversity across those European countries also contributed to a cultural context where
cultural minorities in those areas are particularly viewed through a stereotypical lens. Those media

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in part failed to recognize changes of other parts of the world that had amassed over the years.
They applied their limited understanding of the world to their communication practices, and thus
created the cognitive and social impact on the audiences, which include those traditional luxury
brands. The reality those audiences understand is not experienced directly, but through the way
that the media represent and tell stories about the world. Information from not entirely unbiased
opinions and stereotypes get widely shared and become hard to identify. Over time through the
reproductions of those stereotypes, the values of the society get framed by the biased media system,
which eventually and subtly permeated the racial status quo and further marginalized minority
groups. They take such prejudiced interpretation with them when entering a foreign market without
deep research on the individual culture, which lays hidden trouble for the brand.
• Diversity fails internally
Audiences of the above media, which include those European-based brands, viewed the racial
and ethnic stereotype content and got to possess the knowledge told by the media. But essentially,
it is ignorance that led these companies to simply perceive those stereotypes as potentially real and
questionable. Due to the reasons stated before, many of those European fashion brands are not
having a diversified enough team with people of many geographical, racial, cultural, and
educational backgrounds to be integrated and hired at all levels of the company. For some, their
international staff from various backgrounds who truly understand the broader market are not
prioritized in the decision-making process. The internal lack of diversity disabled those brands to
identify misinformation, so they simply accepted those as truths. Since a deep understanding of
one culture is not properly represented and cannot be achieved through a brief, these transnational
luxury fashion brands will not be able to entail diverse ideas.

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• An especially obstinate problem for the fashion industry
While racism can be a pervasive social problem, the luxury fashion industry has unique and
solid structural problems that make it especially hard for the brands to fix the issue. The industry
makes products with unbelievably high quality to leverage its status. Workers are usually trained
for several months to achieve the ideal quality of products. Traditional luxury brands usually
applied a set of complicated practices in both design and production since it is the foundation to
ensure the sustainability of their remarkable production. For example, the world's largest luxury
conglomerate LVMH, Louis Vuitton’s parent firm, opened training schools for artisans and
launched programs in Europe to support the training of artisans. Those luxury brands also are
usually likely to have long-established education institutes, apprenticeships, and also scholarships
to help train the next-generation craftsman and to preserve the traditional know-how and craft
techniques. There also are a bunch of vocational schools and specialized awards in the scope of
Europe, sponsored by luxury conglomerates like LVMH to sustain the European luxury tradition
and ensure the sustainable growth of those luxury groups. The complicated structure and deep-
rooted system make the required craftmanship hard to get transferred, and by erasing the presence
of knowledgeable multi-cultural voices in the decision-making positions, the industry continued
to repeat its past mistakes.
Also, washing the inherent racism out of the luxury fashion industry will not only make
adjustments to the corporate structure or the supply chain but rather, means making dramatic
changes in how people think about things. For luxury brands, their history is often their major
generator of value, and their leveraged price usually lies in their brand image and reputation. As a
result, all those prominent luxury brands have their own unique DNA. The monolithic standard
has been instilled into those brands throughout their history to align their designs with their

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individual pre-set DNA, from who gets hired to how products get marketed. Such tight control of
brand image makes it hard for artists with diverse perspectives to enter the industry, not to mention
changing the deeper structure of the industry. As a result, presenting culturally appropriate images
of different races and ethnicity becomes a major struggle for the fashion industry.
• Changing environment exposes the problem in a hard way
The intrinsic lack of sensibilities resulted in calamitous disasters with the change of everything
else. In the age of diversity, it is no longer acceptable for these fashion houses to be indifferent to
cultural sensitivities or racism. After all, consumers do no care if the culturally insensitive problem
was made intentionally or not. In the United States, the collective rage against racism sweeping
the country due to a set of social issues forced the industry to confront its longstanding issue. Also,
consumers from emerging markets like China, who are buying those luxury brands, have an
increased consciousness of the value behind the brands they purchase. In the environment of a
global economy, consumers increasingly want the brand they purchase to represent their value,
and they are making a personal statement when making purchasing decisions. Ignorance can no
longer be an excuse and as a result, cultural diversity, racial diversity, and gender issues can all
have a large influence on a brand.
However, for these transnational companies coming from a foreign country and culture,
the sensitivities of a different country can be unintelligible. The stage of debate on different issues
varies among different countries and cultures depending on their unique history. While racism and
cultural discrimination are worldwide problems, their specific concern can be different within
different communities. Oftentimes these transnational companies in a foreign land do not conduct
enough research on the cultural minefields and ignore the importance of certain issues. The
consequential failures in cultural competency will thus lead to major disasters. As the younger

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generation are inclined to vocalize more about and react more harshly to appropriate business
practices, it seems that in no time peddling European elitism has become unacceptable. The
entrenched value system suddenly became the pain point of the whole industry. With the growth
of the global economy, the problem got unveiled in a hard way, and the lack of diversity in the
industry's core resulted in the continued recurrences of cultural insensitivity problems.

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IV. Changing industry dynamics
Businesses are driven by the market and should evolve according to the change of demands.
The macroeconomic context is changing with the surge of emerging economies and global trade,
and high fashion is no longer the unilateral channel for the European elitists to export their values.
Traditional players in the industry will find that the veneration of whiteness and wealth to value
creation, which has been embedded in the industry’s practices for too long, is becoming suddenly
unacceptable. The changing dynamics in both the industry and the general market in the age of
globalization and diversity are revolutionizing the fundamental theorems of fashion. When the
key players in the industry notice that they can no longer live with their traditional practices,
and neither can they afford to be indifferent to the cultural discomforts, the following reasons
are pushing the industry to a rethinking of their aesthetical standard and to a reframing of how
creativity should be expressed:
• Emerging markets are contributing more of the luxury sales
• Favorable government policies on international trade
• Leading in the intense industry competition

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• Emerging markets are contributing more of the luxury sales
Recently, a large portion of the optimistic growth of the luxury market is driven by developing
countries with increasing GDP like China and India. Based on a report from S&P Global,
consumption spending in Asia-Pacific as a whole will be expanding at the fastest rates across the
globe in the next couple of years (Tanchua& Shand, 2016). Aggregate consumption in the
emerging market is expanding more quickly than that in developed economies. Also, according to
the consulting company McKinsey, emerging markets are accounting for an increasing share of
global consumption, with the spending of Chinese consumers accounting for more than a third of
spending on luxury products worldwide (Wiener-Bronner, 2018) (see Appendix 2 & 3). Citizens
of those countries are now having more disposable income to spend on luxury products, which
largely fuels the sales performances of those premium brands (see Index 4).
The rapid economic development of these emerging markets leverages the overall spending on
consumer goods, and thus developing economies have provided new opportunities for long-term
business growth. Such growth will remain strong because of the established populations,
comparatively large middle classes, and relative stability of demand in these markets. With that
being said, large multinational brands with a solid brand image, strong brand differentiation, and
advanced techniques are in the best position to capitalize on these markets. In response to
globalization and the increased wealth of the emerging market consumers, those global luxury
conglomerates have established sales networks within these markets to spur awareness and drive
sales through the strong market presence, so they have obtained a very opportunistic chance to
boost their sales growth, leverage cost structures and eventually to diversify their exposure to local
economic cycles in the long term.

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However, the exploding product choices and communication channels also give those
prospective new customers much more spending power than they ever had. And for transnational
companies, they sometimes find it difficult to relate to consumers in these markets. To connect
with these customers and obtain the businesses of those emerging countries, those transnational
luxury companies usually launch campaigns and activities in an effort to showcase their strong
awareness of different cultures, customs, and races in different countries. Evolving cultures will
gain increasing influence in luxury sales, so brands will need to address and acknowledge different
groups to stay relevant. Without the right cultural sensitivities, it is very likely that any attempt
these brands make will have reverse effects on a brand’s reputation and its future business.
Therefore, as macroeconomics and social changes have opened up luxury sales in developed
countries, traditional luxury groups must learn to communicate with global consumers based on
the various demands if those brands want to expand into those markets.
• Favorable government policies on international trade
The international trading system has always been shaped by a set of principles and policies.
Tariffs and taxes are tools that governments place on imported goods to protect the domestic
interest, inevitably intervening the international trade. But in the context of the global economy,
nontariff trades and the elimination of barriers have become a trend. The global market for luxury
goods is estimated at around $42 billion with a 4% growth rate per year, which can be a huge
opportunity for luxury merchandise companies (see Index 5). As a result, more and more
governments start to realize that when they lower their barrier to international companies, domestic
consumers can get access to a large variety of goods at lower prices. Therefore, tariff reductions
become an important element of trade liberalization.

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This is especially true for developing countries with emerging economies. Those countries
usually have large territories with huge populations. Their intensive economic developments give
them unbeatable growth potential in comparison to developed countries. Many of them are
members of the World Trade Organization, which is committed to providing a free trade
environment. Therefore, those countries usually have lowered their import tariffs and removed
trade barriers.
As more markets are opening up the market and loosening regulations for foreign businesses
in the trend of increasing globalization, global luxury players are having a great opportunity to
leverage their business.
Another piece of good news is that those brands selling at premium prices usually leverage on
their distinctive brand equity. They hired highly qualified and accredited designers to make their
products unique and well-differentiated in the market. Therefore, the luxury fashion industry has
one of the most obvious comparative advantages, which is solid product differentiation, to fit in
the context of the global economy. With the help from their national government to expand,
traditional barriers against conducting global business are eliminated at the greatest possibility.
However, since policymakers, as well as international authorities regulating foreign business,
need to serve the interest of their national citizens, they regulate foreign businesses according to
the influence these business entities will bring to their society. They may prevent a foreign business
from entering the market if they concern such commercial business will harm their domestic
people and culture. Therefore, transnational companies need to develop a friendly relationship with
different national governments across the globe and show their respect for different cultures before
wanting to get more business opportunities and favorable policies from these markets. It is
important to embrace the values of different countries and have cultural sensibilities.

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• Leading in the intense industry competition
The luxury market is facing some unpredictable challenges, and it is presenting many
unprecedented challenges for its players. In a globally competitive industry, much of the same
group of rival companies are competing in different countries. The immense competition in the
premium sector makes a company likely to lose its market share with any minor problem, the result
is especially vicious in countries and regions where sales volumes are large. With numerous
players continuously entering the industry, pressures are compounding every day. Consumers are
offered more options, so individual brands need to stay current to be leading the overall industry.
Such a challenge is compounded by the fact that the industry as a whole is facing a slowing growth
with the growing uncertainty about how the economic forces will impact the consumers (see
Appendix 6). Besides, more luxury brands are starting to feel the pain from the proliferation of
lower-priced premium brands as the younger consumers begin to embrace the values of
conscientious consumption, even if they can afford the high-end products. Although these
challenges are likely to hit individual fashion houses differently depending on their various
situation, the net result will be massive. The accelerating shifts in consumer preferences will
undoubtedly upset the existing equilibrium of power in the luxury fashion sector and brands must
change in time to survive in the harsher economic world and the intensive industry competition.
To navigate the uncertainties of the market, transnational luxury brands must evolve
themselves. Competitive presence is strategically important to leverage and communicate the
value of a brand in the international market and help them establish a solid global image. By
continuously leveraging all its intangible assets in cultural sensitivities, a brand can achieve its
highest value and differentiate itself from its competitors, and ultimately to be the trendsetter.
Eventually, it can build a long-term mutually beneficial relationship with target customers.

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V. External forces that drive for cultural sensitivity
Whereas the fashion industry continues to be disrupted and changed by the shifting axes of
global trade, there are also some external forces, including shifting consumer values and the
development of technology, that drive the fashion houses to find new strategies to maintain their
status in the industry. While there is no way to predict which topics will rise to the surface in the
future, it is clear that cultural sensitivity has become one of the indispensable characters for luxury
brands to proceed. Currently, several forces listed below are driving the global luxury segment
to be more cautious in regards to cultural sensitivity:
• Rising conscious consumerism lowers the error-tolerance rate
• Social media minimizes time for crisis management
• Brand reputation matters more than ever
• A strong internal culture can cut operational cost

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• Rising conscious consumerism lowers the error-tolerance rate
In today's world, there is an emerging variety of consumers who are conscious, conscientious,
and knowledgeable when they are making their purchasing decisions. While their demands differ,
many of the consumers are making a personal statement when making purchasing decisions.
Especially for the younger generation who are representing more of the global luxury goods
consumers (see Appendix 7&8), many of them feel that they can alter their consumption choice to
fulfill their social consciousness. Their consumption patterns are highly directed by the intrinsic
value of brands. They want the brand they purchase to represent their value, so the need for greater
social awareness and understanding is more impending than ever.
As the world is becoming more advanced in terms of social values and cultural identities,
brands need to be socially responsible in representing social values and causes. Cultural diversity,
racial diversity, and gender issues now can all affect a brand’s reputation, and global consumers
are inclined to be vocal more about and react more harshly to companies’ inappropriate actions.
In recent years, diversity has finally landed as a concept, and it's clear that it won't just be a
buzzword. Different audiences from various backgrounds won't come with homogenous cultural
needs, and they want brands to take more than just tokenistic engagement. In other words,
consumers from different cultural backgrounds are currently seeking more culturally ethical and
sustainable products, driven by their value. Indeed, it is the consumer desire that drives brands to
bring audiences from different backgrounds together through their purposeful and ethical business.
Therefore, transnational companies should look beyond quarterly returns and instead gear the
companies toward socially responsible practices. In an environment where conscious consumerism
has gone mainstream and trust is paramount, businesses need to build on sensitivity as well as deep
insights and move away from the tokenistic and superficial engagement with consumers from

20
different backgrounds. It is a crucial moment to make diversity and inclusivity a priority for a
transnational business. To remain relevant to the next generation of consumers, which according
to Bain &Company, will represent approximately 55% of the 2025 market and contribute 130%
of market growth, luxury brands must find ways to share their purpose and values while
demonstrating their heritage and authenticity. And underlying all those will be the need to take the
broader social goal into communication when they try to attract consumers from overseas markets.
• Social media minimizes time for crisis management
Social media has removed the traditional geographic barrier that existed against big
corporations to connect with global audiences (see Appendix 9). It gives businesses the possibility
to leverage their scale of expansion through online engagement and e-commerce platforms.
Nowadays, more people are bypassing shopping in person for the convenience of buying things
online. According to Boston Consulting Group, more than 70% of the Gen Z shoppers globally
decide what to buy through an online experience. On the product development side, the
development of a digital platform gives those brands a chance to have a better understanding of
their customers and serve them better using big data analytics (see Appendix 10).
Also, those luxury conglomerates all have invested a lot over the years in cultivating strategic
relationships with authoritative influencers and key opinion leaders all over the world, while many
of them also have a high-profile clientele base. Those high-profile users can be the third-party
credentials for the transnational companies and create positive buzz for them on social media. As
a result, those brands can either enjoy free support from a lot of global A-list celebrities or have
paid partnerships with them, which help expose the brands to broader audience groups and
leverage their reputation.

21
On the other hand, advanced technology has changed how far all the errors will be received
and spread, eventually destroying many of these well-known brands. While brands actively
participate in the online chat to engage with their target market, they will likely contribute to their
own problems by making unwise decisions and comments. This means that not only are their
insensitivities visible to the whole world, the problems are also easy to share and discuss. Such
discussion usually spreads very quickly, and the immediacy gives almost no time for companies
to react to potential problems, so the problems will be compounded with the extra attention.
Now, traditionally marginalized groups can gather more easily than ever and use their
collective voices in a more meaningful and visible way, so it will be much easier to arouse and
compound controversy. In the time of social media, a bad reputation can be established quickly
while good ones take a long time to be built. Transnational brands, therefore, need to excel with
more cautiousness and sincerity.
• Brand reputation matters more than ever
Reputation has become one of the most important aspects of the business right now. It impacts
real-life behaviors from business opportunities, the selection of prospective employees, to the
company's value and its marketing cost. With the growth of the internet, businesses and brands
will be seen and judged whether they want it or not.
When it comes to attracting new customers and growing the business, reputation is the most
powerful leverage that a business can have. A great reputation can help a business stand out from
the crowd by building up a competitive advantage. Customers usually are willing to pay a little
more if that means purchasing from a more trustworthy company with quality goods.
Customers today have dozens of online reviews at their fingertips. Word-of-mouth has become
a widely adopted referral system for customers. According to Reputation X, 91% of consumers

22
say positive reviews will influence their purchase decisions, and 86% of consumers use the internet
for research before making a purchasing decision. The company’s good online presence will make
potential customers recognize their efforts and will therefore be more likely to engage with the
business.
The hard truth is, no matter how hard a company tries to market itself, most customers will
now lookup the reputation of the business online before making a purchase decision. A good
reputation will not only attract new customers but also retains existing customers. The more people
like the business, the more people will spread good words about the business, which in turn will
increase the number of customers. As a result, a good reputation is easier to build on.
While a good reputation can let businesses enjoy a high standing to avoid too much spending
on future marketing, a bad reputation, on the other hand, can initiate a chain reaction, and it will
undoubtedly sway the collective judgment of a brand. However, a long-term good reputation can
help mitigate the damage from negative accidents. When the business does encounter some
difficult experiences, far fewer people will be influenced by the negative reviews if they have an
established good opinion of the company.
Moreover, reputation impacts all of the company's relationships. It not only applies to the
employees but also can help a company build up the kind of favorable brand images they want
their stakeholders to see. Investors are vital to the financial health of a company as they are the
source of the capital which fuels growth. They expect to see a stable and consistent reputation of
the companies they invested in. A good reputation can establish trust and build valuable
relationships among the company and its stakeholders to let them bring in more financial sources
to support the company's long-term development.

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Also, in no other consumer category is the price for violating consumer trust so high as in the
luxury sector, where the brand's elevated value lies primarily in its reputation, as the industry's
leveraged value lies primarily in the reputation and image of brands.
As the younger generation is developing more consciousness in their consumption, brand
image has become more crucial than ever. Especially for a foreign company, its insensitivities to
the intangible cultural factors can cause huge damage to its reputation in local markets, and in the
context of the global economy, one misstep can destroy the whole business almost without the
business noticing what’s happening.
• A strong internal culture can cut operational cost
Talented people always want to work for companies that they share the same values with, and
such values are generally part of the larger company culture. Corporate culture includes the values,
beliefs, behaviors, artifacts, and reward systems that affect people's behavior on a daily basis. A
company's culture can directly affect the engagement of its employees, which is their level of
commitment to the company. It is important to make sure that everyone inside the company feels
equal, included, and valued so that they can operate at their best.
In the highly competitive market environment, internal engagement is especially important for
a company, because employees will feel uncommitted when the engagement is poor, which will
result in a high turnover rate. With a strong corporate culture, the employee turnover rate can get
much lower, thereby ensuring stability inside the company and improving operating efficiency
(see Appendix 11).
In the context of the global economy, one of the many tendencies for multinational companies
is to have their workforce spread all over the world. Such cross-cultural context calls for constant
collaboration among employees with their global counterparts, and that is when having a culture

24
of diversity can help employees understand each other and get the most out of every interaction
they have with their peers. Creating an environment where employees feel comfortable talking
about their different cultures can be essential in bringing in a diverse set of knowledge,
competencies, perspectives, and ideas from which the business can benefit.
When more people feel comfortable working in a company because of its diverse culture, there
will be a high level of engagement, which means employees will feel more committed. The
diversity inside a transnational company will also serve to bind people together and help people
from various backgrounds communicate and collaborate. Such a culture can also drive execution
and ensure business consistency across the globe. Employees will likely feel appreciated and
respected by their peers, and they will feel more comfortable bringing up their concerns about the
business, so the business can manage to interact frequently with different cultures in the world
economy.
Therefore, having the sensitivities to build an internal culture where employees coming from
different racial, cultural, and social backgrounds feel a sense of belonging and inclusiveness can
solidify the internal structure and minimize the unnecessary cost caused by employees' turnover.
On the other hand, negative employee reviews will unsurprisingly turn away top talents and
make the company spend more money on recruiting. Therefore, companies with a positive
reputation and solid company culture will be more likely to attract qualified candidates and let
them stick around longer to offer more long-term contributions. As a result, they will not always
need to struggle to fill open positions.
Strong corporate governance will also persuade its stakeholders that the company is in good
shape and will continue to have above-average performance in the sector. It can increase their

25
confidence in the company and assure that they can receive substantial dividends. Ultimately, the
company can receive additional investment in order to expand its business.

26
VI. Practices in other fields
Currently, the majority of the fashion industry is struggling to adapt to sensitive issues across
different communities, and some of them are actively trying to adapt successful practices applied
in other areas. While cultural sensitivity varies a lot among different industries, and such
sensitivity will also likely change over time, for companies expanding their business to new
geographic, ethnic, or cultural territories, the essence of the problems are much the same. Thus,
the key strategies for dealing with cross-border differences across industries are related and can
be imitated. Of all the transnational companies, Unilever, Coca-Cola are two that have established
remarkable global strategies after years of international business practice and refinement.
Whereas Unilever shows how a transnational company can apply adaptation to adjust to
differences, Coca-Cola adapted and adjusted its business model to meet the demands of its various
markets. On the other hand, Starbucks also demonstrated by itself how a global company should
operate in a crisis of cultural insensitivity. The three companies lay out the proactive measures for
transnational luxury companies when navigating in different areas as well as the reactive
strategies when facing the mishap of cultural insensitivities.

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• Unilever: One of the most successful transnational companies
Unilever is one of the world’s largest consumer goods companies and a dominant Top 10
performer in annual global consumer product goods rankings by market capitalization. As of the
end of 2020, Unilever had over 400 home care, food and refreshment, and personal care brands
sold in 190 countries. In entering and competing in multiple foreign markets for its cosmetic and
toiletries products, Unilever has followed a “Think global, act local” strategy. Through trial and
error, the company has truly become a strong and healthy multi-local multinational company.
While Unilever recognized the need for a common culture among its scattered units, the
company adapted cross-market subsidization and a global-thinking strategy, which means that the
company adjusts its products per the preference of local customers. In the early days of Unilever,
the company had created a decentralized organization with self-sufficient subsidiaries. As early as
the 1940s, Unilever had already begun to actively recruit local managers across the globe to replace
executives from the head office. Also, since the Indian subsidiary was established in 1942,
Unilever inserted a management process which the insiders regarded as "ization,” which means to
fill local executive and technical positions with local experts, leading to the nationalization of
Unilever’s global subsidiaries.
Unilever conducts its international business by partnering with operating companies. There is
flexibility on every level of the company to ensure diversity can be incorporated. The management
team will explain the rationale behind each of its decisions. The company relies on the knowledge
of those operating companies to judge what specific product expertise Unilever needs in their local
market. In this way, Unilever stays close to global markets and is, therefore, able to make better
use of the opportunities offered by diversity.

28
While continuing to develop local talents in its subsidiaries, the company also expected the
manager to have experience in more than one country. Unilever opens its international
management training college Four Acres to equip 300-400 managers from across the globe with
global knowledge each year. After a period of 6 to 12 months in one market, those managers move
on to new positions in a new market to transfer ideas among companies and instill all kinds of
perspectives into each of its subsidiaries. Each of the chairmen address 350 to 500 senior managers
every year from all over the world to tighten the connection inside the company. Also, the
company's board includes members are from six different countries. This multi-layered network
made sure that international staff from different subsidiaries will work in a culturally inclusive
environment.
Unilever also has pioneered new managerial selection systems as well as advanced graduate
recruitment methods to ensure the input of the most cutting-edge ideas. Unilever managers go to
their local universities to spot talent; prizes are awarded to keep the connection between the
company and the young scientists; Unilever also sponsors a broad range of programs for
universities in many countries to build its reserve of talent. Unilever is always looking for people
who can understand the value of different cultures and work in an international context. As a result,
the company can keep current with the trend in its global marketing approaches and can resonate
with its global audiences.
Lastly, Unilever has been constantly evolving its global strategy based on the ever-changing
broad environment. Although there are still risks and it may be necessary for the company to adjust
its system from time to time, the robust overall system minimizes the damage to the company and
helps Unilever foster a positive and solid public image that is hard to be shaken by one single
misstep.

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• Coca-Cola: Moving from local market to international market
Coca-Cola – the drink -- was invented in 1886 in Atlanta, Georgia, and is now the biggest and
most popular soft drink manufacturer in the world. The company always thinks globally and acts
globally, and thus has become a master of diversification and globalization in the bottled drink
sector.
Throughout its history of operation, the company has always positioned itself as a "multi-local"
business. It always relies on the insight of the company's local bottling partners to act according
to local laws, local culture, and local needs. In each of the countries the company has business in,
Coca-Cola works with reputable agencies and recruits professional marketers to build robust
global processes. The soft drink maker places power in the hands of those who have direct contact
with the customers and gives them flexibilities to allow differences in packaging, distribution, and
media based on the changing situation in a particular country or geographical area. Local
employees across the globe develop ideas and strategies that fit in with both the local market and
the Coca-Cola Company as a whole. Meanwhile, they will be accountable for the outcomes of
their ideas. In this way, Coca-Cola remains a local response and local touch of business activities.
On the other hand, its multi-local strategy approach goes strong and adequately for its worldwide
entering.
Coca-Cola also works with local brands from international markets in the production and
marketing process. Coca-Cola invests a lot in understanding the psyche of international consumers.
This helps the company build strong consumer preferences upon entering a new foreign market.
From such partnerships, Coca-Cola pursues the global strategy of diversification as per the local
culture. The company is able to exploit the benefits of its global branding and keep current with

30
the global trends in taste. Overall, the establishment of localization and adaptation helped Coo-
Cola succeed in its international marketing.
Another successful strategy adopted by Coca-Cola in its international business is its self-
positioning. Coca-Cola always presents itself as a local company that has its headquarters in the
United States, rather than an American company going international, which helps the company
attain the trust of its international consumers. Also, as part of its global strategy, Coca-Cola is a
pioneer investor in foreign social responsibility activities. Coca-Cola gives its global partners and
trade enterprises free promotional materials to further accumulate market preferences.
In addition, Coca-Cola has paid attention to building on powerful associations with cultural
factors in different geographic areas. For example, over the years, the company has invested
heavily in sponsoring Moroccan soccer, the country's number one sport. As a result, Coca-Cola
turned out to be the number one soft drink in the country.
By applying a multi-local strategy, Coca-Cola managed to instill local practices that allow the
company to embrace cultural differences and therefore can enjoy identifiable brand images across
the globe. The company's attentiveness to the various needs of different markets helps Coca-Cola
to always stay locally and stay relevant.

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• Starbucks: Recovering from racial insensitivities
A video of an incident that happened in a Chicago Starbucks went viral on April 12, 2018. In
the video, the store manager called 911 to arrest two black men, whom the manager claimed to be
trespassing as they did not order any food or drink. The video soon sparked public outrage as
people accused Starbucks of racial discrimination.
Starbucks quickly apologized for the incident and changed its guest policies, allowing people
to sit in-store without buying anything. The company also enlisted a contingent of activists and
advocates for guidance and decided to close its 8000-plus stores for training on how to combat
racial bias. Alexis McGill Johnson, the co-designer of the training sessions for Starbucks, revealed
that the goal of the activities was to create "more awareness of how bias works" and help the
employees to apply the awareness to their job. The development team of the training also involved
civil rights activists, including Bryan Stevenson, founder, and executive of the Equal Justice
Initiative; Sherrilyn Ifill, president and director-counsel of the NACCP Legal Defense and
Education Fund; Heather McGhee, president of Demos; former U.S. Attorney General Eric Holder
and Jonathan Greenblatt, CEO of the Anti-Defamation League.
At the training session, employees were divided into small groups to go through the 68 pages
of materials on newspapers, and watch videos on iPads. They were also asked to finish tests and
listen to clips of conversations among other colleagues to realize how they form implicit
associations and make biased decisions on a daily basis. The training starkly revealed how white
and black people experience the world differently.
Any corporation that looks to be part of the solution needs to look beyond token gestures like
training, but the food chain showed its sincerity in addressing its insensitivities by spending tens
of millions of dollars dedicating roughly 175,000 employees at 8,000 locations for 4 hours.

32
Starbucks admitted that the training was not meant to end bias, as it was such a systemic problem
that is out of the hands of Starbucks. Rather, the training was about getting its employees to start
grappling with the implicit issues of race. It got more people to recognize their own unconscious
biases. Employees may start to think twice about their words and actions when they work because
of this training, and that shows the company's effort in trying to start the dialogue of change and
paving the way for the broader society to finally tackle the problem. Such training is at the core of
rehabilitating Starbucks’ brand image.

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VII. Suggested Communication Solutions
For the high fashion industry, the diversity strategy has to be a penetrative one that involves
the entire processes like design, decision-making, and feedback collection which focused on
cultural sensitivity in a meaningful way. Brands need to work from improving their internal
construction to keeping current with the external changes to truly embrace cultural sensitivity and
reconstruct a more diverse fashion industry. Possible ways to create changes are as follows:
• Establish an effective two-way communication system to listen and engage with diverse
communities
• Install internal mechanisms among global employees to understand how communications will
be received
• Make company leadership more accountable
• Develop an effective feedback system for customers to ensure social listening and seek ways
to create actionable insights
• Recruit for diversity in every level of the company’s organization
• Provide more diversity resources internally
• Seek help from external experts
• Influencing the influencers

34
• Establish an effective two-way communication system to listen and engage with diverse
communities
A good way for a transnational company to showcase that it honors diverse cultures and values
is to involve different communities in the conversation. These communities can include existing
and prospective customers in the global market where the company is planning to expand into.
Each of these communities has its specific sensitivities that need transnational enterprise to
accommodate to.
Transnational brands should establish connections with different communities across the globe
to collect ideas and feedback as widely as possible, thereby understanding the most common
concerns and suggestions from diverse groups so as to make pinpointed improvements inside the
company.
Global customers are becoming more conscious about their purchases and want the brand they
choose to respect their values. They tend to react more harshly to a company’s irresponsible social
behaviors. As international customers are offered with more options today, they will be more
decisive in abandoning brands that breach their value. Therefore, the brand must be aware of
different sensitivities in different environments.
A transnational brand should deliver the message to show that it respects all different cultures
and values and will always embrace different cultures. It needs to prove through actions that it is
committed to building the bridge among diverse communities. Such two-way communication is a
good way to reframe the function of purchasing their products from one focused on utilitarian
outcomes to one that focused on expressing the value of a company’s cultural merchandise. As a
result, such communication with those various communities can help those transnational brands
establish effective communication and emotional connection with audiences from diverse

35
backgrounds. Ultimately, it will help the transnational brand bridge the divides among different
cultures, societies, and races through its products.
By connecting with those from different backgrounds, transnational luxury companies can
develop audiences from different backgrounds emotional attachments to the brand. This on the
other hand demonstrates to the public that the company is paying proper homage to diverse cultures
and is committed to building a diverse in-house culture.
• Install internal mechanisms among global employees to understand how communications
will be received
Global distributors and store employees of the company who have deep knowledge about their
own culture can bring diverse viewpoints and perspectives into a transnational company from a
foreign country. As the domestic managers of the transnational companies cannot understand
different cultures through a brief, they should pay special attention to establish non-discriminatory
practices in the company and to build a solid diversity culture where employees are encouraged to
give their opinions on the company and its products regardless of their positions. Once the internal
diversity gets increased internally, it will become easier for the company as a whole to reflect
diverse values and avoid the mishap of cultural insensitivities.
However, the prerequisite for transnational companies is to create an environment where those
employees coming from different racial, cultural, and social backgrounds feel included and
comfortable to voice their concerns about the company's insensibilities and propose constructive
suggestions. Employees must feel a sense of connectedness to the company before they can feel
free to express themselves based on their unique perspectives. When those employees feel that
they must hide or mask core parts of themselves at work, they feel unsure, unsafe, or invisible,
thus causing a company's diversity to become compromised.

36
A transformative dispute resolution can be critical in making changes happen. A great way to
encourage people from diverse backgrounds to bring different ideas into the company is to build a
workforce communication platform. This connects global employees with the company and
ensures that their ideas are heard and valued. By creating a space where global employees from
diverse backgrounds feel safe to voice their opinion and express their concerns, a transnational
company can let global staffs who deeply understand different communities bring in ideas that
truly cater to different communities.
• Make company leadership more accountable
For the senior management and marketing leaders of these multinational companies, they have
an opportune chance to improve the brand image and make their brands truly diverse. The way
they present and carry themselves all demonstrate the company’s culture in a sense, so they should
place themselves at the front line of change. They must regularly speak the language of diversity
and commit to inclusion by themselves.
Managers and leaders should get involved in every decision of the company from the start.
They should assess the needs and requirements of their diverse audiences and workforces. Through
setting goals, collecting data, and assessing changes over time, the managers will have a clear
picture of how the company is doing regarding diversity. On the other hand, such transparency
will make these managers more accountable.
Also, the management team should constantly reach out to employees from diverse
backgrounds to achieve fresh perspectives based on the employees’ various experiences. It is their
responsibility to make the whole company aware of not only larger problems but also small
problems regarding diversity. Managers should use the available resources inside the company,
including conferences, presentations, or training to provide more visibility for diversity problems.

37
Besides, those in the decision-making positions need to strengthen the diversity policies inside
the company. The leadership's commitment is critical in building the overall culture of the
company. They should set diversity goals to track the company’s progress towards diversity.
By letting the top management people be more visible and accessible, these transnational
brands will be able to show how much they value diversity and inclusivity. It will help the
transnational brands acknowledge and honor multiple cultures, so their follow-up cultural
inclusive promotions will seem less like a marketing strategy than a truth initiative. Also, such
direct communication will make employees from diverse backgrounds build emotional
connections with the company and be more committed to work.
• Develop an effective feedback system for customers to ensure social listening and seek
ways to create actionable insights
Knowledgeable customers are the best resources for those transnational luxury brands to
become more culturally sensitive. Brands should reach out to them constantly to address their
concerns. Customers from diverse backgrounds can educate about what is acceptable and what is
not in terms of product design, marketing, and overall brand messaging. Therefore, brands should
establish effective feedback platforms for customers to speak up whenever they find troubling
design ideas or marketing content regarding diversity issues with the brand. This can be done
through questionnaires or channels on the company's website. Marketing staff should always
review feedback from customers and share it with the creative team.
• Recruit for diversity in every level of the company’s organization
In the context of the global economy, a multinational company must establish a strategic
recruitment method to involve talents from diverse backgrounds in the creative team. Diversity

38
should be promoted to every level of the organization. When there are more diverse talents to be
placed in different roles inside the company, it is easier to make the company culturally diverse.
Firstly, it is important to rephrase the words in job postings to ensure there is no limitation on
the number of job seekers who can see themselves in those roles. From a company's standpoint,
blind hiring can be an effective approach to remove unconscious bias in recruiting.
For luxury fashion companies, they must break the unwritten rules of the industry and solve
the persistent issue of identical internal composition. Of all, the makeup of the executive team is
definitely a huge signifier to the rest of the team. The management team of those transnational
companies speaks volumes about their culture and therefore the management team should
represent people from various cultural and religious backgrounds.
• Provide more diversity resources internally
The overall internal diversity of a company can also be improved by providing employees with
more diversity resources. It is important to offer internal diversity training to leverage and
strengthen the internal cultural sensibilities and create a corporate environment where employees
will possess the right sensibilities to different cultures and values. To increase the internal diversity
of the company, the management team can offer more resources for employees to learn from. For
example, the company can set up courses to address diversity-related issues for its employees and
to foster diverse thinking.
Also, not only is letting each of the employees think in a diverse way important, but it’s also
important to let them know what other employees at the company think. Inside the company, there
can be regular communications among employees from diverse backgrounds. They can have
regular interaction with others from diverse backgrounds and establish a deep understanding of
different cultures. This is important because people from different backgrounds usually have vastly

39
different perspectives on all sorts of issues, so embracing diverse thinking can help a company
generate more diverse ideas.
As a long-term approach, investing in a multilingual workforce can be effective in making
employees feel comfortable communicating in the language they find most convenient to express
themselves. It allows them to speak out more easily.
• Seek help from external experts
There is also the option of seeking external support to increase cultural sensitivity. An external
specialist with professional knowledge of diverse cultures can help the business to re-orientate its
approach to different markets. They have the professionalism to instill the awareness of different
viewpoints that global customers have.
Transnational companies going international that cannot improve internal diversity in a short
time should regularly work with professionals from diverse backgrounds to achieve a different
lens and perspective. They should consult with a cultural expert to strategize the elements of its
diversity plan.
Those experts have the professional knowledge to understand what the audiences from specific
cultural backgrounds want, so it will be more effective in tailoring the marketing messages and
product designs based on their suggestions. Since they can be the credible third-party that the
foreign communities trust deeply in, such a partnership can help transnational companies create a
positive buzz in their foreign markets.
Also, such a third-party partnership is more likely to be trusted by the public and thereby build
up the company's reputation more easily. Those credible professional experts can provide
validations for the companies in the prospective markets, so that these transnational luxury houses
can establish their image of a leader in designing high-quality fashion products that set the trend

40
as well as a responsible business player who embraces different cultures in foreign markets. As
experts in the area, the third-party experts can prove that the transnational company strives to give
back to society while doing its own business. It is a more effective way for a transnational company
to build up its public reputation in the foreign market than simply providing testimonials from the
insiders of the company.
• Influencing the influencers
Working with influencers and celebrities from different backgrounds can leverage the brand's
image regarding inclusivity and diversity. These key opinion leaders possess high public exposure
rates and influential power in the market where the company is planning to expand since they have
developed close relationships with the brand's target audiences and have established authority in
the fashion industry. Transnational brands can work with them to use their huge persuasive power
in influencing the public's recognition of the brand in the international market.

41
VIII. Conclusion
In the growing trend of globalization, governments all around the world are removing trade
barriers and loosening regulations to attract foreign business. Since the global market for luxury
goods is estimated at around $42 billion with a 4% growth rate per year (see Appendix 12), those
luxury conglomerates that aim for the international market now have the perfect chance to expand
their market.
However, the competition in the luxury sector today is very intense as traditional magnates are
consistently evolving themselves while many new entrants keep pouring in. But the good news is,
those traditional luxury conglomerates all have established strong brand portfolios over the years,
so they can receive high brand recognition in the emerging markets where consumers are having
more disposable income to spend on luxury products.
On the other hand, those luxury conglomerates always incorporated some traditional
stereotyping and misinformation into their work that has a lack of sensibilities for cultures and
values of other communities, while there is a lack of global representation in those brands'
worldwide team with people of different geographical, racial, and cultural backgrounds to help
those brands stay current with the sensitivities existing in other cultures and identify the potential
issues lurking in the brands, therefore, it is very likely for those companies to breach cultural taboo.
Since the younger generation is more socially conscious, many of them are making personal
statements through their purchases. They expect companies to prioritize social responsibility more
than business profit, and they tend to react more harshly to companies that misbehave. The
immediacy and border boundarylessness of the internet has already become a double-edged sword
that can make any minor mistake largely amplified, streamlined, and beamed into every home in
a matter of seconds, leading to a major crisis that the company will have almost no time to respond.

42
Therefore, if those brands do not have internal staffs who possess the cultural sensitivities to
identify the potential problem within the products, their brand's reputation can easily get damaged
and the brands can easily lose their market share in the drastic industry competition.
The integration of a real deep understanding of diverse cultures always requires the
participation of residents who truly live in such an environment. Minorities need to be involved in
more decision-making positions in the transnational company to offer the company with specific
cultural sensibilities to stay current to various issues in different cultures and customs.

43
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53
Appendix:
1. Dolce & Gabbana Average Monthly Weibo Engagement around the controversy

2. China and Chinese consumers will continue to drive growth of luxury sales

54
3. Chinese consumers will account for 46% of the personal luxury goods market by 2025

4. Emerging Markets’ Disposable Income and Consumption Growth

55

56

57

5. The global luxury goods market should grow 3-5% per year through 2025

58
6. Luxury Sales Drop Forecast by 2022

7. Generation Y and Z represent more of the global luxury goods consumers

59
8. Generation Y and Z will represent 55% of the global luxury goods market by 2025

9. Online luxury is posting strong growth

60
10. Online Sales should reach 25% penetration by 2025

11. Percentage of respondents rating corporate culture “important” or “very important”

61
12. Opportunistic growth for the luxury industry

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Asset Metadata

Creator Zhang, Zhirong (author)

Core Title The importance of cultural sensitivity for luxury brands

School Annenberg School for Communication

Degree Master of Arts

Degree Program Strategic Public Relations

Publication Date 04/15/2021

Defense Date 04/14/2021

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag cross-cultural communication,cultural sensitivity,luxury,OAI-PMH Harvest,transnational

Language English

Contributor Electronically uploaded by the author (provenance)

Advisor Wang, Jay (committee chair), Cook, Fred (committee member), Maio, Pat (committee member)

Creator Email zhirongz@usc.edu,zhirongzhang1997@gmail.com

Permanent Link (DOI) https://doi.org/10.25549/usctheses-c89-442516

Unique identifier UC11668583

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Legacy Identifier etd-ZhangZhiro-9469.pdf

Dmrecord 442516

Document Type Thesis

Rights Zhang, Zhirong

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Access Conditions The author retains rights to his/her dissertation, thesis or other graduate work according to U.S. copyright law. Electronic access is being provided by the USC Libraries in agreement with the a...

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