China’s tough stance on weed puts global brands in a sticky spot

September 5, 2014
September 5, 2014

Taiwanese actor Ko Chen-tung recently made a remorseful public apology after being arrested in Beijing for using marijuana.

“I’ve done the worst thing and become the worst example,” Ko, 23, said in a press conference, as tears streamed down his face. His father, who picked him up from the Beijing detention center where Ko had been held for two weeks, said he and his wife would “still love” Ko after the marijuana bust, but would be much more strict from now on.

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Kai Ko and his agent bow at a press conference on his arrest for marijuana use.(REUTERS/Pichi Chuang)

For the actor, also known as Kai Ko, the incident isn’t just a public embarrassment. It is also a threat to his lucrative endorsement deals in China and Taiwan with 19 different brands, which reportedly earned him nearly $1 million a month. After his arrest, they’re crumbling fast. Yum Brands, which owns KFC, Pizza Hut, and Taco Bell, has terminated its contract. So has Adidas. “I can confirm that we no longer have a relationship with Kai Ko,” an Adidas spokesman told Quartz.

The companies’ response isn’t much of a surprise. After all, marijuana is classified as a narcotic in China, and is just as illegal as heroin. Use can be punished by multi-year jail terms, followed by involuntary enrollment in a treatment center for drug addicts. Beijing has been cracking down on celebrity drug use, including forcing celebrity management agencies to pledge not to hire stars who use drugs.

The Chinese pot crackdown, which comes as the United States moves towards decriminalization and even legalization, put global corporations who prize both markets in a bit of a tricky spot.

Consider, after all, that for many years one of the most visible faces of Adidas was Snoop Lion, aka Dogg, whose enthusiastic consumption of marijuana was even referenced in company advertising, like this heartwarming holiday story “The cautionary tale of Ebenezer Snoop:”

Or that, as US states loosen laws on marijuana possession, fast food brands in the US are rolling out cheeky commercials that hint at marijuana use—including Yum Brands-owned Taco Bell, which introduced the “fourth meal” for “late night munchies.” A new Taco Bell campaign refers to its waffle taco a “gateway breakfast.”

For many global consumer companies, the US remains their largest market, but China is a fast-growing second, meaning they’re going to need to do an interesting marijuana balancing act in the years to come. Sneaker sales in the US were $22 billion last year, for example, about 40% of the world’s total, but China was second with about one-quarter of that total.

Things may also get complicated for Hollywood and the music industry. Asia Pacific’s box office earnings surpassed the US’s last year:

Annual-box-office-earnings-by-region-Europe-ME-Africa-Asia-Pacific-US-Canada_chartbuilder

Not surprisingly, Hollywood is making films aimed, in part, at the Chinese market—at the same time that California’s legalization of medical marijuana means that actors are flashing their vape pens on the red carpet, admitting to marijuana use in interviews and advocating further liberalization of marijuana laws. US music industry stalwarts who are open about their marijuana use are also hoping to crack the lucrative Chinese concert circuit:

How this apparent collision course between Chinese and US attitudes about pot will be resolved is anyone’s guess right now. But Kai Ko’s future is more certain—he’s headed directly to rehab.

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