Economy

Do Brands Have A Role To Play In Social Conflicts?

Corporations usually try to stay clear of controversy. But there may be benefits, in some cases, to taking sides.

American football quarterback Colin Kaepernick is the committed face of Nike.
American football quarterback Colin Kaepernick is the committed face of Nike.
Daniela Arce

-Analysis-

SANTIAGO — Amid the upheaval in Chile and elsewhere in Latin America, some brands seem to have joined the fray by taking unusual measures like cutting prices on transportation apps, for example. And while some might dismiss such moves as opportunistic, others see them as real acts of solidarity.

There's also the argument, in some cases, that the actions are consistent with a given brand's purpose and reputation. Either way, experts agree that there's nothing really unusual about brands becoming part of an agitated social period, and many see it as inevitable given the active role they seek in society. ​

Choosing sides

Certain brands see it as part of their DNA to take a position on events. Sportswear brand Nike has often courted controversy by identifying with value-laden positions, and while these were decisions relating to particular developments and not large-scale social crises, they illustrate how a brand can have an opinion.

In 2018 and 2019 it teamed up with the American football player Colin Kaepernick — who refused to stand for the U.S. national anthem to protest against racism against black Americans — as the face of the 30th anniversary of its "Just Do It" slogan. By doing so, Nike actively chose to enter the national controversy over Kaepernick's stance.

The company faced further controversy this year when it had to decide whether or not to take its Air Max 1 USA trainers off the market for displaying the Betsy Ross, the original flag of the American colonies. Kaepernick complained it represented a time when slavery was in force in several American colonies.

Juan Carlos Bustamante, a marketing expert and university lecturer in Guayaquil, Ecuador, says this type of decision means "taking a public stance on a situation of relevance to society," and making that part of the firm's "identity, its strategy and communication." It is an approach that seems to play well with today's young consumers, who tend to prefer brands that share their values and are willing to boycott firms that go against social principles.

Brands have economic and cultural power that makes them catalysts for change.

Gian Marco la Barbera, chief operating officer of the Brazilian marketing firm iFruit, and Gabriela Kleeberg, a crisis management lecturer at Peru's private USMP university, agree it is not only natural, but a duty for brands to be present in social situations.

Even in critical conditions, says Barbera, brands need to keep selling every day. "But they need to be careful how they communicate their campaigns to avoid conflict," he adds. "In times of crisis, they need to consider their communication approach carefully before launching any campaign."

Kleeberg, for her part, likens organizations to living, human entities. "They create relations based on a system of organizational values and within a mission, vision and purpose," she says. "Only this way will a firm know when it must communicate, and how to do it with coherence, responsibility and empathy." ​

Juan Carlos Bustamante says brands have seen their social importance and roles rise to the point where "they are no longer just economic but also social entities, though less recognized as such." Using brands in social campaigns or to back a movement, he says, means going beyond acting as an agent of change to enter uncharted territory.

"Brands have economic and cultural power that makes them catalysts for change and allows them to show their social responsibility and real leadership," he says. "And yet, it's important to note that this isn't about associating the brand with a charity organization, a good cause or a social moment. It's about a firm using a brand's ability to influence social behavior and thus strengthen its reputation."

Treading carefully

But it's also crucial that they not come across as opportunists. Barbera says firms must not exploit the weak or critical situations like food shortages or public and social calamities. One must "understand" the moment, he says, "and respect the situation. Brands must take part in a moderate and respectful manner, in such a way as not to incite violence or increase confrontation." ​

When brands do get involved, says Kleeberg, they should do so with constructive messages, and only after a period of listening and reflection. "It's worth asking yourself, is there something we can do or change in this situation?" she says. "Some social crises are a protest against the system and we all have a role in that system, and an opportunity to do things differently."

It's about a firm using a brand's ability to influence social behavior.

No firm should wade into a controversy just to again visibility, the USMP lecturer goes on to say. The question, rather, is if doing so is consistent with a brand's organizational culture and projected values.

Company heads, like brands, can also become involved by announcing certain measures. But should executives state opinions publicly? Kleeberg says it's alright to engage in this way, but again, only after taking the time to properly listen and consider the situation.

"It is important to understand what the CEO's role," she says. "The message must be sincere and cautious and coherent with the organization ... That's because brands and organizations rest on human foundations and values."

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Society

Debt Trap: Why South Korean Economics Explains Squid Game

Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.

In the Netflix series, losers of the game face death

Yip Wing Sum

-Analysis-

SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.

The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.


It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.

Seoul housing prices top London and New York

In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.

According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.

Average home loans are equivalent to 270% of annual income.

One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.

According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.

Playing the stock market

At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.

A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."

In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.

42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s

Simon Shin/SOPA Images/ZUMA

Game of survival

In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.

But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.

This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.

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