Swatch sees brand sentiments dip following LGBTQ watch seizure: Was it to blame?

Swiss watchmaker Swatch has been in the news recently after it revealed that Malaysian authorities raided a number of its stores and confiscated 164 rainbow-coloured watches worth a total of US$14,000 from its Pride collection for LGBTQ connotations, according to the brand when A+M reached out. 

It reported that Malaysia's Ministry of Home Affairs raided various outlets across eleven different malls and confiscated watches that came in the colours of the rainbow. Malaysia is known for criminalising same-sex relationships with punishments including caning and jail time.

The seizure was reportedly based on the Printing Presses and Publications Act of 1984 which ensures that content produced does not offend or undermine race relations.

Don't miss: Malaysian authorities seize rainbow watches from Swatch over LGBTQ claims

Swatch then released a statement by its CEO, Nick Hayek Jr. nothing that it "strongly contests" the idea that its rainbow watches, which were put out with the message of peace and love, could be harmful. 

He noted that Swatch has always promoted the positive message of having joy in one's life and that there was nothing political in its messaging. He ended his statement by questioning how the Regulatory and Enforcement Division of the Home Ministry will "confiscate" the many natural rainbows that appear in Malaysia skies yearly. 

Swatch has since noted that it has resumed selling its Pride collection and that its legal team is looking into the matter. However, has Swatch completely lost brand loyalty and trust?

According to media intelligence company CARMA, in the last seven days, the Swatch brand saw a spike in the volume of its mentions on social media. Sentiments of the conversations over the last seven days were 29.1% negative, and only 3.4% positive. However, most of the negative sentiments were not directed towards the brand; instead, it seemed that netizens found the decision by the Home Ministry ‘confusing’ and a ‘waste of resources’, said a spokesperson. 

"When it comes to the incident's impact on Swatch brand sentiment in Malaysia, it's a bit of a mixed bag. To truly grasp the situation, we need to understand who Swatch appeals to. With its fun and upbeat vibes, I can imagine it resonates with the young, trendy, and 'progressive' crowd, if you catch my drift," said Joey Gan, the market lead at PRecious Communications.

Surprisingly, though, Gan highlights that the incident brought forth a number of positive things for the Swatch brand.

"Firstly, it highlighted their commitment to celebrating inclusivity, which I believe struck a chord with its audience. Secondly, it brought awareness to the collection. I mean, have you seen their Pride collection? I'm actually considering getting one for myself now," she said with a laugh. 

Saying that, she notes that Swatch could have handled the situation better by considering local culture and norms. "Here in Malaysia, even minor issues can blow up once they gain political attention," she said before noting that finding the right balance between staying true to one's brand promises and catering to local sensibilities is no easy task. 

From a business perspective, it is important to take the long view through and to realise that building a brand takes time and that it is essential to minimise unwanted incidents. 

"It's all about gradually establishing a positive brand reputation without unnecessary confrontations that could hinder Swatch's growth," she said. 

Agreeing with her, Ashvin Anamalai, the CEO of DNA Creative Communications noted that in his opinion, it was not the most "most astute business decision" to put out the Pride collection knowing Malaysia's stance on the matter.

"The incident undoubtedly had and will leave an impact on Swatch's brand sentiments in Malaysia. The raid raised concerns and potentially created negative perceptions among certain segments of the population, considering the conservative cultural and religious context in Malaysia.

He added on by noting that a more effective solution for Swatch would have been to be proactive and transparent and to promptly address concerns raised, reaffirming their commitment to cultural sensitivity, and respecting local laws.

Swatch could have demonstrated their willingness to engage in dialogue and alleviate potential misunderstandings, he noted before saying:

It's all about understanding the market you serve and communicating effectively. 

Related articles:
After OMEGA success, Swatch fires up partnership with Dragon Ball Z
Brands turn to trendjacking as Swatch-OMEGA's CX fails to land with product shortages
Why are consumers over the moon with the Swatch X OMEGA collab?