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Shanghai’s market regulator fined Canada Goose subsidiary CG (Shanghai) Trading Co. in June over 'misleading' advertising, citing claims by Canada Goose that all of the down blends in its jackets 'contain Hutterite down, the best and warmest Canadian down.' China’s advertising law prohibits terms such as 'the highest level' or 'the best.'Mark Blinch/Reuters

Luxury outerwear retailer Canada Goose Holdings Inc. is facing criticism in China for allegedly misleading claims in advertisements for its trendy parkas – a public swat at a prominent Canadian brand that comes amid continuing tensions between Beijing and Ottawa.

On Wednesday, the state-affiliated Chinese newspaper Economic Daily published an article titled “Catching the lying Canada Goose,” which accused the company of failing to understand the country’s advertising laws. The criticism was in reference to a fine levied by Shanghai’s market regulator against Canada Goose subsidiary CG (Shanghai) Trading Co. in June, over “misleading” advertising.

The regulator fined the company 450,000 yuan ($88,372), citing claims by Canada Goose that all of the down blends in its jackets “contain Hutterite down, the best and warmest Canadian down.” China’s advertising law prohibits terms such as “the highest level” or “the best.” The regulator also found the claims were misleading, in part because the warmth of down is not directly tied to its origins.

In a statement on Wednesday, Toronto-based Canada Goose acknowledged a “text error” appeared earlier this year on the store it operates on Chinese e-commerce site Tmall. “The error was corrected immediately,” the statement said.

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The Economic Daily article pointed out “all companies, no matter whether they are Chinese-funded or overseas-funded, must obey Chinese laws as long as they operate in China.” The article also encouraged Chinese companies to seize the chance to compete fairly with foreign companies, as Chinese consumers are becoming less enamoured by foreign brands.

China is a crucial market for many luxury brands, including Canada Goose. Earlier this month, the company reported that strong sales in China contributed to its revenue more than doubling in its first quarter, compared with the same period last year. Direct-to-consumer revenue in China grew by 188.7 per cent.

But tensions between Canada and China have spurred criticism of Canada Goose in the past. After Canadian officials arrested Huawei Technologies Co. Ltd. executive Meng Wanzhou at the request of the United States in 2018, some users on Chinese social-media sites advocated a boycott of Canada Goose products.

“Canada Goose has been tremendously successful in China, and in fact has been a bright light in the last two and a half years of difficulty. What we’re seeing, though, is that when [companies] have great success in China, that becomes a potential target,” said Margaret McCuaig-Johnston, a senior fellow with the Graduate School of Public and International Affairs at the University of Ottawa and an advisory board member with the Canada China Forum. “Its visibility gives it exposure to risk that another more low-key product would not have.”

She added that there have been examples of politically motivated boycotts in China against foreign companies in the past.

Earlier this year, retailer H&M became the subject of a boycott after parent company Hennes & Mauritz AB made a statement about forced labour in China’s Xinjiang region.

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