Swiss watchmaker Swatch issued an apology over the weekend and pulled ads that featured an Asian male model pulling the corners of his eyes in a “slanted eye” pose.
The images for the Swatch Essentials collection were widely condemned online in China, where many said they appeared to mimic racist taunts about Asian eyes.
Shares in the company fell as much as 4% on Monday before paring losses to trade 3.1% lower.
“It is very significant for a brand of that scale to misfire in this way,” said Mark Borkowski, who runs a public relations consultancy in London. “This carelessness is really quite a fundamental mistake.”
In an apology posted in both Chinese and English on its Weibo social media platform on Saturday, Swatch said it had “taken note of the recent concerns” and removed all related materials worldwide.
“We sincerely apologize for any distress or misunderstanding this may have caused,” the statement said. It also posted the same apology on Instagram.
Swatch declined to comment beyond its statement.
The campaign resulted in a backlash on social media.
“When I saw this news, I was quite shocked. Swatch has been in the Chinese market for many years, and I feel like most people are familiar with the brand,” said 23-year-old student Justin Zhao. “I don’t know why they did it. They were able to somehow release this after going through numerous approvals.”
Borkowski said Swatch needed to investigate how the ad received the go-ahead from executives.
The incident is the latest setback for a firm whose shares have fallen by more than half since early 2023 and which is facing a 39% tariff on its exports to the United States.
Swatch, which also makes Omega, Longines and Tissot watches, relied on China, Hong Kong and Macau for around 27% of group sales last year.
Revenue for the watchmaker slumped 14.6% to 6.74 billion Swiss francs ($8.4 billion) in 2024, hit by a downturn in demand in China, where Swatch said it was seeing “difficult market conditions and weak demand for consumer goods overall.”
Peter Xu, a fashion influencer in China with over seven million Weibo followers, said he believed the controversy would impact Swatch’s business in China, but given the speed of the apology, the fallout was likely to be short-lived.
“It was pretty stupid to release images like those ones,” he said.
($1 = 0.8065 Swiss francs)
