Swiss watchmaker Swatch issued an apology at the weekend and pulled ads featuring images of an Asian male model pulling the corners of his eyes up and backwards in a "slanted eye" pose.
The images for the Swatch Essentials collection were widely condemned online in China, where many comments said they appeared to mimic racist taunts about Asian eyes.
Shares in the company slipped by as much as 2.7% this morning before paring losses somewhat.
In an apology posted in both Chinese and English on its official account on the Weibo social media platform on Saturday, Swatch said that it had "taken note of the recent concerns" and removed all related materials worldwide.
"We sincerely apologise for any distress or misunderstanding this may have caused," the statement said. It also posted the same apology on Instagram.
Swatch Group did not immediately respond to a Reuters request for further comment.
The criticism over the advert is the latest setback for a firm whose shares have fallen by more than half since early 2023 and now faces a 39% tariff on its exports to the US.
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 "persistently 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 relatively short-term.
"It was pretty stupid to release images like those ones," he said.
Reporting by Reuters
