Aren't the Chinese a bit racist towards those of African descent? If so then why would TLM do good in China?
Honestly I don't even think racism is necessarily the overriding factor here, the Mainland Chinese definitely do not buy into 'black is beautiful' as woke advertisers might say, but they don't seem to mind black actors who are
actually compelling and play actual characters whose presence in-story makes sense as opposed to those who are clearly just there to check a box and/or played off as jokes.
Djimon Hounsou played a secondary character in a fairly big Chinese TV show from not too long ago and nobody seems to have had a problem with that, his role was a pretty serious one (a crime lord & slave trader) that wasn't played for laughs too. It did also help that that show's setting was the famously cosmopolitan Tang dynasty, which IIRC was when they experienced first contact with sub-Saharan Africans (either as traveling merchants or slaves to Arab merchants).
In the case of the Black Little Mermaid, or BLM if you will, I think the issue might have less to do with Halle Bailey being black and more with her being - shall we say - not particularly conventionally attractive, as all the memes about her eyes might suggest. This also seems to have been Chinese
Star Wars fans' bone of contention with the sequels:
other than the plot (such as it was) being dumb, they thought the actors weren't hot enough and mentioned that if Finn had been played by Will Smith rather than John Boyega, they wouldn't have had such a problem with him, regardless of his prominence or lack thereof on the movie poster. Same goes for the Tico sisters, there was no faster way for Disney to turn the Chinese off of them than by 1) casting Vietnamese actresses (heads up Mickey, Asians aren't all the same!), 2) killing the one played by a model off early on, and 3) going out of their way to make Rose's actress (who doesn't look bad in some non-SW photos of her I've seen) look as frumpy & unattractive as possible, presumably because adhering to conventional beauty standards = patriarchy and also because
Rian Johnson wanted to write the kind of girl he thought was attainable in high school into the story.
Tl;dr we should be blaming racism less and feminism more in the case of T(B)LM's bombing overseas. Dark skin is a disadvantage when it comes to Chinese beauty standards, but it's not insurmountable as long as you cast a dark-skinned actress who's at least a 7/10 in the role and to be blunt, Halle Bailey did not meet their bar. Also, as even the CCP will say in their publications,
Chinese audiences aren't so stupid that they can't pick up on obvious sociopolitical messaging being pushed in their faces and won't respect a character whose 'diversity' is clearly the main purpose for their existence, any more than they would have respected the minstrel show comic-relief Finn was turned into after TFA (a universal feeling not limited to Chinese audiences I imagine, if the '''''storytellers''''' themselves clearly don't respect the character, why should they?).