Online iwom pr crises in china: the latest and why

In China, discussion of online Internet word of mouth (IWOM) PR crises always seem to be focused on foreign companies, but this is a bit misleading because local Chinese companies get it too. Online crises in China comes in many forms. Sometimes they are brought on by circumstances outside of a brand’s control – a freak accident that explodes into a storm of online controversy, or changes in government policy that throw a benign long-term practice into the worst possible light. Other crises are unfortunately engineered by the brands themselves, through carelessness or malice.

The five examples below of Chinese brands in crises online in China show that in many cases, rather than the details of the problem itself, what’s important is how a brand responds to the initial crisis that makes a lasting impression on Chinese netizens. A swift, engaging, well-targeted response can make all the difference between a satisfied group of online consumers / stakeholders, and a devastating rumor that will continue to harm a brand’s image and reputation for years to come.

BYD’s “five-star” scandal :
BYD is a domestic Chinese auto manufacturer that aspires to be an international brand. Although it has attracted considerable attention this year for its electric models, more recent news reports have focused on a safety scandal involving a traditional model. In July, a BYD F0 car rear-ended a mini van. Although BYD has boasted about the car’s superior safety rating (BYD claims “five-star” passage of the C-NCAP collision test) none of the F0’s air bags inflated when the collision occurred. The owner of the car took BYD to court for misleading customers with false test results. Shortly afterward, the China Consumer Association, the quality supervisor, issued a warning that the collision test results for the F0 are not due to be released until September, so the “five star” test results cannot not true. This statement brought the incident to the attention of the national media, and from there it spread to online forums where netizens blasted the company’s dirty dealing. In the aftermath, BYD responded by releasing an open “letter of gratitude” implying that the lawsuit was an effort by its competitors, referred to as “foreign brands and co-brands,” to fight the pressure of BYD’s climbing sales figures. An article entitled “BYD incident exposed an unspoken rule; the collision test gates is all bullshit” was published in the print media and widely republished on the major portals and auto websites. On a more grassroots level, an online post entitled “Protest! F0 was bullied. Let’s comment and tell the truth” emerged on a BYD sponsored forum and has been reposted elsewhere. Although these articles have currently diverted attention from BYD’s misleading advertising to focus on the company’s victimization at the hands of big brands who feel threatened, the cycle of the scandal is probably not finished yet. It remains to be seen whether BYD’s appeal to nationalism will ultimately work out to its benefit on the Chinese Internet, or if it will eventually have to speak directly .

Mengniu’s OMP Scandal :
Milk Deluxe (特仑苏), a premium brand of milk from Chinese dairy heavyweight brand Mengniu, was marketed to wealthy consumers as an especially healthy beverage choice. The packaging and advertising heavily emphasized the presence of “osteoblast milk protein” (OMP), an additive that Mengniu claimed would help the absorbtion of calcium to promote bone growth. With consumers and the Chinese government wary of any and all additives to pure milk in the wake of 2008’s melamine scandal, the attention of Chinese netizens and the local mainstream media turned to OMP. A government quality investigation of Mengniu’s OMP practices hit the media in February, 2009, and sparked intense online debate (”Who’s messing around? It’s Mengniu! Is someone afraid of chaos? Are we just supposed to sit and drink poisoned milk in silence so the world will be at peace?!”). Because the product was aimed at a relatively limited consumer group, Mengniu’s difficulties were not directly related to the additive itself. Instead, it was its ambivalent response to the crisis that got it into the most trouble online from Chinese netizens who are highly sensitive to perceived hypocrisy. Initially, Mengniu claimed that OMP contained IGF-1, but when news came out that IGF-1 could be carcinogenic in large doses, it changed its tune and said that OMP was essentially Milk Basic Protein, an accepted food additive. Fatigued consumers didn’t care much at this point (”Experts say milk with OMP isn’t harmful to your health.” “Then let the experts drink it first“). However, when third-party tests were released showing that OMP did not have nearly the extent of health benefits that Mengniu claimed, the company was hit again. A posting on the influential popular science community blog Squirrel Society concluded “To make such claims about efficacy based on such preliminary research, it’s quite an understatement to say they merely ‘exaggerated the effects’.” The additive was eventually banned, and Mengniu, which had emerged relatively unscathed from the melamine scandal, ended up with a black eye.

Wang Laoji’s additive scandal :
Wang Laoji (王老吉凉茶) is a “herbal tea” drink that rivals Coca-Cola in popularity in China, but is preferred by many because it’s a Chinese product rather than an international or American brand. It also plays up the health qualities of its formula, which is based on the use of traditional Chinese medicinal ingredients. This practice got the brand into trouble earlier this year. In May 2009, Ye Zhengchao (叶征潮) accused Wang Laoji of giving him gastric ulcers because it contained prunella vulgaris (夏枯草), an ingredient usually associated with Chinese medicine. The Ministry of Health had once claimed that adding prunella vulgaris to food and drink violated the Food Safety Law. The charges were heavily reported in the media and became a popular conversation topic on BBS discussion forums (”Wang Laoji is poison that’ll hurt your liver!”). Web portals, such as the Influential Brands website has a whole channel devoted to Wang Laoji and the case. The case even acquired its own “gate” : Additive Gate (添加门). [Chinese netizens are in the habit of adding “gates” to the ends of catch phrases representing particular online scandals.] Anti-fraudster and TCM-buster Fang Zhouzi weighed in with a blog post about implications of drinking herbal teas drinks, further polarizing the issue: now Wang Laoji’s defenders were sticking up for the entirety of traditional Chinese medicine. The popular nationalist-leaning Tiexue BBS hosted many threads related to Wang Laoji, both positive and negative. Defenses were widespread based on Wang Laoji’s previous reputation: for example, a post dated May 11 details the first time that netizens noticed the brand, which was during the Sichuan earthquake in 2008: “Wang Laoji donated 100 million yuan instantly, and is far superior to the wealthier Coca-Cola and Pepsi,” and said that the Ministry of Health should take care of Coca-Cola first if it wanted to clean up Wang Laoji. Elsewhere, netizens were not entirely negative about the additive itself: a Baidu Knowledge answer talks about the widespread notion that people in Guangzhou use prunella vulgaris to brew medicinal soups, and that it’s not bad for the body at all. The company made no response: when China Newsweek tried to interview a company spokesperson about the case, they were rebuffed as were other Chinese media outlets. On May 12 the Guangdong Food Profession Union (广东省食品行业协会) declared that prunella vulgaris had been listed in the Ministry of Health’s list of legal food additives in 2005 and that it is not known to cause gastric ulcers. So the takeaway seems to be that if you’re a well-regarded national brand known for philanthropy and that’s connected to a point of national pride, you may be able to ride out a health crisis by simply relying on the government and the patriotic public. Wang Laoji may have avoided a crippling scandal this time round, but the poison allegations will continue to circulate online, and when they are brought up in the future, there will be no company response to rebut them.

China Post’s EMS handling scandal :
Around August 24, a several minute clip appeared online that showed postal workers unloading EMS (China Post’s Express Mail Service) packages from the back of a mail truck. Rather than handling them carefully, as customers might imagine, the workers rolled or threw the packages onto the ground, where they landed with audible “thumps.” One of the comments on the post read, “This is a serious infringement on consumer rights….it must be strictly investigated, and management must be overhauled. Otherwise, our countrymen will have no choice but to choose Fedex, UPS, or DHL.” The video quickly spread to other hosts, like 56, and sparked animated discussion among netizens. On the Xitek forums, the netizen who started the thread said “Don’t use EMS from now on,” and similar sentiments echoed across the Chinese Internet. However, netizens confessed that many times they are in a bind: in urban areas there are lots of choices of delivery services, but China Post is practically the only option in smaller towns across the country. The response so far from China Post has been entirely media-driven. Although the mail truck’s plates placed it in Panzhihua, Sichuan, it was the Hangzhou-based Qianjiang Evening News that picked up the story in the interest of its readership, which would be particularly concerned because the city is home to the headquarters of online auction house Taobao and many small online retailers. The newspaper reported a mealy-mouthed statement from the Panzhihua Post Office: “The truck in the video isn’t likely to be ours because our mail trucks are mostly Chang’an vans. From the scene, we are not able to confirm the registration number at the moment,” which also suggested that the clip could be a malicious hoax. The paper also spoke to a Hangzhou postal official, who said that such mishandling never occurred in his city. Netizens who commented on QQ’s repost of that news item were dubious, with most seeing the official’s statement as a purely cover-your-ass action.

Google.CN’s porn scandal :
In June, Google China was the subject of CCTV news reports that accused it of violating social morality. As part of a national campaign against pornography and other corrupting online influences in easy reach of the country’s youth, CCTV revealed that Google.CN would suggest filthy phrases and sentences to innocent netizens searching for completely ordinary, benign terms. The accusations blanketed the national media both online and off, and although netizens were generally sympathetic to Google because of previous prejudices toward CCTV’s hatchet-jobs in the service of government propaganda campaigns, it is still instructive to see how Google responded to the crisis. Unlike the dodgy medical ad crisis last December, during which Google China’s protestations made it appear like a defiant outsider attempting an end-run around China’s advertising law, its attitude all along was one of active cooperation. Its fast response drew a favorable reaction from many Chinese netizens. Initially it worked to remove the search suggestion tool that had gotten it into trouble, and thereafter made periodic statements that it was cooperating with the authorities to ensure that its search results were acceptable. At least in the context of Internet word-of-mouth, what started out as a slam on Google’s online reputation turned into a credibility hit for CCTV. Google declined to comment, preferring to let netizens draw their own conclusions about the Google.CN vs. CCTV “PK” matchup. Some netizens even suggested that Baidu, which had been blasted by CCTV for accepting paid ads for medical products it knew were of questionable legality, had made up with the network and had called in the hit on its international search rival. And when Chinese netizens discovered that CCTV had interviewed its own intern for a man-on-the-street response, and when they unearthed evidence that CCTV had essentially gamed the search suggestion tool to create the pornographic sentences, Google China continued to cooperate the authorities and let the IWOM play out on its own.

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