Chinese
consumers place a great deal of trust in foreign brand-name products,
but as every western consumer goods company knows, trust can be lost
overnight and take years to rebuild.
So it is surprising to see Proctor & Gamble caught out by the Chinese backlash against its products after it appeared to put obstacles in the way of Chinese consumers who wanted their money back following the recall of SK-II, one of its best-selling skin-care lines.
The SK-II line has been available for twenty years and is sold in 14 countries, including the US, China, Singapore, South Korea and Australia.
The story began in September when P&G said it was suspending sales of SK-II in China after Chinese authorities found chromium and neodymium in the Japanese-made cosmetic. Hundreds of consumers then staged protests in Shanghai after being told there would be a waiting period before refunds were be issued.
A month on, P&G said the scare was a false-alarm and Chinese authorities confirmed that the levels of heavy metals found in the product were harmless. The consumer giant said it would resume selling SK-II.
Storm in a tea-cup? Perhaps. But P&G knows should know better than anyone the dangers of not taking seriously consumer scares and product recalls. After the initial findings by the Chinese authorities were vehemently denied, many industry experts believe that the company could have handled the situation better, spending more time and resources trying to reassure consumers over the scare, rather than just denying it.
I suspect that if the recall had been ordered by a western government, the company would have fallen over backward to inform consumers with freephone numbers, extensive press advertising, etc.
For western multinationals, China can seem a long way away and its easy to imagine the P&G boardroom adopting an attitude best summed up with that famous newspaper headline: "Small earthquake, not many hurt."
But, as Shaun Rein of the China Market Research Group notes in this SeekingAlpha story, China is P&G's fastest growing market and among the top five markets in value worldwide.
With the speed that Chinese consumers can now band together using blogs and forums on portals like Sohu, multinationals in China "cannot underestimate the harm PR miss-steps can have on their bottom-lines," says Rein.
On an online survey run by Sina, in which approximately 20,000 people voted, over 80% felt P&G is lying in its public apology for the SK-II debacle. Most importantly, nearly 96% of them say they will not buy any SK-II products anymore.
One blogger wrote: "I never thought SK-II is good -- you may get a freak baby." Another said: "They are so bad; we should ban them from selling in China."
In the past year, Yum Brands and Dell have also had to do major product recalls in China, but they have handled them much better.
The one saving grace for P&G is that some Chinese consumers apparently do not know that SK-II is a P&G brand. Because it is made in Japan, some mistakenly believe SK-II is a Japanese brand. Oh, that's alright then.
http://20six.co.uk/positivesolutions/art/575268/Whiter_than_white_#comm
If they'd apologized, bent too far over backwards, then when common sense was finally restored and people realized that SK-II was perfectly safe, nobody would have believed it. Now they can rebuild sales and brand, whereas if they'd admitted their product was dangerous then it could never recover and global sales would be affected. These companies have to put up with some strange Internet opinion storms, and if you're 100% right and not cheating the Chinese customer, you've got to stick to your guns!