How To Protect “Made In China” – If Done Right It Could Be A Classic PR Lesson; If Done Wrong …

Philip Stone August 30, 2007

The stakes have never been higher – billions and billions of dollars of Chinese exports are sold around the world, usually on price more than anything else, but now quality enters the picture and China has a big problem. How it chooses to resolve that in the world’s eyes could become a classic PR lesson, but right now they seem divided on what to do, taking a stick against those who complain too much and a carrot promising reforms.

And what about global companies that import Chinese products. What should they be doing? It runs the extreme from companies like toy maker Mattel that very publicly orders a global recall of Chinese-made toys because of dangerous lead paint content, to big food companies like Kellogg and ConAgra who import raw ingredients from China but have not exactly been vocal about that with their consumers.

(Consumers don’t like that they don’t get what they think they should be getting. In 2000 a Swiss Crossair plane crashed after takeoff from Zurich because of what was later determined to be multiple human failures. But what astonished the Swiss public at the time is that one of their primary reasons for flying a Swiss airline – the expertise of its Swiss pilots – could no longer be taken for granted for the pilot of the doomed flight was Moldovan and the co-pilot was Slovakian.)

The Chinese quality problems have actually brought to the forefront of consumers around the world that products made by their favorite and trusted brands could very well contain materials and ingredients bought half a world away.  For instance how many consumers buying Procter & Gamble’s lams’ wet pet food knew about its Chinese ingredients that started the crisis with several pet deaths? Consumers know now and the company’s market share has dropped dramatically – another PR challenge if ever there was one.

In China, the campaign to repair the damage has taken several twists:

• The world’s media still gets flak for basically making a mountain out of a molehill. Just last weekend Gao Hucheng, Chinese Commerce Vice Minister, repeated the complaints of other officials during the past few weeks, telling a televised news conference that the quality issues are “hyped and exaggerated by some media organizations.”
• There was a very public condemnation followed by the firing squad for Zheng Xiaoyu, former head of its Food and Drug Administration, found guilty of taking bribes to approve untested medicine.  That no doubt caught the attention of other executives in other industries who might have been doing similar.
• They accuse the US of sending tainted products to China – the latest target being soybeans – and they charge the US of using the food quality issue as a means of ruining good relations between the two countries.

But now they have gotten really smart and done what they should have done when the crisis first unfolded. It has appointed Wu Yi, a vice premier – powerful guy – as head of a four month campaign to weed out all the bad, bring confidence back to Chinese brands, and, perhaps most important, fix China’s embarrassment for  all of its quality failures in the eyes of the world. 

All of this comes at a particularly bad time for China. Not only is it hosting the Olympic Games next August with some 30,000 journalists expected to investigate anything they can get their hands on, but even more pressing is that in October the Communist Party’s once-every-five-years leadership Congress is being held in Beijing and the Party wants only positive news in preparation for that.

With all the stories about more than 60 million cans of pet food recalled after animals died from kidney failure, and the recall of some 20 million toys for lead paint, charges of formaldehyde found in clothes and the like one might think China is in serious trouble, but the volume of its exports is such that all of the complaints thus far affect about 1% of the toy exports and around 1.4% of their foodstuffs.

Looking at it from the Chinese perspective, things aren’t really as bad as the world’s media makes out, which is why they are seething at all the negative stories. But as any PR expert will tell you, perception is far more important than the reality, and perception is always the most difficult to fix, and let’s face it – in the western world having pet cats and dogs dying from their food, or the possibility of babies and small children getting lead poisoning is not exactly what one might call “good news”.

The Chinese now seemed embarked on a two-prong policy of ensuring the new campaign headed by a very senior official will stamp out shoddy products and will have zero confidence, and at the same time remind the world just how important Chinese products are to them within not just the general economy, but within each and every household. And their internal media is being very active in spreading the word.

For instance China Daily wrote last week, “These reports and criticisms have alerted Chinese authorities and related departments and enterprises to take action to plug the loopholes and address the quality problems they might have long ignored. “But if such separate incidents were taken advantage of to fan trade protectionism or establish trade barriers against Chinese-made products, it would be both the Chinese people and American people to suffer.

“It is natural for trade frictions to arise given the large scale of export and import between China and the United States, but they should never affect the overall strategic trade relations between the two. The best way to iron out frictions is to sit down and talk.”

The next day the same newspaper wrote, “Commerce Minister Bo Xilai said on Friday he was confident of victory in the ‘special war’ against poor product quality despite its highly demanding targets. ‘Although the goals are difficult to achieve, we'll do our utmost to ensure the campaign is successful,’ Bo told reporters.”

The newspaper explained, “The campaign, which will run to the end of the year, will ban false advertising, require all food producers to be certified and step up inspections of food, drugs and agricultural products. Among the 20 detailed goals set, there are 12 ‘100 percents’. For instance, 100 percent of food producers are required to be licensed, while 100 percent of agricultural product wholesale markets in cities will be monitored, and 100 percent of suppliers of raw materials for exported products will be inspected.”

So there’s the positive spin on what the government is doing. And as if the Chinese don’t have enough product problems they are also trying to fight off US threats to impose anti-dumping duties. So the government has embarked on a PR policy to remind Americans how they benefit from Chinese trade.

Gao Hucheng, the vice commerce minister, said that US consumers have saved more than $600 billion by buying Chinese in the last decade.  He said that research by the US-China Business Council says that bilateral trade is expected to add $1,000 to the disposable income of each US family by 2010. That should give pause for thought.

What’s pretty obvious is the more China emphasizes the positive of what it is trying to do rather than blame the media for its ills the better its PR campaign will perform.

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