Why multinational corporations lost their dignity?
Piao Shenhu, Tong Weide
When China first opened its door, Volks Wagen, Coco-Cola and 3M company[1] came to develop in China. Motorola，Philip and NEC[2] from Japan were welcomed with fever in the 80th, when Chines consumers unconditionally opted for the products and services of mutinational corporations.
However, the impressiom has been changed a lot since 2000 when Chines GDP on average reached $1000, esp. following the membership in WTO in 2001. The public fail to notice much differences beween local products and their western counterparties'. In fact, the more they expect, the more disappointed they get. The dignity which favored the mutinational companies gone away for reasonable consumers' focus on products' details and qualities. Well then, what are the mistakes to deprive of their diginity?
Double-standard Execution The practice to allow local standard and action beyond global criteria brings catastrophic consequences. In the issue of Toshiba notebook[3], Toshiba company compensated 1.5 billion US. dollars for American consumers, $445 on average, but showed different face to their Chinese consumers, merely some maintaining on software. As the result, Toshiba encountered with feverish rebuke, as their selling droped to 3rd and marketing share 15% from previous 19%.
Similarily, Colgate and Procter & Gamble[4], the two mutinational corporation giants, were critisized by Chinese media due to their selling of toothpaste containing Irgacare MP. According to the research in America, this antivirus could cause cancer under certain circumstances. On revealing by The Evening Standard [5],English retailers decided to pull the toothpaste containing Irgacare MP off the shelf on spot, which was put as overreacting by Colgate and Procter & Gamble, occupying 30& and 50% in Chinese toothpaste market, as sale continued in China. Afterwards, a questionnaire ,conducted by Sina, on brand trust of Colgate shows, consumer's trust points declined to 9% from 88% within a week.
otherwise, Kraftfoods and Campbell Soup[6] were also criticized as double-standard for their using GM soyabean in China, not the same practice in Europe. Legally speaking, these two companies have no fault, beacause there's no taboo in GM soyabean in China, and it's ok once giving a clear indication on the mark. The core of the fact is that under the advertisement of green and peace organization global worry on GM food is spreading in China, which enters into eyes and ears of Chinese clients to everyone's horrors.
Undoubtedly, thouse double-standard multinational companies have left bitterness in consumers's mouth, making them feel discriminated vastly.
Merger on Brand Destruct Recently, conflicts between Wahaha and Danone[7] upgraded increasingly. In 1996, Wahaha established five jonit venture with French Danone and Hongkong BNP，in which Wahaha held 49% share, Danone and BNP jointly 51%. In early June of 2006, Danone sued Wahaha. Although Danone has the legal jetton after destroying"Robust"[8] successfully, the" ethical mood" stired by Wahaha apparently gets the run upon.
Danone is definitely not the exlusive tough one. Despite of their promises to feinforce brand investment sometimes, mutinational companies destroy them all in the end. Many widely known brands such as Energy28, Panda Landry Powder, Yangzi, Xiang Xue Mei Refrigeratory, Tianfu Cola, Shanghai Auto, The White Cat Abstersion Product, the Artic Ocean Carbonic Aicid Drink etc. , have been "frozen" for many years by foreign companies.
In 1994, Unilever jointly hiredvwith another Chinese company the brand of Maxam for 5 years , which was the leading toothpaste brand then. 3 years later, Unilever stopped advertisements on this brand. In 2001, a company from Shanghai purchased Maxam back from Unilever at the cost of 0.5 billion RMB, trying to build up its reputatioin again. But it was too late for the existent damages. The sales amount of Maxam in 2000 was 20 million, amounting to only 1/3 sale in times of merger by Unilever.
Chinese observers consider the merger to push Chinese brands to corner, or kill them all. A survey in 2006 showed that, over 60% of the public held the practice to harm the independence of Chinese economy should be banned.
The Aggressive strategies on Intellecture Property In recent years, Cisco, Philip Electricity, Sigmatel and Microsoft etc. have take actions in lawsuit on intellecture property rights protection. In May, 2005, Netherlandish Philip brought lawsuit against Dongqiang Electron and other 13 related companies; in 2006, Sigmatel accused a Chinese company of violation of its intellecture property rights, trying to barricade the importation of MP3 from any companies who used their COMS chip. As another eyes-striking case in July of 2007, Cisco accused Huawei of violatioin of intelleture property rights on operation software.Finally, the case drew its conclution, but then two parties considered themself the winner.
Microsoft stands as another example. People see the software giant extreme arbitrary due to the very radical legal actions it takes in China. Although it adopts tender style recently, 30% state-run enterprises has employed the Linux system. From the view of many Chinese, the tough stance that mutinational companies take on intelleture property is designed to strike down the underway local industry in China, which accords to the historical imperialistic acts. According to the research by an investigatioin company called AC Nelson, the major interviewee are not in favor of mutinational companies' throwing stone at Chinese companies on intelleture propery rights.
The Lagging Management In the year of 2005 alone, several mutinational companies encoutered with PR crisis owing to its lagging management :3o packs of 6 types of Sony digital cameral were categorized as "disqualified" in sampling inspection:dimitted workers of OASIS revealed that the company put on sales againt the cloths which had been sponsered to some shows; Dale's saleforce's email aimed at smearing their competitors were exposed by media; consumers from Jiangxi Province broght lawsuit against Procter & Gamble etc., which impare their image a lot.
An online survey conducted by Sohu.com in May 2005 showed half of the anticipant thought multinational becoming virtueless. Withous mentioning any company, two ideas prevails: one is that the credit and public image is getting terrible due to its improper behavior. Another is that many mutinational companies treat Chinese market as a experimental base so as to take advantages of its cheapness to try new technology, while skills transferred or contributed to Chinese industrial development remains much less.
(Excerpted from Youth Tabloid·Semimonthly No.11 2007 )
[1] 3M company:Minnesota Mining & Manufacturing Company
[2] NEC:Nippon Electric Company, Limited.
[3]the issue of Toshiba notebook: Due to berry danger problem, Toshiba has to take back all its notebook.
[4]Procter & Gamble: Established in 1837 as one of the biggest daily consumables companies in the world.
[5]The Evening Standard : A famous English newspaper in Britain, covering entertaintment and serious event report as well.
[6]Campbell Soup: An American company specialized in cooking condiments.
[7]Danone: A French food company which strives to buy out Chinese company Wahaha.
[8]Robust: A type of dairy brand initiated by Wahaha, finally stricken down by Danone.