Consumer (& Brand) Discrimination (& Crisis)

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While in Shanghai 15,000 (+) floating pigs, and Shenzhen’s dead ducks, are making headlines (we’ll save food safety for another day), alleged consumer discrimination by Apple is also causing a stink (see link for the original Danwei post):

“…CCTV accused Apple of discriminating against Chinese customers by offering lower levels of service and charging fees for replacing back covers of faulty iPhones, which is done for free in other countries”.

Apple has a problem, but the broader issue of fair treatment for Chinese consumers was also flagged today by China Contact, with a story from the Maldives:

“…following a post on Sina Weibo…The claim made was that the hotel removed hot water kettles from the rooms of Chinese guests while leaving them in the rooms of European guests, ostensibly because Chinese were cooking in their rooms…The complaint received wide exposure on Chinese social media and calls for boycotting Maldives by Chinese tourists….”

A storm in a noodle bowl perhaps, but one that could have major commercial impact – and we all remember that Zadig & Voltaire affair!!! (But here’s a reminder anyway: http://bit.ly/YJMAUR).

Today’s news focused on Apple’s policies and prices, but also pointed to official views that the likes of Apple and Android may have an uncomfortably large market share in China.

“The signs are clear that regulators and establishment media would both be happy for foreign mobile phone handsets and operating systems to lose market share.”

Are foreign brands going to be in for a hard time as local players heat up the competition for domestic consumers? Remember how things got uncomfortable for “malicious foreign investors” (http://bit.ly/YJN2SV)? In terms of published policies and pricing, best for foreign brands to be prepared, be seen to be fair – and to be ready with a crisis management plan. One that includes, of course, serious social media engagement.

On that front, CIC and Ogilvy Public Relations have usefully published a report: “2012 Crisis Management in the Microblog Era” (http://bit.ly/YJNFvL) concluding that:

“brands which respond within the first 8 hours of a crisis’ outbreak are more effective at controlling it, shortening its duration and lowering the overall level of negative buzz”.

Their top tips:

• The shorter the response time, the better
• It works best when senior executives respond directly
• Using an official microblog account can help manage a crisis

The report also notes that 8 of the 10 top brand crises were food safety related (back to those pigs!). 8 out of the top 10 also happened to be related to local, not foreign brands. But that is one to watch…

This post originally appeared in our China Business Blog (@ChinaBLogTweets) Linkedin Group.

This story continues to run…see below for updates from our group discussion:

A perspective on discrimination from China Law Blog, refering to our post: http://www.chinalawblog.com/2013/03/is-discrimination-against-chinese-consumers-rampant.html

27/3/13
“Apple Ire Spreads to China’s SOEs”: http://blogs.wsj.com/chinarealtime/2013/03/27/apple-ire-spreads-to-chinas-soes/?mod=WSJBlog&goback=%2Enmp_*1_*1_*1_*1_*1_*1_*1_*1_*1 ;

And some concerned coverage from the Economist…”this could mark a radically different approach to foreign companies being tested by China’s new leadership…”

“Unparalleled arrogance, undisclosed agenda”: http://www.economist.com/blogs/analects/2013/03/apple-china

More on this in the FT: http://www.ft.com/cms/s/0/8210eae2-97a6-11e2-b7ef-00144feabdc0.html#axzz2OugxMhe6 . Highlights the need for social media engagement – but it also looks like Apple could do also with some strategic public affairs suppor

2/4/13
Apple has now issued an apology “for any concerns or misunderstandings”, and seems to be on the back foot (The Economist: http://econ.st/Z2aFwY ).

It is also suffering additional supervision…”The State Administration for Industry and Commerce said it has issued a notice asking local industry and commerce authorities to enhance legal supervision over Apple’s imparity clauses in its warranty policies” (People’s Daily: http://bit.ly/Z2aD8i ).

It will be interesting to see how this case progresses, and whether other foreign firms suffer similar, state-backed scrutiny. Those with large market share should at least be reviewing their consumer policies and communications, as well as their crisis management plans (see link in the original post).

See our Twitter feed for more China business news: https://twitter.com/ChinaBlogTweets

One Response to “Consumer (& Brand) Discrimination (& Crisis)”

  1. Chinese Consumers Says:

    […] read an interesting post over at the China Business Services Blog, entitled, Consumer (& Brand) Discrimination (& Crisis).  The post focuses on the following incidents of alleged discrimination against Chinese consumers […]

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