Would You Like Fries With Your Guilty Innocence?

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The spotlight has been on big-name MNCs in China again over the past couple of weeks. As mentioned in a recent post on corporate social responsibility (“CSR”), three big, foreign fast-food chains were accused of paying staff below the minimum wage in Guangzhou.

Despite all the noise the initial investigation created, it has now been reported that McDonalds, KFC and Pizza Hut (both owned by Yum! Brands) have been cleared of the charges…

    “but only because China does not extend legal protection to the legion of student workers who man the nation’s fast-food counters…[the restaurants were] paying their workers, mainly students, wages as much as 40% below the local minimum for part-timers of 7.5 yuan (97 cents) an hour.” (Forbes)

As well as reflecting badly on these international corporate giants (a big risk in such a nationalistic consumer environment – as others have found in the recent past), the case has created a new debate about student rights.

Being (technically) innocent does not make life easy for these companies, who have suffered a PR disaster, and who are expected by many to do more (not less) than the minimum required by law. Big foreign brands should take note, and do some risk assessments of their own (especially where franchisees and other partners are involved).

The fallout will continue for some time. One of the first results, according to the New York Times, has been a move by the increasingly aggressive (government monopoly) All China Federation of Trade Unions (ACFTU) to unionise the miscreants. It seems McDonald’s (taking the PR initiative?) may be first in line, hot on the heels of fellow US super-brand, Wal-Mart (see here).

The ACFTU is planning to get 80 percent of foreign companies to sign up by the end of 2008, and anyone running an MNC in China might want to plan for the day when they knock on the door – and to make sure, well in advance, that the Union rep (or the undercover reporter that precedes him) will not find any low-hanging fruit in which to stew the company at China’s most efficient court – the Court of Public Opinion.

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One Response to “Would You Like Fries With Your Guilty Innocence?”

  1. Archive » Another MNC in Hot Water| China Business Blog Says:

    […] themes/pod88/images/menu_5_on.gif’,1)”> « Would You Like Fries With Your Guilty Innocence? April 12, 2007 Another […]

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