Big Brands Gear Up For CCTV Annual Assault
Sales and marketing executives at China’s leading brands are almost certainly losing sleeping these last few nights, as they prepare for the Consumer Rights Day annual assault by state media each year on March 15. To their credit, Chinese media are usually relatively unbiased in choosing the subjects for their attacks, focusing on anyone with a big, recognizable brand name. But that often means the big multinational consumer brands are some of the easiest targets, since many are well known and highly respected by Chinese consumers. China executives from many of those companies will probably be spending this Saturdays in front of their TVs waiting to see if they’ve been targeted under a new attack this year.
The ringleader of what has become a Consumer Rights Day campaign of investigative reports is CCTV, China’s top broadcaster and an opinion leader whose opinions are often repeated by local media and influential bloggers. CCTV launched a high-profile assault against Apple (Nasdaq: AAPL) on Consumer Rights Day last year, criticizing the company for sometimes shirking its after-sales service commitment to Chinese consumers. (previous post)
The attacks that day last year didn’t only target Apple, but also uncovered misdeeds at a number of other major brands including Germany’s Volkswagen (Frankfurt: VOWG) and domestic online gaming giant NetEase (Nasdaq: NTES). But the Apple attack is what most caught everyone’s attention, and the controversy lingered in the media for several weeks after the original story aired.
That attack resulted in a storm of negative publicity for Apple, much of it undeserved in my view since the company already offers much better after-sales service than its Chinese rivals. But the company quickly realized it was pointless to fight the assault, and in the end it issued a rare apology to the Chinese people. Such apologies have become quite common in China for big western firms that come under attack, even though they would seldom issue such statements in other markets.
One report on this year’s upcoming Consumer Rights program notes that CCTV has suffered some of its own embarrassments over the past few months in connection with its attacks, undermining its credibility. (English article) The most noteworthy of those embarrassments came last October, when CCTV aired a report criticizing Starbucks (Nasdaq: SBUX) for charging higher prices for coffee in China than in many other markets. (previous post)
That attack ultimately backfired, with many saying that Starbucks operated in a competitive sector and should be able to charge whatever prices for coffee that it wanted. More recently, CCTV also saw its credibility undermined when one of its leading financial commentators branded domestic e-commerce giant Alibaba as a “vampire” for sucking money away from the nation’s banks. (previous post) That campaign also backfired, with many saying that Alibaba was simply offering some much-needed competition to China’s stodgy state-run lenders.
At the end of the day, I do concur with the view that big state-run behemoths like CCTV and the Xinhua news agency are slowly losing their influence, as better-run, more commercial services give consumers more choice for news and entertainment. But at the same time, it’s also important to realize that these big state-run media are closely connected with central leaders in Beijing, and therefore what they say is often a proxy for Beijing’s priorities and world view. Accordingly, no one will want to become the target of a CCTV assault on this year’s Consumer Rights Day, and I’m sure that most major Chinese and global brands have contingency crisis plans prepared in case they come under attack.
Bottom line: CCTV’s Consumer Rights Day investigations will create headaches for companies targeted in this year’s March 15 reports, even as the broadcaster’s influence fades due to growing competition.
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