CHINA, NATIONAL, SOCIETY, EDITORIAL: Irresponsible Multinationals in China
By Liu Yeqing (Louise)
For quite a long time, an unusual phenomenon has confused and disappointed us. Ever since the 1980s, our country has applied the reform and opening-up policy expecting multinationals, which strictly adhere to the laws in their own countries, to introduce their advanced management to China. They were expected to be the model for Chinese enterprises as they value product quality, practice fairness in competition, pay taxes according to regulations, give prominence to environmental protection and social benefits, and safeguard customer's interests.
However, the fact is that after many multinationals entered the Chinese market, instead of influencing Chinese enterprises with their advanced international practices, they were rapidly 'Chinalized' and quickly adopted Chinese practices. They contend for market share not through fair competition but by bribing authorities. When their product goes wrong, the first thing they do is negotiate with authorities instead of solving the problem.
In spite of substantial profits, they still try every possible means to evade paying taxes. They attach high importance to the environment in Europe and America, but cut the budget greatly for environmental protection in China, making profit at the cost of heavy pollution. The wage of their employees, especially rural laborers, is extremely low compared with their enormous profit. Sometimes the working conditions are so hostile as to damage their workers' health. When their products fail, they do not regard Chinese customers as important as those overseas, instead, they adopt negative measures such as: silence, aversion, refusal of compensation, and so on.
Take the Nestle Corporation for example. Recently their milk powder was found to contain an excessive amount of iodine. Their attitude towards customers was quite arrogant and indifferent, but not to the government. They explained to the Chinese government immediately, attributing the cause of the quality problem to the source of the milk. They chose to mediate in private with the government instead of moving their excessive-iodine-containing milk powder out of the market. They didn’t stop selling the defective powder until a week later. They reluctantly apologized to Chinese customers but refused to exchange purchases. One week later, under great social pressure, they finally agreed to exchange the milk powder.
Their behavior was totally different from their common practices when confronted with similar emergencies in their own and other developed countries. There, they would publicize detailed information about the defective product; apologize to the customers sincerely; move all the defective products out of the market as fast as possible; recall or exchange the sold product; and compensate the customer. Why hasn't the Nestle Corporation applied their common practices in China? We cannot help but ask such a question. And what's more, similar things happen all the time.
It was recently discovered that Kentucky Fried Chicken food products were inadvertently contaminated with an illegal dye, Sudan I, and their reaction towards it was also comparatively slow. Heinz, a goliath international food manufacturer, issued a national recall of chili sauces and chili oils that contained the red industrial dye, Sudan I. But the business partner of Heinz, the Parkson Group, attributed the responsibility to the supplier and refused to compensate customers. The Proctor & Gamble Group was charged with false advertising of a body lotion. P&G only recalled the ads in the stores but didn't compensate nor apologize to the consumers who had suffered ill effects.
In May 2000, the media exposed the deficiency of the FD controller of Toshiba laptops. The amount of compensation Toshiba paid to their American customers was way higher than that paid to their Chinese customers. This has aroused the discontentment and protest of over 200,000 Chinese owners of Toshiba laptops.
Faced with this 'second-class citizen' treatment, many customers are confused. Why should we lay great trust in name brand products from developed countries and pay so much more money for them when we receive only secondary services? Why does the advanced management form that developed courtiers back home change when they are in China?
When you think it over, it's not hard to understand. All enterprises will seek as huge a profit as possible. These 'unusual' practices of multinationals are an indication of the loopholes in the legal system of China. So, if we want the multinationals to follow their international practices in the Chinese market, we should not only rely on their own consciousness for long-term interests, but also form powerful regulations to force them to obey. For example, we should perfect the legal system to make it easier for consumers to defend their rights.
The government should adhere to its principles in supervising the multinationals. If the government keeps yielding, the situation will go from bad to worse. But if it takes the initiative to intervene in such matters, on the contrary, it will exert pressure upon the enterprises, which will benefit the enterprises, the consumers, and also help create a better image of the government.
We should also strengthen media supervision. As a matter of fact, many problems were solved after the media exposed them. With transparency of media, public opinion will not only impose pressure upon the enterprises but also give stimulation to the governmental departments concerned with ensuring social and economic justice.
In addition, the rule of the market and the choices of the public will teach the enterprises a good lesson. For instance, after the Nestle milk powder incident, a 'trust crisis' occurred among customers. In a survey conducted online, 80.76% of cyber citizens said they would not consider buying Nestle milk powder. This is a serious loss for the enterprise.
The multinationals really should give serious thought to how they treat their Chinese customers. No amount of extra profit will matter once customers lose trust in them.
For quite a long time, an unusual phenomenon has confused and disappointed us. Ever since the 1980s, our country has applied the reform and opening-up policy expecting multinationals, which strictly adhere to the laws in their own countries, to introduce their advanced management to China. They were expected to be the model for Chinese enterprises as they value product quality, practice fairness in competition, pay taxes according to regulations, give prominence to environmental protection and social benefits, and safeguard customer's interests.
However, the fact is that after many multinationals entered the Chinese market, instead of influencing Chinese enterprises with their advanced international practices, they were rapidly 'Chinalized' and quickly adopted Chinese practices. They contend for market share not through fair competition but by bribing authorities. When their product goes wrong, the first thing they do is negotiate with authorities instead of solving the problem.
In spite of substantial profits, they still try every possible means to evade paying taxes. They attach high importance to the environment in Europe and America, but cut the budget greatly for environmental protection in China, making profit at the cost of heavy pollution. The wage of their employees, especially rural laborers, is extremely low compared with their enormous profit. Sometimes the working conditions are so hostile as to damage their workers' health. When their products fail, they do not regard Chinese customers as important as those overseas, instead, they adopt negative measures such as: silence, aversion, refusal of compensation, and so on.
Take the Nestle Corporation for example. Recently their milk powder was found to contain an excessive amount of iodine. Their attitude towards customers was quite arrogant and indifferent, but not to the government. They explained to the Chinese government immediately, attributing the cause of the quality problem to the source of the milk. They chose to mediate in private with the government instead of moving their excessive-iodine-containing milk powder out of the market. They didn’t stop selling the defective powder until a week later. They reluctantly apologized to Chinese customers but refused to exchange purchases. One week later, under great social pressure, they finally agreed to exchange the milk powder.
Their behavior was totally different from their common practices when confronted with similar emergencies in their own and other developed countries. There, they would publicize detailed information about the defective product; apologize to the customers sincerely; move all the defective products out of the market as fast as possible; recall or exchange the sold product; and compensate the customer. Why hasn't the Nestle Corporation applied their common practices in China? We cannot help but ask such a question. And what's more, similar things happen all the time.
It was recently discovered that Kentucky Fried Chicken food products were inadvertently contaminated with an illegal dye, Sudan I, and their reaction towards it was also comparatively slow. Heinz, a goliath international food manufacturer, issued a national recall of chili sauces and chili oils that contained the red industrial dye, Sudan I. But the business partner of Heinz, the Parkson Group, attributed the responsibility to the supplier and refused to compensate customers. The Proctor & Gamble Group was charged with false advertising of a body lotion. P&G only recalled the ads in the stores but didn't compensate nor apologize to the consumers who had suffered ill effects.
In May 2000, the media exposed the deficiency of the FD controller of Toshiba laptops. The amount of compensation Toshiba paid to their American customers was way higher than that paid to their Chinese customers. This has aroused the discontentment and protest of over 200,000 Chinese owners of Toshiba laptops.
Faced with this 'second-class citizen' treatment, many customers are confused. Why should we lay great trust in name brand products from developed countries and pay so much more money for them when we receive only secondary services? Why does the advanced management form that developed courtiers back home change when they are in China?
When you think it over, it's not hard to understand. All enterprises will seek as huge a profit as possible. These 'unusual' practices of multinationals are an indication of the loopholes in the legal system of China. So, if we want the multinationals to follow their international practices in the Chinese market, we should not only rely on their own consciousness for long-term interests, but also form powerful regulations to force them to obey. For example, we should perfect the legal system to make it easier for consumers to defend their rights.
The government should adhere to its principles in supervising the multinationals. If the government keeps yielding, the situation will go from bad to worse. But if it takes the initiative to intervene in such matters, on the contrary, it will exert pressure upon the enterprises, which will benefit the enterprises, the consumers, and also help create a better image of the government.
We should also strengthen media supervision. As a matter of fact, many problems were solved after the media exposed them. With transparency of media, public opinion will not only impose pressure upon the enterprises but also give stimulation to the governmental departments concerned with ensuring social and economic justice.
In addition, the rule of the market and the choices of the public will teach the enterprises a good lesson. For instance, after the Nestle milk powder incident, a 'trust crisis' occurred among customers. In a survey conducted online, 80.76% of cyber citizens said they would not consider buying Nestle milk powder. This is a serious loss for the enterprise.
The multinationals really should give serious thought to how they treat their Chinese customers. No amount of extra profit will matter once customers lose trust in them.
2 Comments:
At 10:55 AM , Anonymous said...
Maybe if YOUR own government would begin to judge their own domestic companies the same way, multinational companies would learn to repect their hosts. But NO! The government is bullsh*t! Don't expect some savior to come from the west. ALL the companies in China are irresponsible! You can never pour clean water into a glass with dirty water and end up with clean water! Someone wrote in another article on WOW, that in China,poor parents sell their children because they want their children to have a better life. What crap is that? A better life is to be a prostitute?!! Come on! Open your eyes and see. I agree that the multinationals should try to be moral but when your government "reports" that KFC has too much "this or that" in the food, when at the same time 95% of the restraunts in China wouldn't even come close to passing a health inspection in a developed country in the west, it is just pure arrogance on your government's part. McD's is the cleanest place to eat in China (the food is another story)but it is clean. Most toilets in Chinese restaurants are so disgusting every tourist should be given pictures of them before they come. Your government just wants you to NOT trust anything that is NOT Chinese! Just ludicrous!
At 2:47 PM , Anonymous said...
I must say that I agree with the comments given. In a country where the laws are regarded as just guidelines by local manufacturers and enforcement is ad-hoc the article is a bit one sided and xenophobic. Most Multinational corporations tend to pay their workers well and almost all treat their workers good. International companies do a lot of outsourcing and the conditions in these factories are bad. However as long as these local manufacturers can continiously bribe their way out of genuine checks blaming Multinationals seems like an easy way out.
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