Name-and-shame show puts household brands in hot seat

Household brands in China are bracing for the government’s version of public-service journalism – the annual program on state-run TV that uses hidden cameras to highlight what the network calls companies’ unfair practices against consumers.

China Central Television’s yesterday’s night broadcast for World Consumer Rights Day has targeted some of the world’s biggest companies in the past, including Apple Inc., McDonald’s Corp. and Volkswagen AG. The name-
and-shame show not only attracts eyeballs, it also gets results – Apple’s Tim Cook apologized in 2013 and McDonald’s retrained some workers in 2012.

Breakneck economic growth and rising incomes transformed China into an essential market with 1.4 billion people, and the government’s push for a consumption-driven economy fueled an influx of foreign companies in the fast-food, retailing and automotive industries.

“China’s goal of a consumption-led economy needs to be backed by greater confidence among Chinese consumers in buying locally,” said  Catherine Lim, a Bloomberg Intelligence analyst in Singapore. “This includes assurance about the authenticity and quality of their purchases as well as ensuring customers’ satisfaction in the shopping experience.”

This year, Korean companies such as Samsung Electronics Co. and Hyundai Motor Co. also have reason to worry that it’s their turn to be featured in the “ 3.15 Gala” program. China retaliated against Korean businesses after the government in Seoul allowed the deployment of a U.S. missile-defense system that China said threatens regional security.

“Korea is on the political hot seat right now,” said Shaun Rein, managing director of Shanghai-based China Market Research Group. “I think they would target Korean brands especially.”

Chinese authorities, citing alleged safety violations, suspended operations of 55 stores owned by Lotte Group, the conglomerate that provided land for the system, and shut Lotte Shanghai Foods, a joint venture with Hershey Co. The government also curbed Chinese tourist travel to South Korea.

South Korean cosmetics brands could be a major target given their popularity in China. Amorepacific Corp. is among the top five sellers in the nation, according to Euromonitor International’s latest data.

Ensuring consumers are adequately informed about the authenticity of online purchases likely would be one focus of this year’s broadcast, said Bloomberg Intelligence’s Lim.

That would dovetail with Chinese Premier Li Keqiang’s call for vigorous investigations of counterfeit products and improving product quality to meet the higher standards demanded by Chinese consumers.

Previous shows targeted homegrown powers Alibaba Group Holding Ltd. and China Mobile Ltd. Alibaba has struggled to keep counterfeit products off its websites, and the U.S. government labeled the company’s Taobao e-commerce platform a “notorious market” for fake goods last year. The China Consumers Association said its theme for 2017 is trust in e-commerce. Bloomberg