Brands nervously await CCTV's 'name and shame' night

Tomorrow's World Consumer Rights Day, also known as '3.15' in China, is a day that can strike fear into the hearts of consumer-facing brands in China. That's because 15 March is the day the national broadcaster CCTV (China Central Television) airs an exposé show that has the ability to push corporate communicators instantly into crisis-management mode.

Broadcast since 1991, the programme has in the past left brands such as Apple, Nikon and food app Ele.me, dealing with fallout on the morning of 16 March. It's probably a coincidence that the programme airs on the 'Ides of March'—the date of the public stabbing assassination of Roman dictator Julius Caesar in 44 BCE. But nonetheless, the day may have brands watching their backs.

Usually, recent annoucements from the China Consumers Association (CCA) provide an early indication of the industries that may go through CCTV's "assessments of quality" and "reviews of corporate integrity".

Given the contents of a CCA theme-setting document for 2017 (the theme translates roughly as "with online honesty and faith, you have a worry-free consumer"), industry watchers say the following industries should be on yellow alert.

E-commerce brands

Aside from being mentioned by the CCA, ecommerce abuses got widespread media coverage in February, when a list of e-commerce business failures, first published by Chinese tech publication Ebrun, went viral on tech websites and social media, noted Claire Zhang, PR Newswire's China marketing manager. These businesses failed due to alleged malicious activities and pyramid-selling scams related to hotel reservations, children's products, real estate and home textiles. Brad Burgess, head of China at GHC, calls these "cowboy-in-the-Wild-West" firms that need regulatory reign-ins.

Medical beauty brands

The medical beauty industry, using internet marketing models new to the industry, has "serious" over-marketing concerns. They are part of what GHC's Burgess calls "snake-oil health" firms that make product claims which are uncertain and not verified externally. This year, the 3.15 initiative may reveal loopholes in safety and compliance regarding non-licensed pharmaceuticals and illegal injection fillers in the black market, hinted the CCA. 

New-energy automotive brands

Attention may also be on 'new-energy' vehicle manufacturers committing "subsidy fraud"—obtaining financial subsidies for electric cars, buses or trucks they did not build or sell by forging documents. Zhengzhou Nissan (set up by Wuhan-based Dongfeng Automobile and Japan’s Nissan Motor in 1993) was one of seven automakers, and the only foreign brand, fined last month for such subsidy fraud.

'Political-prisoner' brands

The likelihood of being on the receiving end of CCTV's wrath is higher for iconic brands targeted in recent geopolitical squabbles. Chinese state media outlets like the Global Times have already ramped up retaliation against South Korea’s imminent deployment of the US anti-missile system Terminal High Altitude Area Defense (THAAD), affecting Korean travel retail brand Lotte (see also, "Influence: In Korea, not a Lotte alternatives").

Burgess pointed out brands connected to issues of higher significance within China, such as the above as well as the perennial food-safety crisis, must brace themselves. "It's important to understand where you stand in the spectrum of what is deemed strategically significant and keep a balanced perspective ahead of time," he advised.

In addition, keep the legal department close, especially for brands with business models in the nature of a 'shared economy', recommended Alphae Chen (陈依依), managing director and head of China at Citigate Dewe Rogerson. There is increasing scrutiny on Mobike and other similar services from the Chinese public and the regulators, and it is critical to make sure they "tread carefully with candid legal support".

Once a brand has identified a likelihood of being identified, preparing basic scenario-based reactions is wise, GHC's Burgess said. "This isn't necessarily a detailed or complex treatment, but simply worst-case planning. This can allow for clearer thinking rather than fear-based responses after CCTV's act," he said. 

Brands should take a "face and strike first" approach. Drawing up a Q&A for internal and external engagement, pre-populated as much as possible, is another good step to both calm nerves and prepare for the worst, he suggested.

If the worst does happen, be "destined" to "go through several sleepless nights to some extent", said Jason Cao (曹越), China GM at The Hoffman Agency. To that point, Maggie Chan (陈仲贤), who heads up Newell Public Relations' China operations, spelled out the ideal workflow.

Corporate-communications practitioners at the manager and director levels have to be accessible via cell phone and WeChat for the next 24 hours after the 3.15 announcement, according to her guidance. They have to be on standby to be "instantly helpful on media enquiries".

Either CCTV or other key media may reach the boss of the company directly, so the boss has to either take media calls personally as the first window of contact, or "politely pass them on" to the responsible spokespeople.

Ideally, simulated interviews and other crisis media training will have been conducted with spokespeople well before 3.15, at least one week to three months ahead, Chan tipped.

Brands should also enhance their social listening around this time with relevant keywords, taking note of how topics are trending. "Someone else's crisis can become your own if you are unresponsive to an unfolding dynamic with public significance," counselled Burgess.

Meanwhile, "professional consumerists” (people who blackmail companies by nitpicking product flaws to make a living), can amplify the annual 'assault', added Citigate's Chen.

The latest updates to consumer law, however, stipulate that the authorities should protect "real consumers" instead of blackmailers. This will create a healthier business environment in China, she stated.

Even brands that don't get in trouble can grasp the opportunity to dispel anxieties and put out useful content to attract more potential customers. PR Newswire's Zhang pointed out how P2P online-financing platform Xin Rong tried to establish a positive image with the issuance of a '3.15 Financial Integrity Declaration' press release last year.

Put simply, the '3.15 effect' is no different than any other potential brand crisis, and in fact, has even become "entertainment" for many people. "So it's important to keep the perspective that Chinese consumers often have understanding hearts toward brands who care and demonstrate it by action and sensitivity," summarised Burgess.

Whatever you do, being transparent works in China, reminded Newell's Chan, while "hiding from" or "avoiding" the media definitely does not—especially for locally listed enterprises.