This week has seen two prominent Western companies in PR hot water in China.
Electrolux
An assistant to a senior Electrolux executive has become an Internet celebrity after revealing photographs of her were hacked from an American man’s password-protected photo website.
Roland Soong has summarized the affair and translated some Chinese Internet chatter about the case:
…Beijing Youth Daily contacted Electrolux and was informed by the company public relation specialist that Shi Jing is the assistant to the manager of the home electronics division and she is presently on leave due to mental pressure.
…There are many “angry young people” among the [online] commentators and they are not very polite. Here are some comments:
“The problem with Shi Jing is not that she posed nude, or she had intercourse with someone. There are so many Japanese adult video girls, but why should any normal person scold them? Shi Jing’s problem was that ‘she wants to look aloof in front of her compatriots, but she acts like a dog in front of foreigners’.”
“Let us unite all our powers and find out the true identity of this foreigner.”
This is similar to the Secretary PK Boss affair in April 2006, in which a strongly critical email from a Chinese secretary to her grouchy Singaporean boss was circulated nationwide. That company was EMC, a network information storage provider.
It is highly unlikely that there was any effect on EMC’s bottom line because of the scandal: If anything, the fuss made a lot of Chinese netizens know the name EMC. The fact is, a lot of people in China’s cities can sympathize with having a grouchy Singaporean boss, or a Chinese secretary who looks like a flower but turns into a vixen when vexed.
Carrefour
French hypermarket Carrefour is facing a peculiar kind of growing pain for its breakneck growth in China: systemic corruption among its management ranks at the local levels.
As many as eight managerial staff at Carrefour China have been detained by Chinese police in a wide-ranging probe initiated by the company itself over bribe taking by its managers at its city procurement center in Beijing and seven other outlets, including one in Shenzhen…
…The police summoned 22 suspects for questioning between June 25th and August 1, including 12 local suppliers, according to two major publications, Shanghai Securities News and China Business News. The investigation netted an unidentified number of corrupt managers working at the fresh produce department who requested kickbacks in the form of promotional fees from suppliers. Carrefour did not dispute the reports…
…A report published by China Business News in February last year revealed the value of kickbacks for a procurement manager working at a Carrefour outlet, who earned a monthly salary of 3,000 yuan ($397) but managed to top this up to more than a million yuan ($132,000) every year by devising some innovative forms of bribery such as the acceptance of credit cards, lottery prizes and payments made in exchange for hosting promotional campaigns.
While the Western press is carefully noting that Carrefour itself initiated the investigation, that point is not given much play in the Chinese reports; most of Beijing’s morning newspapers reported on the case today.
Seems like bad PR for Carrefour, but it also recalls a similar scandal in January this year, when Shanghai police detained 22 company executives for bribery and graft. The authorities said at the time that “bribes worth 4 million yuan (US$514,000) allegedly were given to staff at seven companies by local computer network operators, in return for equipment orders” (see China Daily story). The companies named included consulting firm McKinsey & Co., McDonald’s, Swiss engineering firm ABB Ltd. and American appliances maker Whirlpool Corp., among other companies.
At the time of the arrests, your correspondent did some research on behalf of one of the affected companies about the PR fallout and especially the online chatter about the affair. These were some of my conclusions at the time:
Some people think that such corruption is a normal part of business and life in China and that there is nothing special about this case. Such people do not approve of this type of behavior, but recognize that is is really common in China.
Many bloggers said that corruption is part of the unspoken rules of business and society, but criticized it as an impediment to the growth and development of China.
There seems to be nobody blaming the companies affected, nor attaching negative associations to them because of the scandal.