The online consumer revolution – the WTO-column

(Next week also at Chinabiz; now at BNN)
Demonstrations and protests in China have been hitting in April many of the front pages in the world, and for good reason. Explanations behind all the unrest differ very much, but astonishing is that one kind of protest, one that hurts foreign companies directly in their pockets, attracted much less attention outside China. Inside China, it has been regularly big news.
The latest victim was Procter & Gamble, who saw itself fined 200,000 renminbi for what was considered to be a “bogus advertisement”, according to the China Daily. The story originated from Nanchang, the capital of Jiangxi province, where a customer of P&G’s skincare product SKII settled a complaint after the product did not do the beneficial work its promised – reducing deep lines and wrinkles with 47 percent after 28 days – but caused mainly an allergic reaction.
The Xinxi Daily reported about the case, and in the past that would be it. But the incident got picked up by the internet and started to cause reactions all over China. Major publications started to follow the case, reported about it, and amplified the damage that would in the past have been limited to the customers in Nanchang. Even after settling the claim, consumer reactions are still flooding the internet.

This is not about who is right or wrong in this case. P&G accepted a settlement and that does not mean it accepts guilt. But the consumers perceived it as such and that causes again waves in the internet.
What is key is that P&G, and all the other foreign companies in China who had similar experiences, have not yet found a way to deal with this consumer revolution that has cost already many of them millions in damages and even more in immaterial loss of their carefully created reputation. The 100 million online consumers have become a powerful force that needs to be engaged by any brand name in China. Smaller incidents take place on almost a weekly basis, although the larger ones might be more illustrative. Often those incidents spill over into the traditional media, making the fallout even larger.
A famous example was Nike that was attacked by the dark forces of the internet in December when the company was accused of insulting China’s dignity with a harmless commercial where an NBA-player fought with Chinese cartoons and symbols. Nike discovered the online row too late, panicked and then made – at least in my eyes – a fool out of itself by pulling the commercial and apologizing publicly.
Welcome to the new world, I would say to all those who have not yet realized that the internet in changing almost every aspect of this world.
There is no easy solution that can solve 47 percent of your potential problems with the online population. But monitoring what is happening online, who is talking about you that would be a bare minimum. Becoming a player in the process and actively taking on rumors on the internet would be a next one.

Within a year, all PR-firms in China will advise their clients on an online strategy, if they do not do this already like Edelman. In the US they already do. “The end of the world as we know it,” calls Rich Edelman, their CEO it in his weblog. That has already started off in the US where Microsoft, Sun, GM and a few others show how to work effectively on the internet. With China, having the second largest online population, similar approaches are not far away.

Fons Tuinstra

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