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Legal issues highlighted as Chinese consumers hold companies to higher standards


By Dr David Cowan

17 May 2018 at 10:49 BST


Reputational issues are now top of the agenda for Chinese companies as research reveals the impact of scandals, regulations, sovereignty and corporate governance.

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A Reputation Institute survey shows Chinese consumers rate Intel number one, prefer Huawei over Apple, and Google over Baidu, China’s biggest domestic search engine. The top 10 also included Chinese home appliances manufacturer Haier, Rolex, Nokia and Lufthansa. Consumers believe Huawei is more ‘genuine’ than Apple, reflecting the reputational damage Apple suffered following the 2012 Foxconn scandal, when around 150 Chinese workers threatened to commit suicide in protest over working conditions.

Baidu Scandals

Baidu, Google’s biggest competitor in China with 82 per cent market share versus Google, benefits from state regulations on internet censorship keeping Google from operating in the country. However, Chinese consumers rate Google higher in terms of governance, fair business practices, ethical behaviour and data privacy in the study. Baidu was hit by a scandal in 2016 when medical student Wei Zexi, who used cancer treatments promoted in web searches on Baidu, died of his illness. Before his death, Mr Wei accused Baidu, amongst others, of misleading him, sparking a major public and media backlash in China impacting Baidu’s reputation. Nicolas Georges Trad, executive partner at Reputation Institute, said: 'For Baidu, the whole data breach in the context of the Facebook [controversy] is building scepticism and lowering expectations of the company.'

Held to higher standards

The study polled 30,000 Chinese consumers on 280 domestic and international companies with the biggest revenues and visibility in the first quarter of 2018. Mr Trad said: 'We believe that companies here in China are held to higher standards than other companies in other parts of the world.'  He added that perhaps 'the regime here in China is very well reputed, so consumers expect companies to live up to the same types of standards that the government does.'  Earlier this year, Marriott, Delta, Zara and Medtronic were forced to issue public apologies for offending China’s “territorial sovereignty” by listing Taiwan and Hong Kong as "countries" on their websites.

 
   
 
 
 

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