Fighting for the right

CCTV has been holding its "March 15 Gala" on World Consumer Rights Day every year since 1991, and in recent years some large enterprises have been among the targets.

The gala's exposure of cases of malpractice is gaining increasing attention from society, but while this shows growing consciousness of consumer rights on one hand, it's also seen as a way to improve the overall business environment in China.

Big firms as targets

One reason the gala focuses on large enterprises is that they are industry benchmarks and need to shoulder greater social responsibility, said Yin Wen, director of the gala, on March 14.

More big companies have featured in recent years, including international companies like Nokia in 2007, Hewlett Packard in 2010, and Kumho Tires, Evian and Mead Johnson in 2011.

This year, more familiar names were among the targets, including leading domestic enterprises such as China Telecom, which was accused of not doing enough to curb the sending of spam messages. Staff at China Merchants Bank and Industrial and Commercial Bank of China were also found to have sold customers' personal information, and international giants Carrefour and McDonald's were accused of offering expired food.

The companies all offered apologies following the gala, except Industrial and Commercial Bank of China.

China Telecom said it had set up a team to investigate the report and that it will launch a wider inspection of the whole group.

China Merchants Bank said the staff involved in the case had been "punished" and that it would strengthen its information safety management.

One Carrefour branch store in Zhengzhou, Henan Province was closed by the local authorities and the company promised to refund and compensate consumers who had bought the expired goods just so long as they can show their receipts.

However, consumers were not satisfied. "How can consumers get the compensation if the food has been eaten and the receipts have already been thrown away? Such a remedy is no remedy at all," said Zhao Guilin, a Zhengzhou native.

McDonald's made an apology quickly after the report on March 15 via its Sina microblog, and made another apology on March 21 on its website. The company said it would conduct an investigation into the problem and would prevent it from happening again.

Unlike the other companies, McDonald's received unexpected support from many consumers who believe the problem is not too serious, although some said they had lost faith in the fast-food giant.

"Problems at many bigger enterprises from diversified industries have been reported in recent years, but this does not indicate the business environment is getting worse - it shows stronger consciousness of rights protection and greater supervision," Wang Yong, secretary-general of Beijing-based Brand China Industry Union (BCIU), told the Global Times.

The influence of the March 15 Gala has risen in recent years, which is helpful both in protecting consumer rights and interests and in improving the business environment, he said.

Rebuilding reputations

Most of the companies that are exposed by CCTV apologize and promise to correct their faults, but sometimes it's not enough. Some have disappeared from the market, including Secret Tibetan Diet Tea and Tian Popo Chinese medicine lotion. But others go to considerable lengths to ensure their survival.

Among last year's targets, South Korea-based Kumho Tires, the biggest tire supplier to carmakers in China, was reported to be using excessive amounts of recycled rubber at its Tianjin factory, which could cause tires to blow out.

Kumho began to recall faulty tires in April and the Tianjin factory was shut down for almost three months. By February this year, sales of Kumho tires had only recovered to half the level they were at before the quality problem was reported.

"The top priority in the 2012 market plan is to recover Chinese consumers' confidence, instead of pursuing profits and sales," said Lee Han-seop, head of Kumho's China subsidiary, in February.

Shuanghui Group, the nation's largest meat processor, was exposed in last year's March 15 Gala with a report that its Henan-based subsidiary had purchased pigs injected with the chemical clenbuterol, an illegal food additive.

The subsidiary halted production the next day and did not resume production until June. It reported an operating profit of 699.7 million yuan ($110.7 million) for 2011, 60.85 percent lower than the previous year, largely due to the scandal.

Shuanghui said it has worked with the food safety authorities to carry out safety checks and established a food safety supervision committee.

Wider issues

"As more big enterprises become targets of the gala, national supervisors are pushed to advance the improvement not only of the reported enterprises, but also the whole industry," Yan Qiang, partner of Adfaith Management Consulting, told the Global Times.

After the report about McDonald's in this year's gala, Beijing Municipal Health Bureau sent out a notice Tuesday, requiring greater efforts in supervising food safety.

"We will widen the coverage of supervision in fast food chains and ask large-scale catering enterprises to carry out preventive measures to ensure food safety," Ma Yanming, deputy publicity director of the bureau, told the Global Times.

In Zhuzhou, Hunan Province, food safety supervisors inspected two McDonald's branches and seven KFC branches on March 16, the Guangzhou-based Nanfang Daily reported.

Other problems reported this year have also drawn attention from related authorities, including the Ministry of Industry and Information Technology, which asked telecom enterprises to look into the problem of spam messages.

However, the authorities cannot rely on passive reform - they also need to think about how to prevent problems from happening, Yan from Adfaith noted.

Although the March 15 Gala has increasing influence, the effects are not as obvious as expected, said Wang Yong of BCIU.

Companies and authorities sometimes pay attention to the problems only after they have been exposed, and forget about them once the public's attention has been distracted, Wang noted.

For example, the leaks of personal information that were reported this year also happened in 2008 and 2009, and spam messages have been appearing since 2006.

Sometimes media reports don't focus on the main issue, Wang noted. For example, Focus Media was exposed in 2008 and China Telecom this year over the problem of spam messages, but they are only channels, not the sources.

"The key is to find the source, and the problems in the management mechanism," Wang noted.

"We need to seek fundamental solutions to all reported problems, which requires the media to make follow-up reports and needs related authorities to strengthen supervision and inspection to improve the whole industrial chain," said Wang.