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China prepares to skewer brands in annual consumer day gala

Mar 15, 2019

China is gearing up to skewer companies it accuses of treating consumers badly in a yearly event that has previously named and shamed firms from Apple to Nike Inc.

The state-run China Central Television (CCTV) will on Friday evening broadcast its annual consumer rights show, similar to CBS network’s “60 Minutes” in the United States, that tends to be a mix of undercover reports and song-and-dance routine.

Known as “315”, in reference to global consumer rights day on March 15, the show is usually greeted with trepidation by local and foreign brands, that have, in recent years, set up public relation teams in advance or handed out freebies around the day to take the edge off any possible criticism.

“This is the one day of the year that all eyes are focused on the consumer issue,” said James Feldkamp, Shanghai-based CEO of consumer research and testing firm MingJian.

“Some people may say it is losing its bite then suddenly it will have a big scandal that will have a big impact.”

This year, the show will grab more attention as it comes at a time when Beijing is locked in a trade war with the United States and has heavily criticized Canada over its decision to detain the CFO of Huawei Technologies on U.S. request.

Beijing has also continued to be critical of how companies, mainly international brands, refer to Taiwan in their marketing material or product package. Beijing considers the self-ruled, democratic island a wayward province.

Names of companies that will be targeted in CCTV’s consumer rights show are not disclosed ahead of the broadcast.

In fact, to maintain secrecy, people on the show have to sign a non-disclosure agreement, while producers are kept in a hotel and not allowed to go home a couple of months ahead of the screening, according to a former “315” executive.

It is unclear whether the show has had an impact on company sales, but it has drawn apologies from Volkswagen, whose engine defects in the Touareg SUV it criticized last year, as well as from Apple, whose China after-sales service it scrutinized in 2013.

CCTV did not respond to Reuters’ requests for comment.

Thanks to the fast-expanding middle class in the world’s second-largest economy, its consumers have become a powerful spending force with the ability to make or break brands.

Companies are willing to do anything to avoid being named, the former “315” executive said, on condition of anonymity as he was not allowed to speak about the show to media.

The show, first broadcast in 1991, has its own limitations on what can be exposed, the executive added.

Normally food-safety issues that could trigger public fear, giant state-owned enterprise or Chinese medicine firms are off limits, the person told Reuters.

“We are all staying on alert,” said a public relations officer at a major Chinese consumer tech brand.

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