A Chinese idiom warns: “Fish eyes can’t be passed off as pearls, and bitter flea-bane can’t pretend to be tea.”
It means you shouldn’t sell something fake and call it genuine.
DaVinci, a high-end furniture chain for top brands like Armani Casa, Fendi Casa and Versace Home, is learning that in the modern day. Last week, the Shanghai-based company came under fire after state broadcaster CCTV reported that some of DaVinci’s goods were being made in China and then sent off to Italy to be re-imported back to the country as Italian goods.
The practice is dubbed “you shui” or swimming. Government officials said prices are marked up significantly once the Chinese-made furniture has gone for a ‘swim’.
Confusion over the origin of its products isn’t Da Vinci’s only problem. As it turns out, the Shanghai-based company also hasn’t been upfront about materials the furniture is made from. “Rare wood” was, in some cases, polymer and other chemicals, says the China Daily.
One shopper noticed that her television cabinet gave off a strong chemical smell, prompting her to report it to CCTV. Test results showed that it was made from resin and fibre wood and not the “solid wood” advertised. Other shoppers began to post details on weibo (a Chinese Twitter-equivalent) of shoddily-made DaVinci products.
Subsequent investigation from Xinhua found that, during the first half of the year, about 10% of the company’s so-called imports were actually domestically produced in Dongguan in Guangdong province. They were then transported to Shanghai’s Waigaoqiao Free Trade Zone before being sent back to the company’s warehouse.
That meant they didn’t even get a “swim” from Italy, of course. No problem: “Staying at the bonded zone for a day, the products changed from domestically-produced ones to imported ones,” says Zhou Guoliang, a customs official.
DaVinci at first denied any wrongdoing. “We have never bought furniture made in China, shipped it out and shipped it back,” insisted a tearful Doris Phua, the chief executive, last week.
Then it changed its tune, apologising to its customers and suppliers. The retailer issued a statement saying that it will “accept supervision from the government, media and the public,” and has “started self-inspection.” Headlined the Shanghai Daily: “DaVinci sorry for misleading clients.”
It is certainly not the first time a Chinese company has been accused of assigning foreign provenance to domestic goods. In 2006, Order Flooring, a floor material firm claiming to have been established in Germany in 1903, was shown to be a Chinese company with an eight year history.
Similarly, in 2008 Guangzhou Jiahe Cosmetics publicly apologised for claiming that its cosmetics brand Marubi was Japanese.
Of course, the DaVinci case demonstrates that the “Made in China” stigma is alive and well at home as well as abroad. Chinese consumers still see foreign products as better in quality and design (and worth a higher price).
But on Tuesday the Shanghai Daily changed tack, blaming shoppers as much as DaVinci for the fake furniture fiasco.
“As long as our purchasing pattern is dominated by vanity and flamboyance, we will continue to fall for cheap mimicry clad in luxury packaging,” the newspaper lamented.
Industry insiders also tried to assign some responsibility to the government for the DaVinci debacle.
Zhu Changling, president of China Furniture Industry Association, told Xinhua that the supervision and management of imported goods has long been inadequate. He also wanted to see more severe punishment for offenders like DaVinci (at this stage the company hasn’t even confirmed if it will pay refunds to shoppers but best-case under Chinese law is that they get double their money back, according to the Shanghai Daily).
Unless the government cracks down harder on similar scams, there will be plenty more cases in future, says Zhu.
© ChinTell Ltd. All rights reserved.
Exclusively sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.