China Consumer

Show of force

CCTV attacks China Mobile

Evoque w

The Evoque: CCTV highlighted a faulty gearbox

In 1962 China’s economy was still deep in the throes of Communism. It was an era when the concept of the ‘consumer’ barely existed for Mao Zedong and his revolutionaries. But that same year American president John F Kennedy made a landmark speech to the US Congress in which he outlined the basic concept of consumer rights. The date was March 15, and to this day, its anniversary is commemorated as International Consumer Rights Day. Whilst its significance can be lost among the myriad of other ‘international days’, for the last 25 years it has been observed punctiliously in China, and especially so by state broadcaster CCTV which airs a programme called the 3.15 Gala.

The live show is hosted on the evening of March 15 (the 3.15 denotes the date, using the American custom of putting the month first). It targets companies deemed to have breached China’s consumer rights. Offences can range from the relatively benign to the seriously life-threatening. Recent years have seen China’s Shineway Group found at fault for distributing contaminated meat, whilst Apple has been outed for a substandard repair service.

Shanghai Financial News says that as the 3.15 Gala approaches each year, foreign companies get edgy, because they expect to be singled out, particularly if they are a threat to domestic rivals.

It can be an excruciating experience. Companies ensnared by the Gala’s “hidden camera” techniques have been known to lose profits as well as face. The official apology from Apple CEO, Tim Cook, following the 2013 Gala is remembered as one of the rare instances where the boss of the Cupertino-based firm has publicly said sorry.

In 2013, Volkswagen was forced to recall thousands of cars after the Gala revealed a fault with the model’s gearbox. And the faulty gearbox theme was back on the agenda again this year, although this time Jaguar Land Rover was the target, on allegations of problems with its Range Rover Evoque model.

Its gearbox flaw, attributed to software glitches, causes the Evoque’s engine to switch off, rather than switch gear. The timing couldn’t have been worse for the UK-based firm, which has been enjoying heightened popularity among China’s nouveau-riche, and recently opened a joint venture factory to make its cars locally (see WiC271).

The 3.15 Gala was critical of Land Rover’s tardy response to the malfunction, and its subsequent recall of at least 36,000 cars. But it wasn’t the only carmaker in the firing line. Volkswagen was swatted once again over accusations that its local dealers were misleading clients and overcharging to fix simple problems (Mercedes and Dongfeng Nissan were accused of similar practices). All three companies were quick to denounce the behaviour of the dealerships involved, with Bloomberg reporting that Japan’s Nissan had already set up working groups to investigate the problem.

But this year’s Gala also took an unexpected twist by attacking state-owned firms too. Perhaps the most arresting accusation of the evening involved China’s largest telecommunication service provider, China Mobile and its unit Tietong. An investigation by the channel showed the pair have been helping call centres to harass customers with unwanted cold calls. CCTV’s probe suggested that China Mobile’s local branches had been assisting the centres to change the numbers that show up for incoming calls, allowing the callers to disguise their identities.

China Mobile responded to the scandal on its official weibo: “The problem of false calling reported by CCTV on its March 15 programme is a serious violation of the legitimate rights and interests of consumers. China Mobile has instructed China Tietong Telecommunications, Guangdong Mobile and Shanghai Mobile to check this out carefully, and handle the matter seriously.”

The inclusion of a major SOE in the show was a welcome change of script. Following graft purges at a number of the state heavyweights, it may reflect promises by Premier Li Keqiang to attack the vested interests associated with big SOEs.

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