In February 1917, China’s biggest English language daily, the China North Daily News, published a story claiming that a German factory was harvesting fat from dead soldiers to make edible oils, soap and boot dubbing. The Shanghai-based paper reported that the Chinese president, Feng Guozhang, was horrified when he heard Germany’s foreign minister, Paul Von Hintze, boasting about the kadaververwertungsanstalt.
At the time, the British were waging a propaganda campaign to encourage China to declare war on Germany. And it worked. A declaration followed a few months later in August 1917. The fake story also spread widely among European newspapers. One journalist commented that, “I’ve been told by an eminent scientist that six pounds of glycerine can be extracted from the corpse of a fairly well nourished Hun.”
Fake news thus had a long history before Donald Trump coined the phrase during his presidential campaign. And stealing a march on competitors by spreading false rumours about their products has history too.
China’s spate of food safety scandals, which range from melamine tainted infant formula to recycled cooking oils from sewers, also makes local consumers far more prone to believe rumours they read online. Beijing Youth Daily gave its readers a list of recent tall tales including local kelp being made from plastic bags and KFC sourcing monstrously deformed poultry.
Liu Zhi, executive vice president of the China Food Industry Association, tells the newspaper that such malicious rumours have done untold damage to producers and that he wants action. Indeed, the country has a Food Rumours Refuting Association and it recently held a press conference calling on companies to do more.
One food firm that’s been quick to develop an action plan is Wilmar International, which produces China’s best selling cooking oil through its Jinglongyu brand. Since late month Wilmar has been offering a record breaking reward of Rmb10 million ($147,000) to anyone who helps track the uploaders of a video which reignited malicious speculation about its oils. The Singapore-listed group is also taking to court a perpetrator already found.
Wilmar’s actions relate to a short video which falsely accused its Arowana oil of being made from gutter oil. It was originally featured in May 2014 by the People’s Daily on its website (the newspaper later apologised for the report) but has somehow resurfaced again.
Wilmar’s general manager, Chen Bo, says it continues to be on the receiving end of online rumours. However, the group’s foreign parentage does give its reputation some insulation.
Wilmar was co-founded in 1991 by Kuok Khoon Hong, the nephew of Southeast Asia’s richest businessman, Robert Kuok, and one of Indonesia’s richest businessmen, Martua Sitorus.
Last month, it announced that it plans to spin-off its China business. It had originally planned to float its international operations in Hong Kong in 2009 but pulled the deal due to market volatility. During a conference call this month with financial analysts, it says it is now looking at a Shanghai listing in about 18 months time after it has restructured its business to carve the China operations out. The group says it hopes to sell about 10% of its equity at the exchange’s maximum 23 times price-to-earnings cap. This suggests a deal size of up to $2 billion based on first quarter earnings.
Wilmar beat analysts’ expectations, recording a 51% year-on-year increase in quarterly net profits to $362 million, thanks to strong margins in its oilseeds, grains and tropical oil businesses. It also said that China accounts for about 40% to 50% of group revenues which are mainly concentrated in oilseeds and grains. It said an A-share listing would help to cement both Wilmar International’s business and political relationships in China and position the group to act as a consolidator in the sector. Wilmar already accounts for 45% of China’s total sales of edible oils, says Nikkei.
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