Tencent is a tremendous success story in social media, digital payment, online games and entertainment – to name just a few of its strengths.
But even the best companies can make mistakes, as a recent scam in southwestern China has demonstrated.
On July 1 the police in Guiyang, the capital city of Guizhou province, said that Tencent had been duped by fraudsters masquerading as representatives of China’s best-known chilli sauce maker Laoganma.
The fraud only emerged after the internet behemoth accused Laoganma of breach of contract on a marketing deal. Tencent believed that it had signed terms with Laoganma last March to promote an eSports tournament for its smartphone game QQ Flying Car. Once the marketing initiative began, the popular hot sauce (see WiC143) featured frequently in a publicity blitz linked to the game. But Tencent didn’t receive any advertising fees from Laoganma for the arrangement, despite issuing a number of invoices.
The tech giant took steps in April this year to secure payment, including a request to freeze assets of Laoganma’s worth about Rmb16 million, according to a statement by a local court in Shenzhen, that ruled in Tencent’s favour.
In response, Laoganma said it hadn’t signed an agreement with Tencent nor appointed anyone to do so on its behalf. It also reported the case to its home city’s police, which led to the revelation of the hoax and the arrest of three suspects.
The three accused had fooled Tencent’s sales team by fabricating Laoganma’s company seal, or “chop”. Decisionmaking power at companies in China often resides with whoever wields the corporate chop (see WiC501).
The fraudsters were focused on collecting the promotional codes that came with the marketing deal and reselling them for a profit.
News of the scam soon went viral on social media, with views of #LaoganmaDriftinginFire# (the tagline of the original marketing campaign) reaching 180 million on weibo as of July 1.
Tencent, finding itself in an unusually humiliating positition, responded cleverly with a tongue-in-cheek weibo post titled: “I’m the silly penguin who eats the fake chilli sauce”.
An accompanying video offered a pastiche of one of Tencent’s reality shows Produce 101 (see WiC416) in which a cartoonish penguin (the Tencent mascot) lampoons its role in the farce. “A jar of fake chilli oil costs other people eight yuan, but 16 million yuan for me,” the narrator teases. “I’m just really, really dumb.”
Tencent’s PR director Zhang Jun also posted a photo on WeChat in which he showed bowls of rice adorned with only Laoganma sauce. The dish was reportedly the sole meal on offer at Tencent’s staff canteen that night as part of the company’s efforts to make sure that staff learned a lesson from the fraud.
The incident generated a flood of questions for both industry giants. First, how could Tencent fail to verify the identity of its counterparty when signing an agreement? Second, how was Laoganma’s marketing team so unaware that its brand was being embedded in Tencent’s games? More strangely still, some of the packaging for jars of Laoganma’s chilli oil featured QQ Flying Car and the related esports tournament last year. So who produced it and why?
The case is all the more puzzling when Laoganma is known in its industry for not spending on advertising (see WiC469).
Milking the situation for a bit more media coverage, Tencent has been offering a reward of 1,000 bottles of the chilli sauce for anyone who volunteers new information about the scam.
“I reckon that Tencent has managed to achieve publicity worth Rmb200 million for its online game business, especially for the QQ Flying Car franchise, by spending just Rmb10 million or so in advertising”, another netizen remarked. And for Laoganma the revelations have become something of a bonanza too. Sales of its hot sauce on Suning’s e-commerce platform spiked 228% on July 1, while searches deploying “Laoganma” as a keyword have quadrupled.
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