In 1991, an organisation called the China External Trade Development Council (CETRA) hired a branding agency from Los Angeles to give Taiwan a new image.
The island no longer wanted Western consumers to associate the tag “Made in Taiwan” with cheaper mass-produced goods. The agency in question – Bright – was tasked with making a “hamburger look like steak”, the Los Angeles Times reported. Or as its chairman put it, the idea was “to have ‘Made in Taiwan’ conjure up quality the same way that ‘Made in Japan” conjures up quality”.
A decade later, Taiwan was well on its way towards achieving its rebranding goal. The tagline “Taiwan Excellence” was being deployed to underscore the island’s reputation for innovation, particular in the electronics sector. And by this point Taiwan was also looking to differentiate itself more clearly from mainland China, which had become the world’s manufacturing centre for many of the lower-end goods that the island had once produced.
Twenty years further down the road and it is the Chinese manufacturers who want to dislodge their reputation as cheaper producers, just like the Taiwanese did back in the 1990s. Their determination to do so has just landed Gigabyte Technology, a Taiwanese computer hardware manufacturer, in hot water with Chinese netizens.
The motherboard producer caused a stir after publishing a post on its company website in mid-May. Under the tagline “Made in Taiwan, Demanding High Quality,” it made a clear effort to compare its own production process to that of rivals that outsource to their partners in mainland China. “Unlike other brands, which have opted for low-cost and low-quality contract manufacturing in China, Gigabyte is committed to producing excellent and high performing components and laptops,” it promised.
“As a Taiwan-based laptop and component manufacturer, we ensure that 90% of our laptops are made locally in Taiwan,” it continued.
The reaction across the Taiwan Strait was swift. “Where did you get the guts to say this?” demanded the Communist Youth League of China, a national youth movement run by the Communist Party, on its weibo.
Netizens were similarly unimpressed. “The garbage products are the ones made in Taiwan,” rebuked one. “You don’t stand a chance any more,”another Weibo user commented on Gigabyte’s post. “Seriously, don’t waste your energy. You have crossed the red line of the central government.”
A number of international brands have run into trouble for actions or comments that Chinese consumers regard as offensive or demeaning to national pride. And as Sina Finance pointed out, Gigabyte also needed to show more respect for customers from one of its main markets. Last year it derived a fifth of its operating income from sales in mainland China.
In an early indication of the potential for further damage, Gigabyte-related products were soon being removed from the online stores of Taobao, JD.com and Suning.
Gigabyte backtracked quickly, putting out a statement explaining that some of the content in its promotional post was “seriously inconsistent with the facts, an occurrence that was caused by poor internal management within the company”.
It added that 90% of its products are actually produced in mainland China and that it adheres to the One-China Policy (Beijing’s immovable formula that there is only one Chinese nation and that Taiwan will one day be reunified with the mainland). Netizens weren’t mollified, however. “This apology is about money, not about [respecting] China,” complained one.
Gigabyte’s Taipei-listed share price lost 25% in value in three trading days in the aftermath of the firm’s initial comments. There has since been a rebound in the stock price, suggesting investors think the PR storm will blow over.
Gigabyte’s founder Dandy Yeh has a history of overcoming difficulties. He set up the company in the mid-1980s, but almost lost everything in a devastating fire soon afterwards. The company then expanded into mainland China in 2003, setting up a factory in Ningbo.
Yeh once told a local newspaper that professional success comes to those who are “psychologically prepared to withstand failure” and who move forward “step by step”. Companies live or die by the quality of their products, he added. “It doesn’t matter how simple or cheap a product is, it still needs to be good quality, ” he insisted.
Yet Gigabyte is now learning another corporate lesson: it doesn’t pay to upset your customers in mainland Chinese.
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