Why Were Alibaba And Nikon CCTV’s Yearly ‘Consumer Rights’ Targets?

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The Nikon D600.

Last week, CCTV’s annual March 15 brand takedown event caused massive speculation as to which brands would be the unlucky recipients of the network’s wrath this year. The “winners” were revealed to be Japanese camera maker Nikon and China’s own e-commerce giant Alibaba, which may have been chosen for more than just their alleged customer service problems.

The two companies join the likes of Apple, Volkswagen, and McDonald’s in receiving the massive amount of unwanted exposure that comes with the Chinese state-run TV network’s annual Consumer Rights Day Gala (央视315晚会), held every March 15 to honor the global holiday. The brands chosen are usually foreign companies, and guesses abounded as to which would be cast into the limelight this year. Some evidence pointed to foreign car brands, which have been heavily critiqued in Chinese media over the past year for pricing policies and safety standards.

This year, Nikon was the main foreign brand targeted. CCTV accused the company of selling defective D600 camera models that produced “black spots” on photographs, causing the Shanghai Administration for Industry and Commerce to announce a halt on all sales of the model. Nikon had actually previously stopped selling the model, and announced on February 26 that it would provide free repairs after warranty expiration, but some dealers still had the item in stock. The report has prompted the brand to announce that it will recall every model.

A photo with black spots taken with a Nikon D600 featured in CCTV's Consumer Rights Day report this weekend. (CCTV)

A photo with black spots taken with a Nikon D600 featured in CCTV’s Consumer Rights Day report this weekend. (CCTV)

Meanwhile, Alibaba was criticized for lack of regard for consumer safety when CCTV said that its ZhiFuBao payment system had a password protection loophole, meaning customers were at risk of stolen accounts. As a result, the e-tail giant defended itself in a statement statement saying that the company has “robust security and risk management.

Although Chinese net users have been skeptical of Chinese media attacks on foreign brands in the past, the Nikon issue had a greater sense of legitimacy because the camera model has had problems across the world. In addition to the allegations in China, customers in the United States previously raised a class-action lawsuit against Nikon over claims of defects.

However, the main criticisms take aim not at company mistakes, but at their alleged disregard toward their Chinese customers. The main critique of Nikon was that its offer of free repairs was not sufficient, an accusation in line with the type of language used to criticize Apple for “discriminating” against Chinese consumers. In response to the story, one Weibo user stated, “Why do foreign companies have such trouble in China? Is it because they despise Chinese consumers, because the Chinese staff is incompetent, or because Chinese regulations aren’t strong enough?”

Beyond actual stated problems with the companies, there are additional reasons why both Nikon and Alibaba could have been the specific brands chosen.  While the network has often gone after Western brands, difficult relations with Japan could have been a factor in the choice of a Japanese brand this year. In the wake of the anti-Japan riots of 2012, many Japanese brands suffered a major sales dip, and some were just starting to bounce back. However, newly rising tensions have once again prompted Chinese and Japanese officials to hurl harsh rhetoric and insults at one another, and have caused Japanese brands to continue to fear backlash.

The anti-Japan sentiment was present in Weibo comments on the Nikon story. “Get out of China, Japanese goods!” said one commenter.

A Nikon camera receives "camouflage" during China's anti-Japan riots in 2012.

A Nikon camera receives “camouflage” during China’s anti-Japan riots in 2012.

Meanwhile, the target of Alibaba could be tied to Chinese financial regulators’ wariness toward new payment methods being quickly rolled out by both the e-commerce company and WeChat owner Tencent. The week prior to the report, Alibaba and Tencent both announced the introduction of new e-credit cards on Alipay and Tenpay, their respective PayPal-like e-payment systems. However, the credit cards were banned within days by China’s Central Bank. Meanwhile, the two have also been moving forward with not only electronic payment systems, but online financial products.

This criticism also comes immediately after news was leaked last week that Alibaba will be filing a U.S. IPO, which the company confirmed in a statement yesterday after the report aired. Some China business experts have speculated that Beijing will not be happy that the company is opting for New York over Hong Kong, and wondered if the leaked news was just a negotiating tactic with Beijing.

It’s not very likely that one CCTV report would have bearing on Alibaba’s decision to confirm the U.S. IPO, but the report and the e-credit ban do exhibit signs that there may be tension with the Chinese government. At the moment, however, Alibaba is likely focusing on the potential $15 billion that it could raise from its decision. Japanese brands in China, however, are probably even more fearful than they already were.

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