What Wangshi and KFC dont know

We all know the terrible earthquake happened in China, and the Chinese goverment and people are doing the best helping the survivors. There are many many heart touching stories since May 12 when the quake hit. NPR Melissa Block and Robert Siegal (read their Chengdu diary) did a good job from a foreign journalist perspective.

Wang Lao Ji tea drink pic

But I also noticed it is not free of controversies in this all out effort to save lives and help the needy. Notably, Wang Shi (王石), the chairman of Vanke (largest home builder in China), is inadvertly got into this “donation gate”.

Basically, in his blog titled Life IS Most Precious written in May 15, he defended Vanke donation of 2 m RMB (about $0.286 m) is generous enough, further more he said Vanke would like its employee contain his/her individual donation up tp 10 RMB ($1.50). He said the most important thing is to save lives, Vanke is doing the best to build safe homes so that (in the future) more lives will be saved, should similar disaster happen. He also said charity is a life long thing, it should not be treated as a campaign (which I do agree, and I remember Buffett said there is always need for charity in our society when he gave away majority of his stocks to Gates foundation in year 2006).

When I first read this, I think it’s ridiculous to put a 10 Yuan donation limit, despite I think most of what he said is ok. But the backlash on the Internet is much severe than I thought. People are so furious about his 10 Yuan comments, and changed his name to 王十(10 in Chinese), the whole thing becomes a donation gate (You canbaidu王石捐款). Wang Shi and Vanke quickly responded by pledging 100 m Yuan to help rebuild a town in Mianzhu, and issued this apology.

Too late. The demage is already done, from public relation point of view. Lang Xian Ping, an economist from Hongkong, did this cultural analysis of this issue. He hit some points, but I think the problem for Wang Shi, is precisely he read too many western books. Now that a veteran Chinese businessman made such a stupid mistake, I was not surprised to see many international companies put up small changes initially. This of course caused similar backlash to their business, such as protest outside KFC stores in Sichuan. As I said in my previous posts, KFC is making more money in China than its home United States, but it only pledged 3 m Yuan ($0.429 m) initially. In contrast, a little known Chinese tea brand, Wang Lao Ji, pledged 100 m Yuan ($14.29 m). This is quite significant in two senses:

1) Compared to China Mobile/ICBCs, which are majority owned by the Chinese goverment (not to dismiss their effort and good will, their donations are really put money from left pocket to right pocket), Wang Lao Ji is putting up its own money;

2) People did not realize, with annual revenue of 8.9 billion Yuan, Wang Lao Ji (jdb China) is not far behind Coca Cola or Pepsi in terms of sales revenue, if not more.

What we have learned
Of course we know donation should not be a pure number game or beauty contest, of course we know China will need charities for a long long time, but I think multinationals and Wang Shi at least made one mistake: under-estimate the power of Internet, the emotions of ordinary people. They have huge budget for marketing: for instance Coca Cola and McDonald are Olympics sponsor and the price tag is not cheap, but in another sense, donations and community involvement is very important in China. All eyes are on those famous companies and they came up short. Certainly I understand the China subsidiaries may not have authority to donate 100 m Yuan, they need to report to HQ in the US or Europe. One reason eBay China lost to Taobao.

For our Chinese consumers, as I said in previous post “Instead of Boycott”, why wouldn’t we patronize our domestic brands? Drink Wang Lao Ji instead of Coke or Pepsi, buy the Chery (car) instead of Toyota, buy Lenovo instead of Dell/HP, bank with ICBC instead of Citibank…

Again I am not advocate boycotting, but as I saw from the local Ford/GM dealers talking points of “buy American, jobs stay in America”. Why not our Chinese buy Chinese, and the profit stay in China, rather than Cincinnati or New York?

PS, my friend Wang Jianshuo wrote a good piece on a similar topic. Also did you notice Premier Wen Jiabao is the No. 10 popular person on Facebook? (read this Yahoo News).

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