Corporate China

Weibo: Tech execs trash CCTV consumer rights show

PUBLISHED : Monday, 17 March, 2014, 1:32pm
UPDATED : Monday, 17 March, 2014, 1:32pm

Where were you this past Saturday night? Most of us probably spent the evening having dinner out, or perhaps visiting friends. But for many of China's tech executives, the date of March 15 has become for nervousness due to CCTV's annual investigative reports broadcast that evening for Consumer Rights Day. The program often targets high-profile brands in its effort to uncover abusive business practices, and many of those names come from the tech sector. But this year's program was a relative disappointment, with some observers cynically noting on their microblogs that CCTV seemed more interested in generating advertising revenue than protecting consumers.

One notable exception to the chorus of cynical comments was Qihoo 360's (NYSE: QIHU) controversial and outspoken CEO Zhou Hongyi, who took delight on his microblog in the fact that archrival Baidu (Nasdaq: BIDU) was featured in one of the program's reports. All the attention shows just how influential CCTV's Consumer Rights Day program has become, with the ability to send any company into crisis mode if it gets featured for abusing consumers.

Global tech giant Apple (Nasdaq: AAPL) and Chinese online game operator NetEase (Nasdaq: NTES) were both featured on last year's show, resulting in a firestorm of negative publicity for both. The situation got so bad for Apple, which was criticized for bad after-sales service, that the company took the rare move of issuing an apology to Chinese consumers and promising to address the problem.

By comparison, this year's program was a relative non-event. One of the most prominently featured companies was a supplier that provided expired ingredients to several major food chains including Singaporean bakery chain BreadTalk. Most of the biggest consumer and tech names escaped any mention on the show, undoubtedly bringing huge sighs of relief from their top tech executives and public relations officials.

Qihoo 360 analyst Mi Xiaobin summarized a lot of the sentiment with his comment that commercials on this year's program were more numerous than actual investigative reports. Yan Yuelong, the public relations chief at e-commerce giant, concurred, saying CCTV was looking to capitalize on the huge audience it has built in recent years for the program. He went on to repost a list of many of the advertisers who helped to sponsor this year's show.

The lack of big stories this year, coupled with the growing cynicism, hint at waning influence for not only the show, but also for CCTV as it faces competition from a growing group of Internet-based video channels. CCTV has itself also become the subject of controversy, drawing criticism in 2 more recent cases that tried to expose bad business practices.

One of those saw CCTV criticize Starbucks (Nasdaq: SBUX) for its high prices, only to see many Chinese come to the coffee chain's defense by saying it should be allowed to charge whatever it wants. More recently, a CCTV commentator branded e-commerce giant Alibaba as a "vampire" because its Yu'ebao savings product was drawing money away from traditional banks. But in that instance also, many came to Yu'ebao's defense, saying it was providing much-needed competition for China's stodgy financial sector.

While response to this year's CCTV show was muted and may reflect the start of a broader decline, you would never know that based on the prolific posts from Qihoo 360 CEO Zhou Hongyi, who delighted in the fact that archrival Baidu was featured on this year's show. Qihoo and Baidu have been locked in a fierce and ugly battle for supremacy in China's online search space over the past year, employing numerous underhanded tactics and filing lawsuits against each other in their ongoing war.

The CCTV report that grabbed Zhou's attention focused on abusive software often found in so-called "copycat" smartphones that look like popular models but cost far less. It should come as no surprise that such cheap phones come loaded with software that steals personal data and engages in other abusive practices, since the phone makers rely on fees from such software makers to earn some extra money. Zhou re-posted one photo that shows a long list of Baidu software used by one copycat phone maker, and also berated Baidu's founder Robin Li. Of course he made no mention of the fact that Qihoo itself is often accused of similar practices. But perhaps that's a subject for next year's show.

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