How France’s World Cup win cost Chinese brand Vatti US$4.3 million in losses
Company promised that if France won the World Cup it would give full refunds to customers who bought ‘Championship Set’ during promotion period
France’s triumph over Croatia in Sunday’s action-packed World Cup final may have had Chinese fans jumping for joy in their kitchens – the win means some shoppers will be getting brand new gas stoves for free.
But it will amount to losses of up to 29 million yuan (US$4.3 million) for Chinese home appliance brand Vatti, which will have to make good on a World Cup-themed publicity stunt.
Early last month, Vatti, which makes gas hobs and extractor fans, promised a full refund to buyers of its 4,999 yuan “Championship Set” if France won the tournament. It applied only to those who bought the gas cooktop, extractor hood and water heater set between June 1 and July 3.
Bricks-and-mortar sales jumped 20 per cent in that period from the previous month, while online sales went up 30 per cent, the Guangdong-based company said in a statement on July 4.
It expected total offline sales during the World Cup to exceed 700 million yuan, and online sales to be more than 300 million yuan.
While total losses from the refunds would be about 79 million yuan, the company said it would only be responsible for the 29 million yuan of online sales made during the period.
Regional distributors would have to foot the bill for the remaining 50 million yuan of refunds for the promotional sets bought in stores.
One of them, operating in Beijing and Tianjin, had its assets seized by a Guangdong court on June 29, according to Beijing Youth Daily. That came after its president went missing, with the company owing 100 million yuan in debts, the report said. It is listed as Vatti’s fourth-biggest distributor, with sales of 162 million yuan last year, according to its 2017 annual report.
But Vatti said its losses from the promotion would be “controllable”. The refunds would account for less than 10 per cent of total sales during the World Cup.
Ahead of the final, Vatti spokesperson Wang Zhaozhao told news outlet Yicai Global that the company was prepared for the financial impact of the promotion if France won.
“If the team does indeed win, the refunds will amount to a considerable sum, but it will be well within our annual marketing budget – and it won’t have a material impact on our results,” Wang said.
Shares in the Shenzhen-listed company have plunged by more than a third since the start of June, as France beat opponents including Argentina, Uruguay and Belgium.
Meanwhile, Chinese music fans were disappointed that they missed hearing a Mandopop song when it was played at the stadium in Moscow ahead of the final.
Taiwanese news website ETtoday reported on Monday that fans complained they had watched the whole broadcast hoping to hear the 2005 hit Stubborn, by Chinese rock band Mayday, but later found out it was played during the warm-up, which was not broadcast.
“It wasn’t a brilliant World Cup if they didn’t let Mayday fans listen to Stubborn,” one fan was quoted as saying.
The track won a recent poll conducted by Fifa on social media platform Weibo, in which fans in China were asked which Chinese song should be played in the stadium for the final. K-pop tracks Fake Love by BTS and Power by Exo were also played before the final match, after winning similar official polls on Instagram and Twitter.
And with the World Cup over for another four years, Fifa president Gianni Infantino has told Alibaba owner Jack Ma Yun that China has a “big chance” of hosting next year’s annual Club World Cup, Xinhua reported on Sunday.
The pair met for an hour in Moscow during the World Cup, Zhang Dazhong, chief executive of the e-commerce giant’s sports arm, Alisports, told the news agency.
Alibaba’s cloud computing unit has partnered with the Fifa Club World Cup from 2018 until 2022. Alibaba owns the South China Morning Post.