China: Multinationals Hear It Online

From Tibet to Olympic torch protests to Sichuan earthquake relief, the Chinese blogosphere is giving companies an angry earful

Shoppers pass by the French luxury giant Louis Vuitton store. GOH CHAI HIN/AFP/Getty Images

by Dexter Roberts

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Was the Sichuan earthquake, which has killed tens of thousands of Chinese, some sort of retribution for the Beijing government's repression of Buddhists in Tibet? Actress Sharon Stone on May 24 suggested that it was. Ever since, angry Chinese have taken to the Internet to denounce the star of Basic Instinct and spokesperson for Dior (which belongs to LVMH Moët Hennessy Louis Vuitton) on blogs and online forums. "These kind of remarks deeply hurt Chinese people's feeling and are totally unacceptable," wrote a netizen calling herself Mariah on May 26 on a popular online site. Mariah added she plans to "boycott Dior's product from now on." To contain the damage, Dior China issued an apology and said it would "immediately" cut Stone from all China advertising. "We absolutely disagree with and feel regret for this comment," the company said in a statement.

LVMH (LVMH.PA) is just the latest multinational struggling to calm angry Chinese consumers using the Internet and text messaging to broadcast their grievances. McDonald's (MCD), KFC (YUM) and Motorola (MOT) have been among the companies pilloried via mobile-phone text messages and in the Chinese blogosphere for allegedly donating too little money toward earthquake relief, even though the companies have publicly announced hefty contributions. McDonald's, which even saw protesters briefly mill outside restaurants in Jiangsu and in Sichuan, announced it was upping its contribution to a total of $1.7 million. Nokia (NOK) issued four separate press releases detailing its total contribution of $7.6 million, plus a donation of 5,000 mobile phones.

The Net's Challenge Equals Its Opportunity

Earthquake relief is not the only hot-button issue. Since the outbreak of anti-Beijing demonstrations in Tibet in March, the Chinese blogosphere has been singling out multinationals investing in China for real or perceived slights, even though many companies have adopted nationalist-themed ad campaigns to capitalize on Olympic fever (BusinessWeek.com, 5/28/08).

After rumors that executives of retailer Carrefour (CARR.PA) supported Tibetan independence spread on the Net in April, protesters gathered outside stores in Beijing, Kunming, Wuhan, and Dalian. LVMH was targeted online with calls for a boycott of the French luxury brand following the disruption of the Olympic torch relay in Paris. Even Coca-Cola (KO), a sponsor of the relay and the Beijing Games, got ripped into by bloggers in April after a Chinese student in Germany saw an old print ad by the soft-drink giant showing Tibetan monks, which some Chinese netizens figured indicated support for Tibetan independence.

China's Internet, now the world's largest with more than 210 million users, is proving as much a challenge as an opportunity as brands more and more get battered online. The 49 million Chinese bloggers and 75 million regular BBS, or online bulletin board, users put up an average of 10 million new posts a day. And online forums on industries and brands ranging from cosmetics, mobile phones, software, laptops, and autos are proliferating. So-called Internet influencers—those bloggers or BBS posters who have developed a loyal following—reign supreme, sometimes able to derail a new product launch with a single posting. "Since Internet content posted by users can't be controlled, most companies are afraid of the Net," says Song Zheng, executive chief editor of Tianya.cn, the Chinese online forum in which Google (GOOG) is an investor, in an e-mail response to BusinessWeek.