Global Economics

Mad As Hell In China's Blogosphere


Zhang Min was mighty peeved. In June he bought a $1,000 notebook PC from Dell Inc. (DELL), but when the machine showed up at his Shanghai apartment, it wasn't exactly what he had ordered. Instead of the Intel (INTC) Core Duo T2300 processor he had expected, the computer had a T2300E, which lacks ``virtualization technology,'' a feature that allows the computer to run more than one operating system at a time. Dell says it's of little use to laptop users, but Zhang says he wanted it anyway.

A few years ago the 30-year-old Zhang might not have gotten very far with his gripe. But 53 million Chinese are denizens of online forums, making it easy to find folks with equivalent complaints. Zhang turned up dozens who had gotten T2300E processors instead of the T2300 -- as well as a lawyer who was ready to sue Dell. So Zhang has lodged the first of what could be a flood of lawsuits against the PC maker. The computer ``is missing a function,'' Zhang says. ``There are a lot of people with similar problems.''

Chalk one up for the power of the Chinese Internet. While criticizing the government online is still taboo, there are few constraints on airing grievances about corporate behavior. In thousands of Internet forums, the mainland's millions freely point out poor customer service, misleading ad campaigns, shoddy safety standards, and much more. Americans ``think the Internet in China is controlled and censored,'' says Sam Flemming, chief executive of CIC Data, a Shanghai research firm that tracks Chinese online forums and blogs. But when it comes to commenting on business, ``Chinese people are vocal and active.''

And when they raise their virtual voices in unison, they get the attention of both homegrown companies and multinationals operating in China. Online critics blasted Volkswagen after the automaker launched an advertising campaign that appeared to poke fun at public transportation. Last year General Mills Inc.'s (GIS) H?agen-Dazs brand suffered a blow when bloggers circulated rumors that the company's ice cream was made in an unsanitary factory in the southern city of Shenzhen. H?agen-Dazs doesn't even have a plant in the city, but that didn't prevent the faulty information from spreading through the Chinese blogosphere. ``Companies can get really screwed if they don't'' pay attention to bloggers and online forums, says Shaun Rein, founder of Shanghai-based China Market Research Group.

WIN THEM OVER. Some smart companies are paying attention and trying to win over China's opinionated Net users. Shoemaker Converse (NKE) and chewing gum giant Wm. Wrigley Jr. (WWY) this spring conducted a joint promotion online, encouraging Chinese to come up with cool designs for Converse sneakers that featured the logo of Wrigley's Juicy Fruit. And in April, Yum! Brands Inc.'s (YUM) KFC Corp. did an about-face after one of its TV commercials came under fire online. The spot depicted a hardworking student who didn't pass his exams and two carefree kids who enjoyed KFC fried chicken and did well on the test. Denounced online for suggesting that hard work doesn't pay off, KFC changed the ending of the ad to show all three passing.

Dell is taking a harder line. There is no difference in performance between the two processors, and the virtualization technology is a feature that's oriented toward server computers, says Judy Low, a Dell spokeswoman in Singapore. She does acknowledge that Dell made ``an error'' in not telling customers about the switch ahead of time. She says the computer maker has sent notes to its Chinese customers explaining its position on the matter but hasn't offered any compensation.

Some companies are harnessing the power of the Net to figure out what the public wants. Alibaba.com Corp. controls Yahoo! China and also runs TaoBao, a free rival to eBay Inc. (EBAY) and the mainland's No. 1 auction site. After TaoBao tried to introduce a paid service last spring, users balked. So the outfit conducted an online survey of its 20 million customers and discovered that 62% were turned off by the service. ``We told [our] people, 'Let's take it down,''' says Jack Ma, chairman and CEO of Alibaba.com. ``We listen to our customers.''


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