Toyota Losing the China Messaging War on Recalls

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It was bad enough when Akio Toyoda, in response to a question about differing quality standards on cars sold in China as opposed to those sold in the U.S. or Japan, used a bizarre and inappropriate analogy to a popular tofu dish. The question really should have been addressed head on, since it seems that many Chinese firmly believe that second (or third) rate vehicles are being foisted upon them.

But the whole PR campaign seems to be getting worse:

Toyota did not offer any form of compensation for the RAV4 models recently involved in the recall in China over gas pedal problems, the Changjiang Daily reported Wednesday.

Consumers in Wuhan questioned the company’s different attitudes toward the issue of recall. In the US, the company provides door-to-door service to consumers involved in the recall. When drivers take their recalled vehicles to the factory themselves, the company offers transportation reimbursements and a loaner car of the same model.

Sun, a Toyota RAV4 user who had just had his car fixed, said although he did not pay for the repairs, it had cost him time and gas so Toyota should be responsible for his loss.

At some car forums on the Internet, many RAV4 owners are discussing the possibility of filing a class action suit in China against Toyota, the report said. (China Daily)

This whole thing is starting to remind me of other foreign-related product liability “scandals” we’ve seen here in the past, and that’s not a good thing for Toyota. The one that immediately comes to mind is the Toshiba laptop kerfuffle back in 2000.

At the time, I was working for a Chinese law firm in Beijing. One of the partners, a prominent Chinese litigator, was consulted on the possibility of bringing a product liability suit against Toshiba on behalf of injured Chinese consumers.

This all started after Toshiba settled a class action tort case in the U.S. in 1999. After that, well, some folks over here got it in their greedy minds that some cash might be forthcoming if they made a fuss. The best way to go about doing this? Play off of the history between China and Japan and portray the consumers as victims.

The Toshiba Corporation’s settlement of a class-action lawsuit in the United States last year has backfired in China, where consumers are charging discrimination because the Japanese electronics maker has not offered them the same deal.

The company also offered a software patch to fix the problem for Toshiba laptop owners worldwide, but that has not satisfied Chinese consumers, who are ever ready to discern a slight from their wartime aggressors. The Chinese want to be compensated, too, even though no lawsuit has yet been brought in China. (NY Times)

Is this starting to sound familiar? The litigator at my firm worked with a quasi-governmental consumer rights group and several media outlets to stir up public anger against Toshiba. This was a fairly easy thing to do, and they had the tacit approval of someone, somewhere in the government to do so.

Things got messy, with the rhetoric getting out of hand and becoming embarrassing to the Central Government (I suspect the Ministry of Foreign Affairs was none too pleased). At the same time, plans were made to file a class action suit in Beijing with a “friendly” judge. Chinese law at the time did not really recognize a Western-style class action, and some of the international lawyers in the firm at the time were consulted on relevant foreign law so that the judge could be educated on how to proceed.

This was a well-oiled machine (relatively speaking), with the judiciary, media, consumer groups and others working in synchronization. But once bilateral relations suffered, word got out through the usual, non-official channels, that the whole thing no longer had a patron inside the government and that all the participants better cut all this shit out if they knew what was good for them.

I was delighted. Not only was the legal case itself seriously flawed, but as a corporate transactional lawyer, the last thing I wanted was to be associated with a plaintiff-side tort action. You just don’t do that.

But my larger point here is that these things can snowball on you, and if you’re a Japanese company in China, the margin for error is tiny. Many might disagree with me, but the public here has a sort of love/hate relationship with Japan. On the one hand, emulation of Japanese media and fashion is common, but public sentiment may turn quickly if it appears that China or the Chinese people are not being treated fairly (Toyota is no stranger to this and should know better). This reaction might, depending on the situation, be wholly irrational, but given modern history, it is easily understood.

Toyota is getting hammered. People here already think that they have been given crap products. They also think that Chinese consumers are being treated relatively poorly compared to mitigation campaigns carried out in other countries. The accuracy of these accusations is beside the point.

Toyota better hire some top gun PR consultants in a hurry (or fire the ones they have now) or they might be looking at a coordinated effort to embarrass them and drag their asses into court. Whether the Chinese government will encourage or put a stop to such consumer-led actions remains to be seen.

2 responses on “Toyota Losing the China Messaging War on Recalls

  1. asdf

    I really don’t know if it is carelessness or difference on the part of toyota. They are #1 in the world because they are better and often cheaper in the US and european markets. But in china, the market is hypercompetitive, where I’ve even ridden in a knockoff RAV4. Maybe they just don’t expect to win in the chinese market in the long term and have given up. They make plenty of money in the US, and rightly, that’s where they should focus.

    1. Stan Post author

      That would argue for paying more attention, and spending more, in the U.S. market. I’ll buy that. But there’s no reason to piss off China if you can at all avoid it. Better handling of PR is not always that expensive compared to the time and expense of building back your brand.