This weekend saw Nikon attacked in a consumer rights program by Chinese State broadcaster CCTV. The program vocally criticized Nikon over the D600 sensor problems, which is still sold in Chinese stores, and also for the inadequate after care provided to customers. Each year Chinese State broadcaster CCTV releases a special consumer rights program to mark consumer rights day. In the past it has targeted foreign companies over the selling of defective or overpriced products, and normally the program has acted as a precursor to these companies being placed under government inspection. After last year’s program Volkswagen recalled over 300,000 cars meanwhile Glaxo-Smith-Klein saw a significant drop off in sales. Glaxo-Smith-Klein was also placed under investigation with bribery charges eventually being leveled at top executives. The CCTV program according to The Financial Times is notorious among foreign businesses in China who fear becoming the focus of a coordinated State media attack. With CCTV normally acting as the vanguard The Financial Times states that foreign CEOs have already planned with PR firms crisis management strategies in case their company ends up being the program’s subject. Since the CCTV program on Nikon aired the Chinese government has announced it is to launch an investigation into Nikon while simultaneously appearing to ban the sale of the D600. With ABS-CBN reporting that shops in Shanghai were told by police on Sunday to immediately cease selling the problematic model.
Reuters claim that Nikon had sales of 118 billion yen in 2013 which would mean the Chinese marketplace accounts for about 11.7% of Nikon’s worldwide sales. The impact of this program could have a catastrophic effect on Nikon’s business health should Chinese consumers abandon Nikon as they did with Glaxo-Smith-Klein. This fear was reflected by a 4.7% drop in the value of Nikon shares since the program. Nikon’s task to recover their reputation and restore Chinese consumer faith is made more complicated by the current difficult business climate in China for Japanese companies. Anti-Japanese sentiment has impacted on Chinese sales for many Japanese companies as diplomatic tensions between the two countries become increasingly strained. After last month’s announcement in the US of a potential class action law suit the D600 faults made Nikon an easy target for the CCTV program, and exposes how as of yet Nikon are still unable to adequately address the fallout, or regain the initiative.
In a statement Nikon said,
“We regard this matter very seriously … and express sincere apologies to our customers. We thank the Chinese government, media and consumers for such close attention and supervision over Nikon.”
Whether this new sincere approach as opposed to dismissing the issue will heal or lessen the damage in the short or long term is anyone’s guess. What do you think of the situation? Do you think the criticism is fair?