P&G Cream Loses Face in China

26 September 2006

BEIJING: Chinese customers are again exercising their newly-discovered consumer muscle against a global giant they believe has acted dishonourably.

Following a litigation threat against Dell Computer over 'not-as-advertised' microprocessors [WARC News: 15-Aug-06], Procter & Gamble is now being taken to task.

Customers are irate over its perceived tardiness in refunding purchases of upscale SK-II cosmetics, after Chinese authorities last week claimed the products contained harmful chemicals.

P&G suspended sales of the brand on Friday, amid reports that fisticuffs had broken out at the company's Shanghai offices and at a store beauty counter because shoppers were unable to get their money back instantly.

The Japanese brand, bought by P&G in 1990, retails for upwards of 792 yuan ($100; €78; £52) in China, where an average urban yearly wage is 12,291 yuan.

Consumers were reported to be incensed over P&G's failure to apologise and make immediate refunds. The alleged negative health effects are proving to be of less concern.

The company insists the product is safe and has required customers seeking refunds to sign waivers absolving P&G of blame.

It says it has not mishandled the situation, claiming: "We did what we thought was responsible."

But Tom Doctoroff, China ceo of advertising agency JWT, believes P&G should have responded by immediately apologizing and accepting a recall.

The brand ruffled the feathers of Chinese consumers in April 2005 when P&G paid a $24,000 fine and withdrew advertising materials for an SK-II skin cream after a customer complained the product's claim to make people look "twelve years younger" was false.

Data sourced from Wall Street Journal Online; additional content by WARC staff