Baseless accusations do firms long-term damage

14:00 | 06/09/2018

Several entrepreneurs have recently been hit by articles based on false information, making matters look far worse than they actually are and damaging the businesses’ reputation and their relations with customers and business contacts.

baseless accusations do firms long term damage
Con Cung is working to mitigate the damage caused by the ungrounded allegations Photo: Le Toan

Con Cung still struggles

Despite having cleared its name after being accused of selling goods of unclear origin, the consequences of domestic maternal and baby product distributor Con Cung JSC’s ordeal can be felt to this day. The company lost VND1-2 billion ($44,247-88,495) in sales a day, while the damage done to its reputation is difficult to assess.

Nguyen Quoc Minh, chairman of Con Cung JSC’s Management Board, told VIR that since the issue occurred, the company’s business has been hugely impacted. During the 28 days of inspection, instead of maintaining normal business, it had to work with the Market Surveillance Agency to clarify the origin of its goods.

“Since the issue occurred, our sales have been reduced by 20 per cent,” Minh added. “We lost VND1-2 billion in sales per day, which directly impacted our staff’s income because their wages depend on the company’s sales,” said Luu Anh Tien, general director of Con Cung JSC.

Tien stated that the issue not only cost the company hefty revenue, but also its prestige and honour. The toughest time was when the Ho Chi Minh City Market Surveillance Branch announced finding seven violations at Con Cung. After hearing about the violations, a large number of customers announced that they were boycotting Con Cung.

“Even the faith of loyal customers who have been buying our products for their children for four or five years has been shaken,” Tien added.

After ending the crisis, earning back customers’ trust will be a tough mission for Con Cung. Tien said that several days after the Ministry of Industry and Trade announced the report, customers started visiting the stores again, but their numbers have been very low.

“Right now, we are focusing on letting customers know that we are a genuine business,” Minh told VIR. “What we are doing right now is to make people understand that we sell original goods that are backed up by all legal documents – which is completely the opposite of what the news has been saying lately.”

The wrong kind of arsenic

Back in 2016, the information that fish sauce contains arsenic made headlines, sending consumers into a frenzy and damaging fish sauce producers.

According to the Vietnam Standards and Consumer Association’s (Vinastas) survey on fish sauce products circulating on the local market, which was announced on October 18, 2016, 95.65 per cent of the samples had arsenic content exceeding the regulations. In addition, Vinastas also posted articles warning that 85 per cent of 88 companies’ fish sauce products did not measure up to the requisite standards.

The representative of 584 Seaproduct JSC, one of the 88 companies, stated that after Vinastas’ survey, it was constantly bombarded by phone calls from clients and supermarkets requiring an explanation. Some customers even returned its products.

A large number of articles were written on this issue, which were then shared on social networks. The Ministry of Information and Communications (MIC) on October 21 in the same year pointed out that there was a widespread misunderstanding of the regulations on inorganic and organic arsenic in these articles. According to the MIC, only inorganic arsenic damages the health, while organic arsenic does not. Most arsenic found in fish sauce products was organic. Circular No.02/2011/TT-BYT issued by the Ministry of Health on January 13, 2011, only sets a limit on inorganic arsenic content.

Grapefruit and cancer

The victims of incorrect news are not only enterprises and manufacturers but also farmers. Perhaps grapefruit farmers in the Mekong Delta region will never forget the crisis that took place 11 years ago. In July 2007, the UK’s BBC and Daily Mail published news saying that “eating grapefruit can increase breast cancer risk by a third.”

The information was based on the results of a survey on 50,000 women conducted by Southern California University and Hawaii University. According to the survey, women eating more than a quarter of a grapefruit per day were at 30 per cent higher risk of developing breast cancer.

Several local press agencies cited this information, causing a huge misunderstanding among Vietnamese consumers and causing significant damage to grapefruit famers. While many Vietnamese agricultural scientists published evidence proving that domestic grapefruits were completely harmless, Vietnamese consumers still treated the fruit with a strong measure of suspicion.

Within a single month, the price of grapefruit in Mekong Delta provinces dropped from VND8,000-10,000 ($0.35-0.44) to VND1,000 ($0.04) per fruit. Despite this sharply reduced price, consumption was very low, and a large number of farmers had to cut down grapefruit trees.

These examples point to the remarkable influence of the media on the minds of consumers. Unverified or false information, if appearing in the media, can have devastating effects on companies, manufacturers, and consumers.

Boomerang Social Listening Consultant, a company providing services of alarming media crisis in Vietnam, stated that the company’s system sends an average of 531 alarming message to the brands using its services. Thus, at every three minutes, a company has to face the crisis risk from receiving alarming messages via phones and emails.

Evidently, bad news spreads far faster than good news, and scoops based on untruth fly the fastest. Even worse, corrections and apologies after the fact go only a little way towards mitigating the damage caused – they draw in far fewer views and hardly any shares. Thus, Con Cung has a long way to go to win back customers’ trust and recover the VND1-2 billion in missing daily revenue during the 28 days of inspection.

While consumers will readily receive the protection of the Vietnam Competition Authority and Vinastas if they buy low-quality goods, who will protect companies from false news?

Lien Bui CEO, Thuy Thien Nhu JSC and ORFARM organic food brand

“Entrepreneurs and brands are under great pressure from social media and the press these days. While bad press usually ends up not being as bad as it seems at first, it could hurt their reputation, affect their relations with customers and business contacts, and, if serious enough, it could bring a business to the verge of bankruptcy. “

Cao Thi Thuy Dung , Director, Top White cosmetics company under Happy Secret Ltd.

“Untrue information spreading on social media can have a huge impact on individuals and organisations. When the scandal related to our products occurred, a large number of people went out to rudely criticise the company, even though they had never used the company’s products at all. These people worked for rival companies.”

Thai Tuan ,Director, Tan Hue Vien Food Processing Co., Ltd.

“Information on social networks stated that our products are of low quality and can easily cause skin allergies and intestinal cancer. Therefore, all orders had to be temporarily halted. This is simply unhealthy competition. They used the false news to take down the competition. There has been a large number of similar cases. “

Van Anh

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