China Business, Racism, and Glocalization

I spoke with a good-sized client the other day who told me of how her company was having to “harmonize” its China product return policies with those of the United States and the EU. This company had previously given Americans and Europeans 6 months to return its (mostly commercial) product, while giving Chinese customers only 30 days. The client’s explanation was that it was concerned “too many” Chinese customers would take advantage of the six months.

In fairly short order, however, this company felt that too many of its Chinese customers knew they were being short shrifted as compared to this company’s American and European customers and this “feeling” would likely end up being worse overall for the company than if it simply extended its return-by date for China.

In other words, companies need to get ready for how their actions outside China will influence their actions inside China and vice-versa.

A loyal reader — an international lawyer in Mexico — recently sent me a Newsweek article entitled, Back to the Days of Blackface, which discusses the fallout Colgate-Palmolive has incurred from its ownership stake in a product/brand that would be considered offensive/racist to the overwhelming majority of Americans:

Of all the unfamiliar products in a Chinese supermarket, one of the most shocking to American visitors is a toothpaste featuring the logo of a minstrel singer in a top hat, flashing a white smile. Even more shocking: the paste, known as Darlie in English and as Black People Toothpaste in Chinese, is a product of the Hawley & Hazel Group, a Hong Kong–based company established in 1933, which is now owned in part by the Colgate-Palmolive Co.

Darlie used to be called Darkie. According to the book America Brushes Up: The Uses and Marketing of Toothpaste and Toothbrushes in the Twentieth Century, the CEO of Hawley & Hazel saw blackface performer Al Jolson in the U.S. and thought, “Jolson’s wide smile and bright teeth would make an excellent toothpaste logo.” He was right: the firm now claims to be one of the market leaders of toothpaste products in China, Hong Kong, Taiwan, and Southeast Asia.

Colgate purchased 50 percent of the company in 1985 and, after three years of criticisms, switched the name “from Darkie to Darlie and modified the logo to a less crude version of a black man.” In 1989, Colgate-Palmolive’s chairman stated, ‘’It’s just plain wrong. The morally right thing dictated that we must change [in a way] that is least damaging to the economic interests of our partners. Yet the Chinese name of the product has remained unchanged.

This product’s name and imagery is simply no big deal in China, where “it wouldn’t even occur to them that Black People Toothpaste [another brand of toothpaste in China] is offensive.”

But Colgate is a Western company:

Yet Colgate is a Western company, and as such, “should know better,” says Kwame Dougan, an African-Canadian living in China. Colgate declined NEWSWEEK’s interview requests, instead releasing a statement saying, “There are different perspectives on this issue.” Hawley & Hazel also declined an interview request. Darlie doesn’t exactly advertise its relationship with Colgate; Colgate’s Web site has only two mentions of Darlie, which both talk about how the brand is driving growth in the Asia-Pacific region. Darlie products examined in China for this story featured no mention of the Colgate label.

“I think that the brand should simply be retired,” says Laura Berry, executive director of the Interfaith Center on Corporate Responsibility, one of the organizations that originally pressured Colgate to fix its Darkie brand. Until then, Darlie smiles on.

I agree.

When I was a kid, my parents would chastise me for my McDonald’s cheeseburger addiction by bringing up McDonald’s poor history of minority hiring. Being the future lawyer that I was (and viewing five McDonald’s cheeseburgers as the finest meal ever invented), I did my own research and read how Ray Kroc insisted he had nothing against African-Americans, but he just did not think customers were ready to have them at the counters. Here is a guy who himself knew racism was wrong (and I am taking him at his word on this) but went along with it for business reasons. That really bothered me and I thought it in some ways worse than the flat-out racist who refuses to hire People of Color.

is Colgate doing the same thing as Ray Kroc? Is what Colgate is doing even good business?  What do you think?

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China Business