What Happens in China Doesn’t Stay in China: The Third Reich and Emissions Scandals and….

Way back in 2011, we wrote on how what your company does outside China can impact how it is viewed and even how it does in China. Logical, right? See China Business, Racism And Glocalization.

What spurred that post was a multinational client of ours who had sought our help in “harmonizing” its China product return policies with those of the United States and Europe. This company had given Americans and Europeans six months to return its products, while giving Chinese customers only 30 days out of concerns that “too many” Chinese customers would take advantage of the six months. Soon though this company was getting reports from China that its customers were not happy about being treated worse than their American and European counterparts.

In that same post I talked about how the China lawyers at our firm were very much used to hearing and dealing with the above sort of thing, but how it had not really hit home to me how a company’s actions inside China might impact it outside China. That was until I read a Newsweek article (from 2010) entitled, Back to the Days of Blackface, which discussed the fallout Colgate-Palmolive incurred from its ownership stake in a product/brand that would be considered offensive 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 then went on to talk about how Colgate’s actions bothered me and I could certainly imagine those actions bothering others.

American and European companies have for a long time been concerned with how their China employment practices can impact their reputation outside China. One need only read pretty much any multinational’s requirements on child labor to get a sense of how important the big companies view this issue.

There has in the last six months or so been a growing uproar regarding foreign companies that help China’s surveillance capabilities but it has only been in the last couple weeks that China’s treatment of its minority religious populations (one in particular) has really been coming front and center in terms of how it can impact business worldwide. The following three things have brought this home to me:

1. Facebook. I am seeing people talking about “how something needs to be done about this” and I am seeing the b-word — boycotts — being bandied about.

2. Clients. Actually just one client, a company known for its progressive stance on such things as employee relations and the environment. This company told me that it is “accelerating” its cessation of China manufacturing because its employees are starting to complain about its China connections on “moral and political” grounds. I am reluctant to explain exactly what aspect of China policy it is that has spurred on these complaints (for fear of what might happen to this site in China), but if you have been reading the news and if you follow the link in the next paragraph you will know.

3. The News.  You really must read this BBC article on Volkswagen to believe it. Let me first say that pretty much every car I have bought and owned in the last ten years has been German and I have had to defend those purchases from time to time to others, including to one of my own daughters. My defense has always been simple and unequivocal. Germany, perhaps as much as any country in history, has recognized the evil it did (in WWII) and has very much sought to make up for that. And we should not punish the kids for the sins of the parents. But when the CEO of a company like Volkswagen — which was so intimately tied in with Hitler’s regime — makes a comment that is hard to believe (or if believed is equally horrific), I do not think it unfair to highlight its past ties with Nazis or its incessant dishonesty regarding emissions.

I bring all of this up because I see things bubbling and I am just curious who else has been seeing these things and I am also curious regarding what sort of impact you see these things having on businesses worldwide and, most importantly, on your business. What are your employees and customers telling you? Is all this just more incentive for companies to decouple from China? Or will just not saying incredibly stupid things to the press be enough to protect you and your company? Has China — as a number of clients keep telling us — become “just too difficult” or “no longer worth all the hassle”?

You tell us.

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