BEIJING – Recently, pharmaceutical company Renhen Pharmacy went through a public relations nightmare after a doctor wrote on the popular Chinese micro-blogging site Weibo that its children’s cold medicine was dangerous. Could better preparation and response on Weibo have substantially mitigated the damage to Renhe’s image?
On Jan. 21, a Weibo post about Renhe Pharmacy quickly plunged the Jiangxi-based company into a PR crisis. The company’s share price fell 10% in the ten days following a post about Youkadan, a popular children’s cold medecine, resulting in a one billion yuan ($160 million) loss of market value.
Earlier in January, PR firm Ogilvy & Mather and Chinese consulting agency CIC had jointly issued a White Paper on crisis management in the Weibo era. The report said that while China’s micro-blogging platforms (like Twitter and Facebook) have become an important medium for brand marketing and communication, they have also played a significant role in the outbreak, spread and aggravation of crises. Research found that the first eight hours after a public relations crisis breaks out are a critical window that companies must use to respond.
A crisis in short bursts
On Jan. 21, a doctor at a Beijing hospital, identified by the surname Meng, noticed that many children under one-year-old were taking Youkadan medicine. Recalling what he thought was a Food and Drug Administration alert on the medicine, Dr Meng posted the following message on the Weibo micro-blogging site: “Youkadan and Haowawa medicine have been proven toxic to children’s livers. Children under one year should absolutely not take it. Children under six should take it with caution.”
He then asked, “Why are their advertisements still in the media? Celebrities, please spread the message and have these advertisements removed.”
Although the doctor had less than 2,000 followers, his Weibo identity as a pediatrics doctor gave the message authority. On the evening of the 21st, Chinese television star Wen Zhang reposted the message to his 26 million followers and ignited Renhe Pharmacy’s PR crisis.
On Jan 25, one of China’s most famous comedians, Song Dandan, who has done advertisements for Youkadan, added fuel to the fire by making a public apology on Weibo for endorsing the company.
It turned out though that the doctor had been misinformed. Youkadan later released a statement, corroborated by the Jiangxi Food and Drug Administration, saying, “The medicine is safe for children from age one to 12 and won’t cause harm to liver. Children under one should not take it due to the lack of empirical statistics on safety and effectiveness - but not because it harms the liver.”
However, the damage was already done.
A rapid response
Chu Wen, a partner at Ogilvy & Mather, says that research shows that if a public relations crisis is handled properly, then the company’s share price will be up 7% after six months. If mishandled though, the share price will still be down 15%.
On many occasions, as in the case of Youkadan, harmful reports against companies turn out to be false. But if the response is mishandled, market value will be difficult to salvage.
The Chinese company BaWang Group, for instance, had a PR crisis in July 2010 when a magazine reported one of its shampoos contained dioxane - a substance known to cause cancer. However, it was later shown that the amount contained in the shampoo poses no threat to humans and that dioxane is in fact found in many shampoos.
Nonetheless, BaWang’s share price tumbled. The annual report showed that sales in the second half of 2010 dropped 63.2% compared to the same period of the previous year.
The eight-hour rule
Through a statistical analysis of 50 domestic and international case studies, Ogilvy & Mather found that issuing a response within eight hours shortens the duration of a crisis. If the first response comes more than a day after the crisis breaks, then it will significantly extend the duration of the fallout.
According to Chu Wenn, if a company’s first response is within eight hours, the average duration of the crisis is six days. If it comes between eight and 24 hours, the crisis will last seven days. Waiting between a day and a week to respond will draw the crisis out to 15 days, and waiting more than a week will result in a 19 day crisis.
On Jan 23, two days after the crisis began, the first article about Youkadan was published in the Chinese media. It wasn’t until that evening that Renhe Pharmacy issued a clarification.
Instead of responding online, the company waited to respond through “traditional” media.
Chu Wen says brands that have already established official Weibo accounts before a crisis can reduce their response time by 12 hours and shorten the average duration of the crisis by two days.
In 2012, the company that most successfully averted a Weibo crisis was McDonalds. At 8 p.m. on Mar 15 last year, Chinese state-owned television CCTV reported that McDonalds was selling food past its expiration date. The report was picked up by many micro-bloggers, and less than two hours later at 9:50 p.m., McDonalds issued an apology on its official Weibo account.
According to Chu, McDonalds’ success in handling the crisis lay in the speed of its response, the sincerity of its attitude and the authority that came from communicating through its established Weibo account. Had the company not been on Weibo, it would have had to wait until the next day to speak to the media and get its message out.
According to the Ogilvy & Mather White Paper, when “opinion leaders” participate in spreading a message on Weibo, the average amount of discussion increases 37 fold and the duration of crises extends by six days.
Chu advises brands to reach out to opinion leaders in the industry, turn them into loyal fans and maintain a daily relationship with them. “Opinion leaders cherish their feathers, and will be relatively cautious to speak,” Chu says. “[A brand] needs to establish a mutual trust relationship with them.”
After actor Wen Zhang reposted the doctor’s Weibo message during the Youkadan crisis, it was shared more than 20,000 times. And Song Dandan’s apology for endorsing the company was reposted more than 10,000 times.
The importance of a company having a Weibo presence can’t be ignored. During the McDonalds crisis, the message containing the company’s apology was reportedly shared 8,400 times within the first half-hour. But that doesn’t mean issuing a timely response on the platform guarantees a crisis will be fully mitigated
Chu says that Weibo is often a platform for emotional expression. Therefore, Weibo users tend to prefer reposting messages with negative connotations. “Compared to the relative neutrality of traditional media, Weibo has personal likes and dislikes, and strong emotions.” Chu said.
Most of the clarifications issued by Renhe Pharmacy during the Youkadan crisis were useless. The doctor who posted the original message even apologized and clarified several times that he had posted “without adequate fact checking.” However, popular Weibo users lacked the same enthusiasm to repost these clarifications and none of the corrections received anywhere near the same amount of re-postings as the original message had."
Translated by Zhu Na.