23 Jul 14
Written by David Bunzel

Another PR Crisis in China: Fast Food Brands Still Learning

Fast Food Brands China

A year ago, we discussed how Yum! Brands, Apple, and Volkswagen, were woefully unprepared to address different PR crises in China.  The recent Husi Foods meat scandal, that affected five international quick serve restaurant brands, showed that companies in China are still learning the nuances of consumer behavior and public relations in this market.

In 2013, KFC, one of the more important Yum! Brands’ labels, was hit hard by an avian flu outbreak that affected one if its poultry suppliers.  Yum! Brands was able to make a smart recovery over the next two quarters, largely in China, where its KFC stores addressed the poultry supplier issues, refreshed some of its stores, added free wi-fi, and had a very effective World Cup promotion.  Store managers satisfaction at the culmination of the World Cup quickly turned to dismay when the Husi Meat scandal hit, a further blow to KFC’s local reputation.

KFC, as well as McDonald’s, Burger King, Starbucks, and Papa John’s were impacted, as they recalled food that contained meat supplied by Husi Foods.  The consumer reaction through digital media was intense and these brands were not adequately prepared to address consumers through some of the local Chinese social media platforms.  Renren, the Facebook of China, only shows one of these brands having a public page–KFC.  KFC has 253,000 followers on Reren, a pretty small army to defend its brand.  Weibo (similar to Twitter), has each of these brands represented, but only Starbucks has more than a million followers.   With a population of 1.3 billion and more than 600 million internet users, these brands have nominal social influence in the important China market.

A study last year, by GlobalScan Radar, showed 71% of China’s consumers use social media to find out information regarding health, social, safety, and environmental issues.  Food issues rank high on this list and fast food stores, especially the international brands, have become easy targets.

DigitalMediaIX surveys university students in China on the brands they prefer and how engaged these brands are on social media.  The company publishes the DMIX 100 list of leading digital brands in China, which is a good barometer of how prepared a company is to engage consumers with social media.  Of the five brands affected in the scandal, only Starbucks (ranked 11) is reasonably prepared to communicate to its customers through social media.  KFC ranks 34 and McDonald’s  ranks 60.   Burger King  and Papa John’s do not even make the list.

A recent article by McKinsey discussed how to manage a crisis in China’s complex social media environment.

The important lesson for companies to learn from these brands’ experience is you need to be present where your customers are active.  The Chinese consumer is very engaged with social media.  Brands that are not equally engaged risk crises like these, which can dramatically affect a company’s brand image and impact sales.


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Photos Courtesy of UW-Madison Archives

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