Nike in hot seat for false marketing at China consumer show

China's annual name-and-shame consumer protection show criticised Nike for false marketing. Photo / 123RF

China's annual name-and-shame consumer protection show criticised Nike for false marketing and the Japanese retailer of Muji-brand products for selling food from areas that showed signs of radioactive contamination.

The state-run show, which aims to uncover abuses by companies, claimed that Nike sold basketball shoes that didn't include the advertised Zoom Air sole cushions. The program, which aired Wednesday, also alleged that Ryohin Keikaku Co.'s Muji chain sold food products that were mislabeled and didn't reveal that some came from Japanese areas that were affected by radiation.

Nike didn't immediately respond to requests for comment. Representatives for Ryohin Keikaku couldn't be reached outside of office hours.

The China Central Television broadcast, which coincides with World Consumer Rights Day, is a reflection of the growing clout of China's 1.4 billion consumers, who have transformed the country into an essential market for foreign companies in the fast-food, retailing and automotive industries. The show has targeted some of the world's biggest brands in the past, including Apple Inc., McDonald's Corp. and Volkswagen AG.

Reaction was swift to the "3.15 Gala" show, which relied in part on hidden cameras and reporters disguised as shoppers. Immediately after the program, the state-run broadcaster aired a live televised segment at Nike's office in Shanghai, where authorities questioned the staff.

A trade official said the government has started an investigation after finding that the company actually sold 300 pairs of falsely advertised sneakers, not just the shoes featured in the show.

Shortly after the program, Chinese e-commerce giant Alibaba Group Holding Ltd. has been tracking and blocking "abnormal" Japanese nuclear-contaminated products since 2011, according to a Weibo post from the company. Alibaba has deleted 22,000 links to suspected products and has taken actions against 4,108 businesses in 2016, it said.

The show also targeted two e-commerce sites that sold Japanese products ranging from rice to milk powder from radiation contaminated areas in violation of Chinese customs rules, it alleged. One of the sites was backed by By-Health Co., a local maker of nutritional supplements.

In Nike's case, the broadcast featured a consumer who complained to the company but was not properly compensated by the shoemaker, which the broadcaster said violated China's consumer protection law.

In 2012, Nike was fined $704,000 (4.87 million yuan) by Chinese authorities for a similar offense, state media reported at the time. The shoemaker reportedly advertised shoes as having two double air cushions while they in fact, had only one.

The show attracts eyeballs and results. Apple's Tim Cook apologized in 2013 and McDonald's retrained some workers in 2012 after the companies were put in the hot seat. In recent years, the program has shifted to become less hostile toward foreign companies and also trained the spotlight on domestic brands. Ele.me, a local food delivery website that was a target last year, recently launched a food safety campaign.

The highlight on consumer protections comes as the government plans to generate more growth through consumer spending, with the economy transitioning away from a reliance on heavy industry and exports.

Chinese consumers are gaining in clout, with the average urban household income tripling in the past decade. The country's shoppers are expected to push online retail sales to as much as 14 trillion yuan (US$2 trillion) in 2021 from about 5 trillion yuan last year, according to market researcher Mintel Group Ltd.

Previous shows targeted homegrown powers Alibaba and China Mobile Ltd. The e-commerce giant has struggled to keep counterfeit products off its websites. China Mobile, the country's largest wireless carrier, was targeted in 2015 for enabling fraudsters who impersonated banks and the police to obtain money.