Consumer power begins to flex its muscles in China

Asian Economic News, April 5, 1999

BEIJING, March 29 Kyodo Three years ago on a visit to Beijing from his native Shandong Province, Wang Hai spotted an opportunity to make a profit from the fake goods flooding the Chinese market. Wang, now 26, read the 49th clause of the new Law on the Protection of Consumer Rights, which says consumers have the right to demand a double refund from retailers if it turns out they have bought fake commodities.

So, he decided to make the rounds of the capital's department stores to test the law. Within 50 days, his scheme had brought him nearly 8,000 yuan (960 dollars). He followed up with a buy-and-sue tour of all the major cities around China, which helped draw wide public attention to consumer rights. Today, the consumer hero is reinventing himself as a modern entrepreneur by establishing Dahai Business Consulting Corp. in 1996. With an information network of 200 full-time investigators around the country, the company so far has handled more than 100 cases of trademark infringement and helped crack at least 70 cases of fake product manufacturing. This issue, and the ongoing problem of poor product quality, is now the focus of burgeoning consumer power in the country. In the bad old days of central planning, the Chinese public was lucky to find anything worth buying in state-run stores, where the concept of ''service'' was nonexistent and quality bottom of the list of priorities, but it was not worth complaining. In 1987, the Chinese Consumer Association (CCA) only received 150 letters of complaint. Last year, the number of complaints rose to 667,000, of which 67.3% were about quality problems, mainly shoddy electrical appliances, food and articles for daily use such as furniture, shoes and garments. But, more than a quarter were about telecommunications, including overcharging for public phone services, theft of telephone accounts and fake products, according to Wu Gaohan, director of CCA's complaints-handling department. Consumers also found much room for improvement in services provided by restaurants, beauty salons, intermediary agencies and indoor-decoration teams. The number of complaints about medical services more than doubled from the year before, Wu said. With the real estate boom in recent years, fraud in property measurement, construction quality problems and poor property management have also become areas of concern -- some 10,000 complaints last year. At the same time, bad and fake seeds, poor breeding stock, inferior chemical fertilizers and farm equipment are the biggest threats to rural consumers' interests and safety, according to another senior CCA official. Some 30,000 complaints last year showed a 30% increase from the year before (compared with only an average 6.8% gain in complaints about other products or services), Secretary General Yang Shukun said. The official Business Weekly cited the plight of villagers of Wangcun in the Inner Mongolia Autonomous Region who were left with no rice to eat. They had bought more than 3,000 kilograms of rice seeds in 1997, but in the fall last year found they could harvest nothing because the seeds were fakes. Yang voiced grave concern over roughly manufactured products for farm use, which pose a direct threat to rural consumers' lives and health. About 10,000 cases of pesticide poisoning are reported every year. They are often caused by highly toxic farm chemicals leaking from substandard sprayers. While blaming manufacturers who put profits ahead of safety, Yang said rural consumers are easily lured into buying substandard products at low prices because of their lower income levels and inadequate sense of self-protection, the CCA official pointed out. Limited access to quality test centers and a lack of knowledge about relevant laws and regulations cause further grief for farmers when quality disputes arise. Meanwhile, an official survey in the Workers' Daily found most people were reluctant to take legal action over the flood of fake and bad-quality products because they think it would take too long, cost too much money and have no result. Some 78% of those questioned suffered losses from buying shoddy products but 70% said they had no recourse. The main reason was a legal action against the manufacturer or seller cost too much and took too long, an average of three to six months. In one case, a Heilongjiang farmer bought 45 kg of seeds from a Harbin shop in July 1995 and spread it on 19 hectares. The seeds were of bad quality and the resultant loss was 50,000 yuan. In October 1996, he sued the shop for compensation but the case remains unsettled, despite his having made 18 long-distance trips from his home to the court in Harbin. A second reason was consumers felt in a weak position as an individual acting against a company. They are fearful of the cost and complexity of hiring a lawyer and other experts, of gathering all the necessary paperwork and putting themselves at the mercy of officials. Many consumers were unaware of their rights and procedures they could use to claim losses and did not feel it worthwhile to file suit for a small sum. There were two famous exceptions -- a Shanxi man sued a firm for 1 yuan, while a Zhejiang man sued the local telephone company for overcharging him 5.50 yuan -- but these are rare cases. The newspaper called for a change in consumer habits and called on local governments to follow the examples of Suihua in Heilongjiang Province and Changde in Hunan Province, which have simplified the procedures and cut the costs of consumers taking action. Another problem is officials responsible for product quality who do not want to upset powerful local firms. The China Economic Times recently published an angry report from a Jiangsu correspondent saying many officials hesitated to act on complaints from consumers, despite the retail market being flooded with fake wine, cigarettes, fertilizers, pesticides, detergents and toys.