The Chinese milk industry is no stranger to scandal and the latest exposes the unethical side of Chinese public relations practices. This summer there were reports that the baby formula by Synutra International was linked to premature breast development in three baby girls. Reports surfaced online which spread to newspapers and major Internet news portals, resulting in Nasdaq shares dropping 27 percent in one day.
The company immediately issued a statement standing behind their product and a week later the Ministry of Health confirmed that there was no link between the girls’ premature development and the baby formula. A police investigation into rival dairy producer China Mengniu Dairy for alleged slander against Yili Industrial Group uncovered an online campaign called the “731 Plan” which consisted of posting false articles by fake consumers in an attempt to generate safety concerns about their competition’s baby formula.
Beijing BossePR Consulting Co. was hired by Mengniu to carry out the plan and this week three BossePR employees, Zhao Ning, Hao Liping and Ma Ye, were arrested along with director of Mengniu’s child dairy department, An Yong. Mengniu apologized in a statement claiming it was Yong’s (not the company’s) plan to boost sales.
According to an article on MSNBC, it is not uncommon for Chinese companies and PR agencies to disseminate accusations against competitors as a PR strategy. The article quotes Alistair Nicholas, chief executive of AC Capital Consulting in Beijing, “there is a mentality in China that one of the ways you do PR is to get bad stories out there about your competitors, PR is played in a pretty dirty sort of way in this market sometimes.”