Yesterday we began to explore the biggest challenge facing China, trust, and how mistrust is a pervasive feeling even at a personal level. Today we are going to slightly broaden our view and look at mistrust between customers and companies.
Between customers and companies
While the importance of trust may seem obvious, the results of mistrust are often irrational.
For example; a Chinese person is walking down the street and spots 50RMB lying on the ground. Given the lack of trust between individuals, do they A) pocket the money immediately B) look for the person who may have dropped it or C) leave the money on the ground?
According to my college students in Guangxi (about 120 of them) the answer is C. In each of the four classes, I was told that you should leave the money on the ground because it may be part of an elaborate trap, where as soon as you pick up the money the scammer will come out of the shadows and accuse you of being a thief.
As I’ve discussed before in detail, this same attitude can be seen in the marketplace; a good deal is actually a trap.
You may not realize the amount of trust you have placed in companies, but odds are you enjoy meals every day with little worry that what you’ve just consumed could kill you. When you buy a pair of shoes, a watch, or a television, you assume that it will last a reasonably long time, and if it doesn’t the store will take it back with few problems. Every transaction involves a degree of trust.
Yet in China, we see this breaking down at every level. A Chinese friend told me that the threat of contaminated food is a constant worry for him and his friends. (It’s the long term effects they are worried about from heavy metals, added hormones and God-knows-what from gutter-oil.) “We talk about it everyday,” he said, “We wonder how much shorter our lives will be or what diseases we will have.” The result has been that he eats at local restaurants far less than he used to.
After the opening up of China’s economy, small private enterprises boomed, leading to thousands of new brands. A few have established themselves as household names in China with solid reputations, but far more have opted to exploit uninformed shoppers in exchange for quick profits (People’s Daily exposes 2-3/week at least). As a result, Chinese consumers are often reluctant to try new products, which has led to a borderline obsession with “famous” brands. Consumers are then shocked when these “famous” brands are hit by scandals too (like the latest milk scandal that hit one of the two major brands).
China, it seems, is still in the sorting out phase of development. While there are companies which seek to earn the trust of customers, their efforts are often lost in the sea of scandals (a glance at what has happened with Chinese group-buying sites this year is good evidence). So much so that it will take a long time for a company to develop a reputation that is strong enough for people to actually trust because each scandal effects the entire sector (the first milk scandal happened nearly 4 years ago, but I’m still asked to bring infant formula back each time I go home).
While I believe that companies are slowly moving in a more honest direction, the process is slowed by ineffective oversight by gov’t departments. People are willing to take larger risks when the likelihood of being caught is low, and in China that can be very low. Until the gov’t is able to take strong actions that defend the rights of customers (and companies), trust will have a hard time taking root.
Next we’ll be looking at trust between citizens and journalists.