Local restaurant chain operator Wowprime Corp last week announced it was postponing a planned rally in Greater Taichung to back the firm’s demand for compensation from Ting Hsin International Group (頂新國際集團) regarding the latest cooking oil scandal.
On the surface, Wowprime expected the planned protest by its 10,000 employees to send a strong message to the public about the need for credible government certifications. The move was really an attempt by the firm to boost employees’ morale and its corporate image amid growing consumer complaints, because nine products sold by its restaurants were found to be involved in the latest food safety issue.
The company has not yet announced a new date for the protest, but it might not need to do so because apparently not many people agree with the company’s view that it is a victim of the food scandals — given the company’s insincere and insufficient compensation offers to consumers, its business scope and market share.
Since all oil items imported from Vietnam by Ting Hsin have been deemed questionable and banned from sale by the government, Wowprime, like other firms, has to withdraw products that have been made using that oil, but the company’s slow response to consumers’ demands has only decreased confidence in its products, its brand and its share price.
Moreover, the issue has also battered the image of Wowprime chairman Steve Day (戴勝益), who has for many years been seen as a paragon among Taiwanese bosses, along with Taiwan Semiconductor Manufacturing Co chairman Morris Chang (張忠謀), Hon Hai Group chairman Terry Gou (郭台銘) and Asustek Computer chairman Jonney Shih (施崇棠), according to various government polls and online job bank surveys.
Even so, it is the vendors working in various night markets and street stalls nationwide who have borne the brunt of and suffered most from the adulterated cooking oil scandal, as evidenced by the 2.55 percent growth from a year earlier in the nation’s food and beverage consumption in the third quarter, which was almost half the 4.58 percent annual increase seen in the second quarter.
Clearly, the food scandal’s impact on the nation’s economy is significant. The Directorate-General of Budget, Accounting and Statistics on Friday said that the reduced sales at restaurants after the first of the oil scandals broke in September dragged down the nation’s private consumption by NT$2.4 billion (US$78.75 million) and led private consumption to grow by just 2.43 percent from a year earlier last quarter, the lowest growth since the fourth quarter of last year. The issue hit GDP growth in the third quarter by 0.05 percentage points, the agency said.
While the Ministry of Economic Affairs estimates that exports might decrease by NT$2.3 billion this year if a ban on Taiwanese food imports by several countries continues until the end of the year, the impact of the latest food scandal will be longer-lasting. First, growing suspicions cloud the reputation of the nation’s food and quality service. Second, the effort to build a solid image of products made in Taiwan face an uphill struggle.
An obvious challenge facing the nation, especially top business leaders, is how to promote the idea of corporate social responsibility after the government’s pro-business attitude has only triggered public anger toward the corporate sector. Although Ting Hsin’s wrongdoings are set to lead to more oversight of the corporate sector’s operations and investments — economically, socially and environmentally — this issue offers a hard-earned lesson for businesses that getting rid of a bad reputation is difficult, but losing a good one is all too easy.
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