The planned release of nuclear wastewater in Japan offers some surprising lessons in crisis communications for international brands in China, writes Qing Na from Dao Insights
With more than one million cubic metres of treated wastewater from the Fukushima Daiichi nuclear power plant due to be released into the sea having been given the greenlight by the International Atomic Energy Agency (IAEA), a mix of anger and fear is spreading across Japan and beyond, including in China.
China became the largest importer of Japanese food in 2022, clocking a total import value of RMB 11.45 billion (£1.24 billion), a 35.2% year-on-year increase, according to the Ministry of Agriculture, Forestry and Fisheries of Japan. Japan is also the second-largest supplier of beauty products to China, exporting approximately RMB 28.62 billion (£3.10 billion) of relevant items between January and November 2022, according to statistics revealed by China’s General Administration of Customs. This accounted for 24.77% of China’s total import of cosmetics, second only to France (24.98%).
But now, products originating in Japan have become red flags to Chinese consumers amid the nuclear scare. As pre-discharge tests were held in June (the actual discharge of the nuclear wastewater is expected to begin this August), boycotts of Japanese products kicked off in China’s digital spaces. Internet users compiled lists of brands, most of which are beauty and skincare brands that are produced in Japan, which have been widely circulated on Chinese social media, propelling relevant hashtags to garner over 300 million views on Weibo and another one million on the lifestyle-sharing platform Xiaohongshu.
“Consumer boycotts of foreign companies may impact sales in the China market in the short term, especially if local Chinese brands offer similar products as an alternative,” Vivian Zhu, Senior Consultant at APCO Worldwide, told Dao Insights.
Among those most affected by the consumer panic was P&G-owned SK-II due to the production facility and assembly line of its star product, Facial Treatment Essence, being situated on the shores of Lake Biwa — Japan’s largest lake and sole source of water used in SK-II’s products, which was alleged to be affected by the nuclear water. The brand’s parent company P&G was quick to reassure consumers that all SK-II products are manufactured in strict compliance with internal quality standards, external regulations and market requirements.
Another Japanese beauty brand, Shiseido, also saw a knock-on effect, resulting in the brand’s shares falling 6.8% in late June, the largest weekly plunge in nearly ten months. As a result, similar action was taken by Shiseido in a bid to soothe public concerns as well as to avoid further financial loss.
In addition to public concerns, analysts warned that governments in the Asia-Pacific region may cite this incident as a reason to increase regulations on companies and require them to supply further details about their manufacturing and sourcing of raw materials in the name of consumer safety. This soon became a reality as Beijing’s customs authority announced in early July that they would ban food imports from 10 Japanese prefectures, including Fukushima, meaning more foreign businesses would fall victim to the backlash.
To mitigate business crises in a situation like this, Zhu said, “businesses should be prepared to communicate the safety measures they are taking to monitor radiation levels in their products and at production facilities.”
“Even businesses that do not currently plan to publicly address the issue should prepare internal statements to shareholders and business leaders on their response, as well as answers to FAQs, should the issue attract additional consumer or government attention.”
Given that the full release of the nuclear wastewater is expected to take 30 to 40 years, “foreign businesses should prepare contingency plans to adjust relevant supply chains in the affected region if they see a long-term impact to their business, especially if countries like China and South Korea impose restrictions on product imports,” continued Zhu.
It is also vital for foreign businesses to closely monitor geopolitical events as possible inflexion points for increased scrutiny over their company’s home country by association, according to Zhu. “While businesses may not want to comment on geopolitical issues directly, they should seek to understand the geopolitical context of consumer boycotts and potential government reactions to anticipate the possible impact on their business,” she added.
If you are a British company working in China concerned about issues such as this one, call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC’s market research and analysis services could help.
