China Consumers Association reports illicit promotions by foreign brands

The China Consumers Association (CCA) has released a report on this year's Double 11 online shopping festival, revealing illicit promotions by some foreign brands. China is strengthening regulations of online platforms to better protect consumers. A buyer of goods from American sportswear brand Converse complained that he spent more money by paying a deposit in advance and the balance later than buying the goods without paying a deposit. A consumer of Italian sportswear brand FILA said that he spent a long time getting a coupon during the brand's live-streaming session, which promised the coupon would provide the largest discount. But the next day, the shop issued coupons with higher values, which were made widely available. The CCA said that Converse and FILA had returned the difference in payments to the consumers, but many other consumers are still waiting to get their refunds.

The CCA report also cited Chinese consumers complaining that France-based L'Oréal was delaying its shipments. L'Oréal was also found to be engaging in false promotions. The brand announced in its live-streaming session it would offer the “biggest discount of the year” with 50 face masks for CNY429. After a few days, consumers found that L'Oréal started to offer a “bigger discount” with 50 masks for only CNY257, nearly half the previous discount.

Li Jiaqi, known as China’s lipstick king for selling 15,000 lipsticks in just five minutes through live-streaming sessions, said L’Oreal Paris had advertised that customers would get the steepest discount for a facial mask if they tuned in to Li’s live-streaming sessions during a pre-sale for the November 11 campaign, China’s largest shopping spree. Consumers later found out they were able to buy the same product at nearly half the price by getting vouchers during L’Oreal Paris’ own live-streaming sessions. Li Min, Partner at Shanghai Hansheng Law Offices, said L’Oreal’s practice could involve deceptive promotion, mainly in the form of false advertisement. L’Oreal Group meanwhile offered compensation and issued apologies to customers, but the incident showed that foreign companies joining live-streaming events could encounter problems.

James Yang, Partner at consultancy Bain, believed the ubiquitous use of live-streaming has become “an additional complication for brands”. “Not only do you have to choose what products, promotions and packages you want to launch on November 11, but now you also have to be very specific on what platforms you will do this on, and why,” he said. The CCA noted that the competitive situation in the market is excessively based on how to cash in on internet traffic. The CCA vowed to be serious in dealing with consumers' feedback, the Global Times and China Daily report.