UPON hearing that some Haagen-Dazs ice cream was processed in an ordinary apartment without a sanitation permit in Shenzhen, Xu Guoying at first thought, ¡°It can¡¯t be true¡±. Then she became furious.

¡°I felt so disgusted and cheated by this reputable foreign brand,¡± said the accountant at an American oil company in Shenzhen, who claimed to be a devoted fan of Haagen-Dazs, produced by General Mills.

In the last two months alone, Xu has spent over 1,000 yuan (US$121.07) on the ice cream, including a birthday cake for her husband. The couple developed a taste for Haagen-Dazs ice cream years ago when they lived in the United States. Their taste continued after they returned to China, even though Haagen-Dazs ice cream ¡ª a luxury brand in China ¡ª is much more expensive here.

Although the ¡°black kitchen¡± only provided ice cream cakes for five franchised Haagen-Dazs stores in Shenzhen, Xu felt her years of trust melt away within a day.

Trust crisis

In recent months, a painful ¡°trust crisis¡± has involved far more companies than Haagen-Dazs. A number of multinational companies (MNCs) have been found either with quality problems or in violation of Chinese regulations. Their names are very familiar to the public: KFC, P&G, Heinz, Unilever, Nestle.

In early March, the illegal dye ¡°Sudan-1¡± was detected in products sold by KFC and Heinz. Then, Kraft Foods¡¯ Ritz crackers and Campbell Soup Company¡¯s Golden Corn soup were found to contain ingredients made from GM (genetically-modified) soybeans after testing sponsored by the environmental activist group Green Peace.

In the same month, P&G was fined by the Industrial and Commercial authorities due to exaggerated claims in SK-II cosmetic advertisements.

Most recently, the level of iodine in Nestle¡¯s Golden Growing 3 Plus Baby Formula exceeded national standards.

In past decades, MNCs have introduced new products and management concepts to China and have transformed their reputations for reliability and quality into broad consumer loyalty. This was probably facilitated by the recent popular Chinese philosophy: ¡°Things from the West are always good.¡±

However, the recent quality crisis affecting NMCs has dissipated such dreams, and consumers have begun to raise the question: ¡°Should we be so trusting of MNCs anymore?¡±

Professor Xue Qiuzhi of Fudan University, a leading researcher of MNCs in China pointed out that it was mere coincidence that these crises had occurred in a short period of time, but Chinese consumers should still try to adopt a more reasonable attitude towards MNCs.

¡°Actually, MNCs are like all companies, whose basic principle is to maximize profits. Consumers need to realize that MNCs are neither vampires nor philanthropists,¡± said Xue, associate dean at the Management School of Fudan University.

¡°In a growing market, MNCs soon lose the ¡®aura¡¯ which attracted consumers and instead show their real nature.¡±

Twenty-eight-year-old Chen Yan is a member of the generation growing up with MNCs. She is familiar with their ads and trusts their products. Her favourite ads are for Nestle¡¯s instant coffee ¡°Wonderful Taste¡±.

¡°I will be more careful when choosing MNC products ¡ª higher price and good social image may not guarantee quality,¡± said Chen.

Meanwhile, researchers said the trust crisis has seriously damaged the reputations of the MNCs involved and the loss could be huge without proper crisis management.

¡°It takes a long time and hard work to build a brand and cultivate consumers¡¯ trust, especially in a market with intense competition,¡± said Wei Feng, associate researcher of Cheung Kong Graduate School of Business.

¡°I will never buy any Haagen-Dazs products. How could a renowned brand do something so wrong,¡± Xu Guoying told the Shanghai Star.

Double standards

During the Nestle baby formula crisis, Wu Diming, who has a six-month-old son in Beijing, found the company¡¯s attitude and delayed apology disappointing.

¡°How can MNCs treat Chinese consumers so differently?¡± she asked.

Dr Mei Xinyu from the Research Institute under the Ministry of Commerce criticized MNCs for being prejudiced against consumers in China and other developing countries. He cited Kraft¡¯s GM food as proof.

Even though MNCs are applying different standards in China than in other countries, they usually comply with Chinese standards and regulations.

¡°Generally, MNCs have thoroughly studied local regulations, laws and supervision when making investment planning. Differences in laws and regulations, which promise lower costs, are part of the reason why MNCs invest in developing countries in the first place,¡± said a legal consultant in a foreign law firm who asked not to be named.

Some MNCs apply global standards and international conventions which means their practices are the same in all their branches worldwide. Other MNCs choose to abide by local standards which differ in strictness in various areas.

¡°Generally, China has lower standards for companies such as quality control, the release of waste water, waste gas and chemical poison release. For this reason, MNCs could not be blamed for double standards because they do not violate laws,¡± said Xue.

However, analysts said the ¡°double-standard¡± strategy on the part of these companies would hurt the feelings of Chinese consumers in the long term as the Chinese market develops. ¡°MNCs should not underestimate consumers¡¯ awareness of their rights,¡± said Chen.

Experts explain that even if MNCs apply global practices, the poor management, weak executive power and special market environment would cause problems.

Early this week, Haagen-Dazs headquarters in Shanghai explained in a press release that the operation in question was due to the company¡¯s negligent management.

¡°MNCs have global principles, but it¡¯s costly and time-consuming to apply these principles,¡± said Xue. He said that top management of MNCs expect quality standards to be met, but it is hard to instill the importance of these standards in every employee.

¡°Also, lured by the potential profits on offer in the Chinese market, some local employees of MNCs lower standards in practice.¡±

This crisis has also raised an alarm for quality authorities to strengthen the supervision of MNCs, whose products usually are supervision-free.

¡°Generally, our examinations are focused on small and domestic producers which are believed to pose higher risks than MNCs,¡± admitted an official from the Shanghai State Drug and Food Administration.