|

To survive a corporate scandal or to crumble

by Jun Hongo

Reflecting a year that was jam-packed with food makers’ scandals, including false labeling, the Japan Kanji Aptitude Testing Foundation announced earlier this month that “nise,” meaning “fake,” best symbolized 2008 in a single character.

But despite breaking the hearts of fans of Shiroi Koibito chocolate cookies by lying about their shelf life, Sapporo-based Ishiya Trading Co. came back in style following a self-imposed three-month sales hiatus.

“Sales of Shiroi Koibito have tripled in comparison to the same period last year,” Hiroaki Ogawa, spokesman for the scandal-hit confectioner, told The Japan Times. “We’ve improved the chocolate and cookies used in the product, while also revamping our production management.”

With the cookies in short supply across Hokkaido, Ishiya revved up its production line to a maximum 500,000 cookies a day since resuming sales Nov. 22.

“Our customers have supported us by trying out our new Shiroi Koibito cookies, and we pledge to live up to their expectations and act responsibly,” Ogawa said.

While the public received a number of apologies in 2007 — including one by bolting Prime Minister Shinzo Abe — only a handful of parties successfully navigated the treacherous waters of PR damage control and survived.

Ishiya appears to have passed the test with flying colors, lawyer Shigeru Nakajima said.

An expert on corporate transactional law, Nakajima explains the key components of a successful televised apology: Bow for five seconds, do not wear a light-colored suit and never, ever smile in front of the press. In his book “Sono Kishakaiken Machigatte-masu” (“That News Conference is Incorrect”), which analyzes publicity control during a corporate crisis, he writes that the response to a scandal often determines the fate of a company.

“Ishiya quickly went public and acknowledged its responsibility, while also announcing from an early stage that an outside team would be brought in to avoid further malpractice,” Nakajima said.

When its unethical practices came to light in August, Ishiya selected a new president, renewed its board members and invested some ¥1 billion to sanitize its factory and print the expiration date on each individual packet of cookies in every box. The revitalized company also brought in an external panel of experts to ensure legal compliance.

Faced with the shortage of Shiroi Koibito cookies after sales restarted, Ishiya even announced that it won’t ramp up production any further — out of fear it would harm quality control.

On the flip side, Hokkaido-based Meat Hope Co., which at first denied using pork and chicken in products that were labeled 100 percent beef, went bankrupt a month after its scandal broke.

The meatpacker’s president, Minoru Tanaka, denied the allegations all the way up until his son, a board member of the company, prompted him to come clean in the middle of a televised news conference.

Tanaka and three former Meat Hope executives were eventually arrested on suspicion of violating the Unfair Competition Prevention Law, and the company accumulated some ¥670 million in debts before going bankrupt.

Tatsuo Yamada, executive director of the Tokyo-based Japan Society for Corporate Communication Studies, explained that Meat Hope’s plummet was deserved because of its appalling PR performance and lack of sincerity.

“Meat Hope allowed the issue to fester, while Ishiya confessed its unethical conduct without guile,” Yamada said.

“If done right, a televised apology can have a positive effect,” he said of Shiroi Koibito’s tripled sales — proving the old adage that, at least in some cases, there is no such thing as bad publicity.

Also Out There is an occasional series focusing on hot topics, people, events and trends in today’s Japan.