American supplier let Toyota down

The world's largest carmaker Toyota (yes, they left GM behind in 2008) is in trouble in the US after some of its models were found to have faulty accelerator pedals. Last week, the problem forced Toyota to recall 2.1 million vehicles in the US market. The carmaker has also suspended sales of eight models in the US which used these pedals. It has halted production in five plants in the US for a week to fix the problem.

Last year, Totota had to recall 4.2 million vehicles due to a risk of pedals getting trapped in lose floor mats.

The interesting bit here is that the faulty accelerator pedals were produced by an Indiana-based US company called CTS Corp, a key supplier to Toyota since 2005. Wondering what would have been the reaction if the faulty part had been produced by a Chinese manufacturer in China? But as the fact of this case is, the crazy pedal (it tends to accelerate on its own!) was produced in the US by a US company. So, everyone is now blaming Toyota for quality and safety failure. See, this is what happens when you stop buying GM and run after the Japanese cars, they seem to be saying.

Toyota shares are down on stock markets and so are the stocks of its partner suppliers. While Toyota nurses its wounds, GM, Volkswagen and Honda Motors are likely to benefit.

A market growth at break neck speed may have caused quality lapses at Toyota. But now they have hit the speed breaker. This episode has only added to an already growing belief that quality of Japanese products is not the same what it used to be. Japanese companies will have to work harder to protect their image. Their market-share leadership will be short-lived if they ignore safety, quality, and business responsibility (yes, they are mostly laggards in CR).

McDonald's lawyers at it again

Another interesting episode of McDonald's lawyers going after someone who tries to use the prefix Mc. I came to know of this after Elainecohen's tweet this afternoon.
While McDonald's has the right to protect its brand and trademark from unscrupulous potential rivals, legal action against any and everyone who tries to use the prefix Mc even for things totally unrelated to burgers and fries may be called harassment.
But McDonald's lawyers are not always successful. For example, McDonald's was not lucky in Malaysia. A humble McCurry won the battle against McDonald's.

How to rile both Google and China with one click

A fake YouTube site created by a Chinese young man is challenging both Google and Chinese authorities. Interesting piece on The Christian Science Monitor "Want to rile Google as well as China? Create a fake YouTube site." That is some example of putting pirated intellectual property to some good use!

McDonald's Says "Sorry"

American fast food chain McDonald's has said sorry to Singapore for excluding the pig toy from its collection of 12 animals from the Chinese zodiac. The company apologised in an advertisement published in a prominent local newspaper and said the pig toy will be available soon for buying.

McDonald's had replaced the pig- one of the 12 animals in the Chinese zodiac- ostensibly out of respect to Muslims. Its outlets in Singapore are Halal Certified, meaning the food served is in compliance with the Islamic code. The company presumed -without consulting key stakeholders -that offering a pig toy will annoy its Muslim customers. But the gesture offended some Chinese customers who thought the pig was an integral part of their zodiac and should not be removed. Worse, McDonald's replaced the pig toy with a Cupid thinking that offering Cupid will make a great marketing move as the Valentine Day coincides with the Chinese New Year. Chinese customers were not pleased. They started writing letters to local newspapers and soon various social media forums were buzzing with criticism of the company. Finally, McDonald's realised it had bungled. And ended the controversy with a public apology. The right thing to do.

Companies can avoid making this kind of costly mistake by injecting corporate responsibility into the DNA of the organisation. Embedding corporate responsibility throughout the organisation can equip functional managers to think holistically when making choices or decisions. Corporate responsibility should not be run like a show by the PR guys who have no idea what corporate responsibility is. Going beyond writing cheques to charities or PR generating sponsorships takes more than spin skills. Hiring a competent CR professional may be the first important step companies serious about responsible business should consider. Commitment and support from the top executive and the board are of course pre-requisits.

Google's threat to China not surprising

Wondering why people are surprised by Google's threat to withdraw from China. Agreed, the open threat is unusual given their past feet dragging on privacy issues. But what Google has done now is very much what they committed to doing when they signed up the Global Network Initiative, a multi-stakeholder initiative launched in October 2008 to protect online freedom.

I wrote a feature in Ethical Corporation (Strategy & Management section, Sept 2009 issue) on GNI which is worth revisiting now to understand where Google is coming from and what future course of action it might consider. The feature mentioned examples of what Google, Microsoft and Yahoo (the three first companies which signed up) are doing to implement the GNI principles.

Also worth reading is GNI's statement on Google's new approach to China. The statement begins with "Google’s decision to reconsider its business in China is an indication of the tough choices information and communications technology companies face around the world where respect for human rights is at risk."

Vedanta not out of the woods yet

Vedanta is allegedly illegally constructing structures in the reserved forest area for bauxite minining in India. If true, this can be disastrous for their reputation. The company has not been given a license yet.

The environment and forestry minister says the mining license to Vedanta will be considered only if the company complies with the forest rules and respects the rights of local people.

Conc solar power can solve MENA's water woes

In recent decades,fast-growing demand for water in the Middle East and North Africa MENA)region has translated into a heavy reliance on seawater desalination plants. The resulting increase in energy consumption from fossil fuels is, simply put, unsustainable.

Compared to nuclear, concentrating solar power provides a more effective solution to resolving water, energy and environmental issues in the Middle East and North Africa region.

Read more here.

Chinese authors challenge Google

As an author, Google's arrogant assumption that they have the right to copy any author's work for free to their digital library (Google Books) worries me. Unsurprisingly, Google's action is being challenged everywhere.

In the latest case, Mian Mian, a famous Chinese author has sued Google for an alleged copyright infringement in a Beijing court. She has accused Google of illegally copying her novel Acid Lovers into their digital library. She is seeking $8000 in compensation.

Google is already under attack by the Chinese authors' association who are accusing the search giant of illegally adding hundreds of thousands of Chinese-written books to Google Books, a highly controversial digital library project.

Publishers and authors in the US, Germany, France and other countries have also objected to Google's plan to digitize millions of books for free. Google reached a settlement with the US authors in 2005 when it agreed to pay $125 million to resolve pending cases and agreed to pay part of the revenue to authors and publishers from advertising and sales resulting from their books included in Google Books.

This followed, last year, by a very controversial step by Google where it declared that it will unilaterally digitize books unless the respective authors decide to opt out. In other words, the onus lies on the author or publisher to opt out. If the author does not opt out, his/her book will be digitized by Google without consultation or permission. And Google went ahead with this plan devised by its lawyers.

China Written Works Copyrights Society, a non profit group for protecting authors' rights, has challenged Google's heavy handed approach to digitize books in this fashion. The Society wants Google to apologize and pay compensation for copying its members' books. Google has had multiple rounds of negotiations with the Society to resolve the matter, the latest meeting scheduled for coming Tuesday. If the Chinese group manages to force Google to pay compensation, that will encourage writers associations in other countries to sue and seek a rightful compensation.

Critics of Google's scheme say that rather than automatic Opt In, Google should have adopted an automatic Opt Out plan. In other words, it should not copy a book to its library unless it obtains a written Opt In from the author or the publisher, depending on who owns the copyright.

Google is not the only company which is using automatic Opt In trick to further its own cause. There is a growing trend among companies to use this as a short cut to shore up their profits and undermine the consumers or other stakeholders.

What is ethical way of doing it? What is the right thing to do? Automatic opt in OR automatic opt out?

McDonald's pig in a poke

An unfolding controversy involving McDonald's in Singapore indicates how important it is for multinational brands to have corporate responsibility managers with deep local insight on the ground.

McDonald's rolled out a promotion in the run up to the Chinese New Year, an important sales period for eateries.' The promotion included offering a collection of 12-character Doraemon set representing the animals of the Chinese zodiac calendar. A clever idea from the marketing perspective, indeed. Chinese love collecting the zodiac animal toys, especially during the Chinese New Year. McDonald's offered these collectibles at two dollars a piece if the customer buys a meal.

Somewhere in the middle of the campaign, Chinese consumers discovered that the collection had one animal missing- the pig. The collection would be incomplete without the pig. McDonald's had replaced the pig with a cupid. This upset the Chinese consumers. But McDonald's says it decided to exclude the pig to respect the sensitivities of its Muslim customers. All McDonald's outlets in Singapore are halal certified and the company thought offering a pig toy would be inappropriate.

But it seems McDonald's assumed a bit too much. It has now ended up annoying Chinese consumers. Local blogs and media reports are questioning McDonald's insensitivity toward the Chinese consumers. To make the matter worse, a number of media reports have quoted Muslim consumers and scholars who say there is nothing wrong with offering a pig toy in a halal certified outlet. After all, it's a toy, they explain.

McDonald's lack of cross-cultural understanding points to a common trend among multinational companies who often neglect to deploy corporate responsibility managers with local insight in Asia even though their significant growth comes from the region. Majority of them have left poorly-defined corporate social responsibility functions in the hands of public relations managers who don't view it beyond charitable giving or public relations gimmicks.

What McDonald's should have done was to engage with the Muslim community's leadership to discuss the promotion and the dilemma it faced. It should also have understood that an incomplete collection of zodiac toys will offend the Chinese customers. But an organization can think like this only if it has corporate responsibility drivers on the ground and principles of responsible business integrated into the day to day working of the organisation.

CSR Training Workshops

Here is the link to high quality CSR Training Workshops, launched by Ethical Corporation