Ben DiPietro, The Wall Street Journal’s Risk & Compliance Journal, February 8, 2016
Food processor OSI Group is this week’s crisis candidate, as it has taken an aggressive stance to fight a court ruling in China finding the company sold “inferior products” to fast-food chains. U.S.-based OSI called the ruling inconsistent and said the charges against it were part of a “smear campaign” by the Chinese authorities. OSI, by going public with its criticism of the Chinese justice system, is going against the norm for how western companies solve disputes in China.
Saying it can “no longer accept injustices against our people and our reputation,” the company said in a statement it is considering an appeal of the verdict. The company also is considering legal action against Dragon TV, which it said made “false and incomplete accusations” against the company.
Using only the statements made by OSI since the verdict was announced, the crisis experts evaluated the decision to challenge the government publicly—is it one they would have advised the company to take? Did the company’s response strike the right tone? If not, how could it have been better? What are the next steps you would advise the company to take?
Davia Temin, president and chief executive, Temin and Co.: “Occasionally you have to fight back. That is where OSI finds itself–and with good reason. There is a formula that has emerged among non-Chinese companies accused of wrongdoing in China, whether with or without reason: First you apologize, then you negotiate, then you make reparations, you make some changes and then come back gingerly from the brink. Companies privately bridle at needing to give in to what they see as blackmail to retain operations in the country but they do it anyway.
“OSI is different in several ways. First, it is private and thus has more financial latitude. Second, 10 of its people have been jailed or sentenced to jail, some for up to 17 months, with more jail time to go. This can be life-threatening. Third, it tried the formula and it hasn’t worked, so what option is left when the company feels it was set up, unfairly accused and unfairly judged? Either capitulating totally or fighting back. They have, courageously, chosen to fight.
“Its press statement is very well done–strong, clear, unequivocal. OSI doesn’t repeat the allegation, nor does it seem unreasonable or overly emotive. It just will not accept proceedings they find seriously wanting. In so doing, it is raising an issue that really must be raised. OSI is doing every company doing business in China a favor–it is taking on the fight, publicly. And the timing may just be right to see some kind of positive result.
“While there are some crisis counselors who believe that an organization’s first response in crisis should always be to fight back, that is not my belief. I believe response needs to be based on the circumstance. In this one, OSI has shown it will no longer be backed into a corner, docilely. It is doing the right thing, and in the right way.”
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