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September 04, 2006
Bloggers 1, Hon Hai 0
A big win for China's bloggers. The country’s online corporate watchdogs yesterday scored a major victory with the announcement that Hon Hai Precision, the Taiwanese manufacturing giant that produces iPods and just about every other electronics product you can think of, was withdrawing its lawsuit against two Chinese journalists who had reported critically about working conditions at a factory in China. A Hon Hai subsidiary had sued the two reporters last month in a Chinese court for defamation but that prompted a storm of online criticism of the Taiwanese company. (Here's a link to the Chinese-only blog set up by the two reporters.) Hon Hai started to back down last week when it revealed that it was reducing the amount of damages it was seeking to just 1 yuan – or 13 cents. Now the company has given up completely and withdrawn the lawsuit.
Online criticism of President Hu Jintao or other top Chinese leaders of course remains taboo, but it’s perfectly kosher for bloggers and bulletin-board users to go after big-name foreign companies. See this BusinessWeek story I did last month about online criticism of Dell and other multinationals. This Hon Hai case is the biggest victory to date. In the U.S., bloggers hit the big time when they helped bring down Senate majority leader Trent Lott and CBS anchor Dan Rather. China's blogosphere can't claim all the credit for getting Hon Hai to retreat from its lawsuit, since the country's traditional media definitely joined in the parade of critics. But without pressure from irate Chinese denouncing Hon Hai online, I doubt the Taiwanese company would have given up so sheepishly.
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Spot on, Bruce. What a shock to Hon Hai to realize that it is no longer enough for them to ship on time at an appealing price.
The critical question is whether Hon Hai has learned from this experience, or whether they see this as an abberation rather than a harbinger of the way their world has changed.
Hon Hai has done a superb job growing into a $20 billion company essentially beneath the world's radar. It no longer has that luxury, and this change is going to mean that the company will have to take greater care in the way it operates if it wants to continue to grow.
The alternative, of course, is to lurch from public crisis to public crisis until its customers begin looking in earnest for alternatives lest THEY find themselves facing uncomfortable questions.
Posted by: David Wolf at September 4, 2006 09:40 AM
Thanks Bruce for reporting this news.
I saw WenBao's blog. It is great?
But, I wish that the blog and he himself could be protected by Sina.com or the Chinese government.
There were a lot of cases in Chinese history of these kinds of lawsuits. Some Chinese people were treated badly by the Chinese government during the lawsuit period. I've been told that those people will resign or relegate to the background. But, I believe it will change, just need time.
Posted by: Louise at September 9, 2006 03:37 AM