Bloggers 1, Hon Hai 0

Bruce Einhorn

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 Now the company has given up completely and withdrawn the lawsuit.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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