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Published by:
RSM Case Development Centre (2012)
Length:
16 pages
Data source:
Published sources

Abstract

SK-II is Proctor & Gamble's (P&G) high-end skincare product line, made in Japan and exported to China. It entered the Chinese market in 1999 after taking off in neighboring Japan, and became a top premium cosmetics brand within a few years. Two consecutive product safety scandals in 2005 and 2006 stopped its growth momentum, however. P&G's denial and repeated emphasis on own technical expertise as well as its meeting international safety standards inflamed Chinese consumers. Angry at this American multinational's arrogance, many speculated that the incident was Japan's retaliation against China in their ongoing political and trade disputes. Facing vehement official and public denunciation, P&G had to suspend sales of SK-II just 8 days after the crisis broke out. Although the Chinese government declared SK-II's innocence shortly after, SK-II's negative brand image stuck. Almost a billion-dollar brand in 2006, SK-II has dropped off P&G's key product as of 2007. Despite being one of the most socially responsible companies in Asia, P&G suffered serious reputation damage.

Topics

P&G; Procter & Gamble (P&G); China; Japan; Product safety; PR; Corporate communication; Crisis management; Conflict management; CSR; Institutions; Rent seeking; Nationalism; Protectionism
Location:
Industry:
Other setting(s):
2005-2007

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