Corporate Communications Conference
Group Corporate Affairs of the Jardine Matheson Group
Luncheon Address
Best practices of customer complaints handling; Trends of consumer rights in Greater China,
Connie Lau
Chief Executive
Hong Kong Consumer Council
Thank you for inviting me to share with you on 2 issues – i.e. consumer complaints handling and the consumer protection in China.
It is interesting to note that the companies within your Group cover a wide cross section of the economy. Accordingly, the consumers you have to deal with could be seen as very different.
For example, those working in the Group 's consumer goods retail arms, property, and construction could be seen as having different sets of problems depending on the people they deal with.
This is true to a large extent. However, what I suggest is that despite the differences, you all have one overriding concern. And that concern is 'people management ' . It is through practicing people management skills that you will be able to achieve the ultimate goal of your company. And that goal is of course, to provide the best goods and services, and achieve the best returns.
As US President Theodore Roosevelt once said "The most important single ingredient in the formula of success is knowing how to get along with people". In other words, "people who fight fire with fire will only produce ashes".
The Consumer Council has a long history of dealing with people in a range of different and difficult circumstances.
Consumer Council – people focused organizationl
The Council is a people focused organization, and our business is almost always dealing with consumer complaints. If you think it is bad having one angry customer complaining about what your company, or your staff have done, just think what it is like for Council staff. Virtually all of our customers are complaining about something or other.
But then again, dealing with complaints is a big part of our business and a major reason for our existence. So I shouldn 't protest too much. If everything was just fine, my staff and I might soon be out of job.
In fact, having regard to the level of complaints received every year the continued existence of the Consumer Council is probably very safe. Over the past year the Council recorded the highest number of complaints ever, at 44, 409 cases. This is 21% greater than the previous high of 36,847 received in 2007-08. The major forms of conduct complained of related to sales practices , prices and quality of service.
The surge of complaints was mainly attributed to a large volume of complaints in the financial services sector (11,928) alleging improper selling tactics. In particular, Lehman Brothers investment products alone attracted 10,689 complaints. Typically, however, telecommunications remained the largest product category of complaints.
One comforting aspect in the total figures was that complaints from tourists have gone down 27% compared with that in the previous year. Complaints from Mainland tourists also dropped 31%. The most significant drop was complaints lodged by Mainland tourists involving shopping arranged by to ur guides. This was 66% lower than the previous year. This drop in numbers is the result of joint efforts between the Council, the Police, and the Customs and Excise Department to mutually refer relevant cases to protect shoppers ' rights and to combat sales malpractices.
Consumer Complaints are Warning Signs
You might think that the Council is working at the opposite ends to what your companies are trying to achieve, and our experience s and processes are therefore different. However, I don't think that is really the case.
We are all trying to achieve the same sort of outcomes for society. In other words, an efficient and effective free market, where the needs of business and consumers are met for mutual benefit. Accordingly, both side deserve equal respect.
With regard to consumer complaints are concerned, the experience you get in dealing with consumer complaints provides a valuabl e insight into what is happening in the marketplace. Consumer complaints provide important warning signs for both business and the Council.
As far as the Council is concerned, consumer complaints indicate possible failings in the safeguards that society is expecting Government to provide in the legislative and administrative framework.
As far as business is concerned, complaints indicate possible failings in the way the business is conducting itself. These can point to possible detrimental outcomes to future market share and profitability.
Dealing effectively with consumer complaints can avoid unfavourable publicity. Efficient complaints management gives an opportunity to upgrade the quality of service of the business concerned, and thereby increase its competitive edge. Importantly, the complaints and how they are handled provide valuable feedback to management on how staff are performing their duties.
Dealing with Consumer Complaints
The Council puts a lot of effort into training its staff on how to deal with complainants. And as I noted earlier, we together with you are both seeking to achieve similar objectives. I think the best advice I can give to you, in dealing with consumer complainants, is no different to that which forms the basis of our own staff training.
There are twelve basic principles – observed by HKCC staff - we stress that staff must observe. These are as follows.
1. Make Notes. Records must be accurate, brief and precise. Contents of the complaint record should cover the complainant's name, address, contact phone number, time, date, the event and related persons. Emphasize the need for facts and ask simple short questions.
2. Remain Neutral. Don't take the complaint personally. Don't jump to conclusions too early.
3. Hearing only One-side of a Story is Dangerous. Don't instantly concur with what the complainant has said. Simply tell the complainant we will collect more information to verify the complainant's side of the story.
4. Everyone is Different. Remember that not all complainants' situations are exactly the same. In particular, where there are a group of complainants, each complainant must state their own complaint individually.
5. Don't Attack Mistakes. In the course of receiving complaints don't point out to complainants that they have made mistakes. For example, avoid saying "I know you won't like hearing this, but you shouldn't have done that".
6. Guard Against Inaccurate or Incomplete Information. Wrong information collection may be due to inattention, misunderstanding or miscommunication. Clarify points that are not clear and repeat back what you have heard the complainant say, to make sure you have the story right.
7. Be Clear in What You Will Do. Set a Time Frame and make commitments you will be able to fulfill. Set boundaries on what you will and won't do.
8. Beware of Made Up Stories. Carefully watch the complainant's attitude in making allegations. Tell the complainant that you will contact the persons complained against before getting back to the complainant. If possible, attempt to check the allegations through other sources.
9. Clarify Requests from the Complainant. Ask "what do you want to be done?" so it is clear in both minds how this matter will proceed. Ask "do you want to keep this complaint confidential?" in accordance with the Privacy Ordinance.
10. Emotional Complainants. Trust your instincts and call on someone for assistance if you feel insecure because of a complainant's behaviour. It is better to be safe than to be sorry.
11. Complex Situations. Be aware that some allegations may involve or may escalate to criminal offences. These could involve either you or the party complained of. Be aware of complainants who say they have a hearing or language barrier. Don't meet these persons alone since circumstances might turn against you.
12. Periodical Review of Complaints. Analyze complaints periodically to review areas of consumer dissatisfaction. Identify strengths and weaknesses in the services rendered.
As you can see from these twelve principles, the Council has a very thorough and careful approach to handling consumer complaints.I would commend these to you in developing consumer complaint handling processes within your own areas of responsibility.
Consumer Protection in Greater China
"Consumer protection in Greater China is in a const ant and rapidly evolving state. It exists at the city, province, and national levels, backed by a variety of administrative efforts and literally hundreds of consumer associations. Some of these associations provide similar services to that of the Hong Kong Consumer Council and publish magazines similar to our magazine‘ Choice ' . The Hong Kong Consumer Council has provided assistance in the development of consumer advocacy in China and regularly liaises with its counterparts.
The mechanisms by which consumer rights are being achieved in China include government action, public advocacy, and enlightened self-interest on the part of corporations.
The Government has introduced various product safety and environmental laws, including enforcement and sanctions.
Law on Protection of Consumer Rights and Interests
The major piece of legislation governing consumer protection in China is the Law on the Protection of Consumer Rights and Interests. This law came into force in 1994, and sets out consumer rights and the obligations of business. It also provides for agencies of the state to punish, through criminal offences, businesses that violate legal consumer rights and interests under
Increased publicity given to enforcement of consumer protection laws, has reinforced awareness that consumers have the right to make complaints against unfair business practices and have them addressed. This is particularly so with regard to faulty products.
The existence of these laws, and the publicity given to effective enforcement of the laws plays a large part in determining consumer confidence, in addition to underlying economic conditions. A 2009 McKinsey and Company Annual Chinese Consumer Study on consumer confidence noted that there has been a shift from making purchases based on brand, to that of value for money. The report also noted there has been an expressed desire to collect information from the Internet and other sources before making purchasing decisions. This points to an increasing level of consumer sophistication. It also points to the need for consumer associations to make sure that their information on product comparisons are up to standard, and for businesses to ensure they provide value for money.
Corporate social responsibility is also an emerging principle and is driven in large part by multi national corporations operating in China. These corporations have accepted the need to accept their responsibilities in the developed economies where they operate, and where there has been a longer history of consumer advocacy.They also recognize it makes good business sense to be portrayed as socially responsible.
As to the future, it can be expected that traditional Chinese values will to some extent underpin the direction in which consumer protection will evolve. However, there is also a keen appreciation of the need to learn from and adopt the more successful aspects of consumer protection laws and enforcement procedures in other countries.
MOU with US Federal Trade Commission (2007)
In this regard, the government body that has overall supervision of China's consumer protection framework, the State Administration for Industry & Commerce (SAIC) signed a Memorandum of Understanding in 2007 with the US consumer protection agency, the Federal Trade Commission, to promote consumer protection cooperation.
Similar MOUs have been signed between the Federal Trade Commission and other countries. The MOU is designed to foster greater policy-level cooperation in consumer protection matters affecting both nations. It is described as a"best efforts" agreement that is not legally binding and does not alter either country's consumer protection laws. The key provisions are:
- exchanging views on consumer protection policy is sues of common interest, and exchanging information concerning consumer protection laws and regulations; and
- collaboration in the holding seminars or other events, and mutual visits relating to consumer protection issues.
Member of International Consumer Protection & Enforcement Network (ICPEN)(2006)
Another important fact to note is that in 2006, the SAIC became a member of the International Consumer Protection and Enforcement Network (ICPEN). ICPEN is the worldwide organization of trade practices law enforcement authorities of forty countries, most of which are members of the Organization for Economic Cooperation and Development.
Members of ICPEN share information about cross-border commercial activities that may affect consumer interests, and encourage international cooperation among law enforcement agencies.
The fact that such an organization as ICPEN exists, and that memorandums of understanding are being signed by many countries, means that the framework for addressing consumer protection is evolving in line with the globalisation of markets.Therefore, as a result of these efforts, the ability for unscrupulous traders to hide behind borders is decreasing.
The Legal Framework in Hong Kong
In 2008 the Consumer Council made a submission to the Government in which it identified consumer protection laws that required urgent review. For example, amending the Trade Descriptions Ordinance to cover services, not simply goods as is presently the case.
The Council also recommended a new enforcement framework that would be integrated with existing consumer safeguards that are spread throughout various other pieces of legislation and agencies. The Council recommended the creation of a comprehensive consumer protection law (the Trade Practices Statute) to be administered by a public enforcement agency. The basic framework would provide general consumer safeguards against misleading or deceptive marketplace conduct in the form of a basic ‘safety net' that could adapt to the many situations that arise in Hong Kong's economy.
Following a recent meeting between the Government and the Council to discuss the submission, the Government stated it should be able to make the recommended amendments to the Trade Descriptions Ordinance. As to the other matters raised by the Council, the Government acknowledged that consumer protection was something that it had to constantly do for the interest of the public. It also acknowledged the need for a legislative framework that clearly defined what should be regarded as unfair trade practices, given the concerns that consumers have expressed regarding unfair sales practices.
Conclusion
Throughout this speech I have been referring to the term 'consumers'. However, there is a common saying that "consumers are statistics, but customers are people".
This points to a critical issue that we all have to be aware of. And this includes the Council as well as business. We deal with people and we have to satisfy the demands of people, with concerns similar to our own.
Problems that arise in the marketplace through unscrupulous business practices can have serious consequences that affect the well being of people; ranging from financial distress to personal injury.Moreover, each person with whom we deal is an individual. As such they should be appreciated for the contribution that each brings to the marketplace.
At the end of the day we all share common expectations and are worthy of the respect and protection that is a characteristic of an orderly and fair society.
Of course, it is not easy to please everyone. And not everyone can appreciate the difficult task that you and I have in providing an efficient service. There is always the competing demand of value for money that customers want, and the reality that service providers have to incur costs and make a significant effort to provide that value.
This is best summed up in the joke about two competing barber shops. Both of the barbershops were in red-hot price competition for customers. So one shop put up a sign advertising haircuts for a very low 7-dollars.
His competitor then put up a sign that read, "We re pair 7-dollar hair cuts."