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Fonterra’s false alarm shows danger of ‘crying wolf’

Clocktower.

Friday, 30 August 2013

Victoria and Otago Marketing academics provide expert comment on the Fonterra crisis:

Although it is good news that Fonterra received the ‘all clear’ from the Ministry for Primary Industries yesterday, a lot more needs to be done to restore New Zealand’s reputation, say academics from Victoria University of Wellington and the University of Otago.

Dr Hongzhi Gao, Senior Lecturer in Marketing at Victoria Business School and Senior Research Fellow of the New Zealand Contemporary China Research Centre, says the New Zealand government and business communities still have a big job ahead to ensure the official findings filter through to the global market.

“Negativity was so widely spread overseas that a proper public relations campaign needs to be planned and implemented in key dairy export markets, including China. If it is done well, the crisis may be turned into an opportunity for New Zealand’s brand,” says Dr Gao.

Associate Professor John Knight, Department of Marketing, University of Otago, says Fonterra is to be congratulated for carrying out a precautionary recall.

Prof-John-KnightAssociate Professor John Knight

“However, Fonterra needs to ask itself, how did this fiasco evolve in the way it did? With the benefit of hindsight, what could have been done differently?

“If such an event occurs in future—and obviously we hope it doesn’t— Fonterra needs to avoid causing unnecessary hysteria by only releasing accurate and verifiable information. For instance, the mention of a ‘dirty pipe’ conjured up visions of unsanitary conditions and poor manufacturing standards—visions which could do lasting damage to New Zealand’s reputation for having control standards as high as anywhere in the world.”

Dr Knight suggests that at the first hint anything was wrong in March this year, an initial cautionary recall should have been carried out, notifying all channel members that products based on the contaminated whey ingredient were to be embargoed while further tests were conducted.

“There was no need to mention unproven fears concerning the nature of the organism—they could have just mentioned that there was suspected contamination by an organism that had the potential to cause illness. This should have been followed up by rapid, extensive testing to determine the exact nature of the contamination.

“Sounding a strident alarm based on wrong information—essentially ‘crying wolf’—has the potential to weaken response to a genuine crisis some time in the future.”

Dr Gao and Dr Knight have teamed up to study international crises, including the 2008 Chinese milk contamination crisis where Fonterra lost its investment of over 100 million dollars in a joint venture with Sanlu.

For more information contact:

Dr Hongzhi Gao
Tel 64 4 21 113 0518
Email hongzhi.gao@vuw.ac.nz

Associate Professor John Knight
Tel 64 3 479 8156
Email: john.knight@otago.ac.nz

A list of Otago experts available for media comment is available elsewhere on this website.

Electronic addresses (including email accounts, instant messaging services, or telephone accounts) published on this page are for the sole purpose of contact with the individuals concerned, in their capacity as officers, employees or students of the University of Otago, or their respective organisation. Publication of any such electronic address is not to be taken as consent to receive unsolicited commercial electronic messages by the address holder.

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