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In March, a viral video alleging that a customer had urinated into a hot pot at a Haidilao restaurant sparked widespread public concern and cast a shadow over the popular Chinese hot pot chain. While the authenticity of the video could not be independently verified, the reputational damage was significant.
Now, a court ruling has shed light on the legal aftermath of the incident and its implications for corporate brand protection in China. The Huangpu District police in Shanghai previously confirmed that two 17-year-old males, identified as Tang and Wu, were apprehended and given administrative detention in connection with the event.
While the incident’s direct financial impact on Haidilao’s bottom line remains unclear, industry estimates suggest the cost of handling the PR crisis at the affected Bund-area location likely included covering customer refunds and offering compensation. Some reports indicated this compensation could have reached between $2.1 million and $2.5 million USD.
The court has now ordered Tang and Wu, along with their parents, to issue formal apologies in designated publications to both Sichuan Haidilao Catering Co. and Shanghai Haidilao Catering Co., while protecting the minors’ privacy. Furthermore, the parents were ordered to pay approximately $18,000 USD for utensil damage, cleaning, and disinfection costs. More substantially, they were also ordered to pay around $301,000 USD in combined compensation for business losses, damage to brand reputation, and associated legal expenses. The court also specified that the compensation would be paid from the teenagers’ own assets first, if applicable, with the parents covering any remaining balance.
The *People’s Daily*, the official newspaper of the Chinese Communist Party, weighed in on the case, stating that “minors participating in social activities should respect social ethics and abide by public order.” This highlights the broader societal expectation of responsible behavior, irrespective of age, and the importance of safeguarding public interests.
Legal experts suggest the ruling sends a clear message about corporate liability and the importance of protecting business interests. Zhu Xiaozhe, Vice Dean and Professor at Shanghai University of Finance and Economics Law School, commented that the judgment serves to remind the public that guardians bear the primary responsibility for supervising the behavior and shaping the values of minors. It also asserts that the law should protect businesses from illegal interference and that any behavior that infringes on a company’s property rights or commercial reputation should be subject to legal constraints. He further stated that judicial decisions play a vital role in building an orderly and fair business environment guided by the rule of law, emphasizing the role of the legal system in fostering a secure and predictable economic landscape for businesses operating in China.
This case serves as a reminder for companies operating in China of the importance of crisis management, brand protection, and the potential for significant legal and financial repercussions resulting from incidents that damage corporate reputation. The ruling also points to the increasing scrutiny and accountability applied to individuals – and their guardians – for actions that negatively impact businesses.
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