Nike, Muji-Owner Shares Recover After China Consumer Fraud Exposé

Outside a Nike store in Shanghai, China. — Outside a Nike store in Shanghai. Qilai Shen/EPA/REX/Shutterstock

HONG KONG — Shares of Muji’s parent company Ryohin Keikaku Co. partially recovered Thursday, ending the day down 1.23 percent, after a Chinese state media report accusing it of consumer fraud sent its shares plummeting in morning trading.

The Japanese retailer, together with sportswear behemoth Nike, were among the brands targeted in a Chinese television show segment aimed at uncovering fraudulent consumer practices. Nike shares also took a dip on Wednesday, but closed up 0.66 percent.

The broadcast is an annual show on CCTV, coinciding with World Consumer Rights Day, and in the past has criticized brands such as Apple, Nikon and Volkswagen. This year’s program, a 60 Minutes-style show featuring hidden cameras, singled out Nike for falsely advertising a model of shoes as having air cushions in the heel, and Muji, a lifestyle brand that sells clothing, homewares, and food, for selling food items that are forbidden in China over radiation concerns.

The show prompted quick reactions from both companies.

“In April 2016, 300 pairs of the Nike Hyperdunk 2008 FTB were sold in China with an inaccurate product description stating that the shoe contained airbags,” a statement from Nike said. “As soon as we were made aware, we immediately contacted consumers to offer compensation and apologize for the confusion and inconvenience.”

Ryohin Keikaku blamed a misunderstanding stemming from the products’ packaging, which notes the seller as the Tokyo-based company, along with its Tokyo address. In Japan, companies are required to list the name and address of the company considered to be the seller on food packaging, but are not required to list the product’s place of origin.

It said that the report on CCTV mentioned two products that Muji imports to China that are supposedly manufactured in regions designated by Chinese authorities as having radioactive contamination. These include nine of Japan’s prefectures as well as Tokyo, and importation of food products from these areas is banned.

However, Muji said the two products in question are actually manufactured in Fukui prefecture and Osaka respectively, neither of which are regions on the Chinese government’s list of banned areas, and therefore nothing has been done illegally.

“Food products sold in China that are imported from Japan undergo legal inspection and quarantine, at which time certification of the place of origin is submitted before importation occurs,” the company said.