Seller Beware

It all started with a couple of pairs of earphones. In 1995 in Beijing, Wang Hai spent $20 on what were billed as state-of-the-art Sony headphones. The amalgams of plastic and wire were, as often happens in a country infamous for fake or questionable products, not quite functional and not quite Sony. But China had enacted a consumer-protection law the year before that gave a bit of muscle to the nation’s beleaguered shoppers. So Wang, who studied law in college, bought 10 more faulty earphones and took his case to the Beijing Municipal Administration of Industry and Commerce. He was hailed as the first person to test China’s consumer-rights legislation—and he won, receiving double the price of his losses from the shop. Successful legal efforts against purveyors of pirated shoes and clothes followed. “No one understood what I was doing,” he recalls. “They said, ‘How can you make money from other people’s fraud?’ I said, ‘I am standing up for the consumer.’”

Since that landmark civil action nearly two decades ago, Wang, now 40, has forged a business empire fighting for consumer rights. One company investigates corporate malfeasance. Another of his firms focuses on the rights of property owners: in China, the real estate market is so frenzied that many apartments are sold even before the ground is broken, and unscrupulous developers often promise more than they deliver. Yet another venture tracks brand pirates. Besides helping individual consumers, Wang also consults for the Chinese government and tracks counterfeits for multinationals.

Wang gives lectures on consumer rights at universities and runs a free consumer-complaints hotline. He has hosted TV shows. His targets have included large state-owned telecom companies, which he successfully urged to release more-detailed phone bills. In a nominally communist nation where the contest of capitalism runs largely unchecked by state oversight, Wang’s is a vital voice. “China’s biggest challenge is that it has to evolve from giving profits to those who cheat and run overprotected monopolies to rewarding those who innovate,” he says. “How can China continue to grow and be competitive if it doesn’t value quality?”

China may have laws—after all, its civilization boasts one of the deepest repositories of legal knowledge in the world. But rule of law is often elusive, and corruption rife. Consumer rights is one of the few areas in which individuals can triumph and use the law to their advantage. Still, Wang’s shock tactics can land him in trouble. When he first started out, his legal campaigns pursued small-time operators. But Wang now exposes bigger fish, often linked to the state. After Wang accused a major detergent company of using unsafe ingredients, the propaganda office of the city district where the firm is based publicly attacked him in official media.

In 2013, China’s consumer-protection law was enhanced for the first time since 1994. Now compensation for a faulty product has been raised to a maximum of three times the loss, as opposed to two. To Wang, that’s not enough. “The consumer-rights law in China still values the company over the customer,” he says, noting that China doesn’t have an independent consumer-rights association. Local media are complicit, too, taking payoffs in return for favorable write-ups of certain brands.

A string of safety scandals—poisoned milk powder, fake drugs, even watermelons that explode from an overdose of growth hormones—has made the Chinese preference for imported products more than just a matter of taste. Among Wang’s favorite targets are Chinese companies that could pass as foreign brands by using seemingly Western names. Take the case of the curiously named Jissbon, one of the most popular condom companies in China. (Its Chinese rendering uses the same characters as James Bond’s name in Mandarin.) Wang knew that many Chinese thought the condom manufacturer was a trusted British brand even though friends in Britain couldn’t find Jissbon condoms there. Wang discovered that Jissbon’s first trademark was Chinese, not British. Most of the company’s directors were based in Wuhan, a central Chinese city. (Ironically, Jissbon eventually did become a foreign brand when Australian condom­maker Ansell acquired it.)

Wang’s crusading doesn’t exclude non-Chinese companies. In 2012, he publicly chastised Nike for having released a line of basketball shoes in China that had one air cushion while similar sneakers produced for other markets had two—and were less expensive. Nike said there was a mix-up in its publicity materials, and offered refunds.

Yet Wang famously wears American Ray-Bans as part of his swashbuckling consumer-superhero getup. His clothes come from Japan’s Uniqlo and Timberland, the American retailer. “I love my country,” says Wang, “but if I can help it, I will not buy Chinese products. You can’t trust most of them.”

That’s a preference millions upon millions of his countrymen share. This trust deficit may have profound consequences. “You won’t find a visionary company like Apple in China until companies here consider the customer invaluable,” Wang says, iPhone in hand. “The fate of China’s economy depends on how it treats its consumers.”

— With reporting by Gu Yongqiang / Beijing