Opinion / China Watch

Disney fires a broadside at pirates
By GEOFFREY A. FOWLER (WSJ)
Updated: 2006-05-31 12:47

http://online.wsj.com/public/article/0,,SB114902904291766786-pEEJN21OoupMs8G55Bdr8H7KBVs_20060607,00.html?mod=regionallinks

Walt Disney Co.'s latest marketing campaign in China features a nervy gambit: getting consumers to help it weed out counterfeit products.

The company's "Disney Magical Journey" promotion, its biggest Chinese marketing campaign of the year for consumer products, is a twist on the traditional customer-loyalty program. To enter a contest for free Disney DVDs, television sets and trips to Hong Kong Disneyland, customers peel a sticker off a Disney product, attach it to a form, fill in a few personal details and mail it in.


The catch: Only legitimate Disney products carry the specific red hologram-covered stickers, in a market rife with pirated Disney products that often are of similar quality to the real thing.

Fighting these counterfeits is crucial for Disney. Sales of consumer products -- such as stuffed toys and books -- make up the bulk of the company's business in mainland China. Piracy has wiped out most legitimate sales of DVDs, while government regulations bar much of the company's imported programming from being shown in theaters and on TV.

Many products in China feature holograms to help retailers and government officials differentiate legitimate products from counterfeits. But Disney's new campaign is unique in that a consumer-products company is using a promotion to enlist consumers in the process.

In-store ads across the 13 Chinese cities involved in the campaign and regular broadcasts of Disney's "Dragon Club" variety-and-cartoon TV show encourage children to make a game of "finding" the hologram stickers. "Here is an original hologram sticker from Disney products," says one host on the show, pointing to an oversize sticker featuring Mickey Mouse. "As long as you buy the original products, you will get...a chance to win big prizes."

A second component of the campaign plays on 88, a lucky number in China, to encourage customers to increase their Disney purchases. Consumers who spend more than 88 yuan, or about $11, get additional coupons for legitimate Disney products.

In the first three weeks of the promotion, which began April 21 and will end Monday, the company received 250,000 entries for the anticounterfeiting contest and has had to print more entry forms, says Ken Chaplin, Disney's Shanghai-based vice president of retail sales and marketing.

Some customers have even called the company to alert it to retailers selling products without the stickers, says Mr. Chaplin. The calls help Disney alert those retailers selling pirated goods unwittingly that they aren't stocking legitimate goods.

Mr. Chaplin won't say how much the company is spending on the campaign, but he says it has paid for itself. Moreover, the information customers provide on the entry forms helps Disney build its first big database of Chinese consumers -- a prized asset and a challenge for many marketers in China.

How much success the contest will have in curbing the sale of counterfeit goods remains to be seen. Some piracy fighters say the hologram stickers are a flawed solution, because pirates can copy them, too.

China's biggest consumer-products marketer, Procter & Gamble Co., doesn't even bother adding them to products. Shannon Young, the greater-China team leader for brand protection at P&G, says he has yet to come across a reasonably priced technology that can't be mimicked.

Disney's Mr. Chaplin says it would be very difficult and expensive to pirate his company's holograms, because they are so technically advanced. But he adds that Disney is at work on a technology that would let consumers send a message on their cellphones with a number printed on the hologram to verify whether the sticker -- and the product -- are legitimate.