China Zhongwang Holdings
[Agency: Porda Havas]
Challenge: On Sept. 14, 2009, The Economic Observer, one of the most influential financial media in China, published an inaccurate article that claimed that Zhongwang Holdings had fabricated sales to its top 10 customers in its listing prospectus. The newspaper claimed it had received an anonymous allegation, which was said to have been verified by ZW. Many other news portals picked up the story. After the article was published, ZW’s share price dropped by more than 10 percent.
Actions: ZW, the world’s second-largest industrial aluminum extrusion product developer and manufacturer, is a client of Porda Havas. We alerted management to the news article, put our crisis management operation in place immediately and worked closely with ZW throughout the process. The Economic Observer, which was alerted of its mistakes, carried out subsequent investigations and accepted that the contents of the article were seriously inconsistent with the facts. We advised a media conference with ZW’s major clients and an audit committee to conduct an independent review, then a conference call with investors about the results.
Results: The Economic Observer publicly apologized to ZW and its investors through its official website and the newspaper on Sept. 16, 2009. It published a correction to the inaccurate article, and we circulated the key message about ZW—that the company is dedicated to maintaining transparent communications—through media and research reports to better enhance the understanding of ZW and improve investors’ confidence level. ZW’s corporate image has improved, its brand awareness has increased and its share price has stabilized.