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APDcolumnist|LingZou
After a glorious financial quarter and the stock price up from its trough in February, Baidu faced perhaps the strongest public scrutiny ever, due to a cancer death case of a college student, Wei Zexi, who was treated in a privately contracted hospital (public in name) recommended by Baidu.
It is not the first time for Baidu to face public accusations of aligning with some private hospital chains that are notoriously known for overpricing service items and misleading customers. But this time, the social media and major domestic press are not pardoning Baidu at all – sina.com has even done an online survey (http://survey.news.sina.com.cn/result/113756.html) on this case, with less than 3% of the survey participants voted for the notion that Baidu should not be held responsible for the death case.
(In this Sina.com headline poll of more than 14,000 participants so far on what responsibility should Baidu take as a search engine, 46.8% of the participants voted that Baidu should not be even doing any sorts of medical advertisements; 39.3% thought that Baidu should inspect in detail of the hospital’s credentials and 11.3% voted for inspection of individual department’s credentials (due to rampant outsourcing in public hospitals). Only 2.7% voted that Baidu should not be held responsible)Screen Shot 2016-05-02 at 4.26.54 pm
The public outcry has been fierce, and Baidu so far has shown discretion in response. But the rationale behind the whole story was rather complicated:
1)Baidu has been trying to exonerate itself from the negative image of placing profit considerations above safety, which has led to a worsened relationship with the “Putian clan”, the largest private hospital chains in China that were alleged to be the culprit in this case;
2)Laws and policies were in place to limit malpractices, but were not exercised in practical situations;
3)Mass media has been trying to place the blame quickly, mainly due to self-interest (sina weibo, wechat and 360.com all opponents with baidu in the online advertising industry), yet the antidote to this issue has yet to be addressed.
We believe that a healthy conversation should take place in terms of reshaping this industry into a more regulated, disciplined and sustainable fashion.
Wei Zexi’s death sparks public outcry
Wei Zexi，a college student in Xidian University based in Xi’an.Source:Screen Shot 2016-05-02
Wei Zexi was a college student in Xidian University based in Xi’an, majoring in computer science. He was diagnosed with synovial sarcoma during his sophomore year, a rare form of cancer that typically occurs to a person’s joints and has few cure options. After trying multiple medical treatments, including radiotherapy and chemotherapy, his family decided to search online for medical options, which results in Baidu’s search “recommendation” of Bejing No.2 Armed Police Hospital.
The result of this treatment process was quite a disaster for the Wei family, as they poured in more than 200,000 RMB (35,000 USD) in medical fees while the situation is still getting worse. In Wei’s remaining days, he posted on Chinese equivalent of quora – zhihu.com – under the question “What is the worst ‘evil’ in humanity?”(https://www.zhihu.com/question/45052202), writing about his experience in this hospital. Receiving more than 21,000 upvotes, he wrote:
“I have no idea how ‘evil’ Baidu was before then, including its competitive price bidding process for medical-related ads, until now…”
His key point of the accusation was that the hospital promoted a treatment method which had already been proved to be obsolete in the US, but the hospital claimed that it was the most advanced option. He died later on April 12th. After his death, the mediacover this news and questioned Baidu for malpractices in paid medical ads.
Baidu responded quite swiftly, saying primarily that they were sorry for the loss of the Wei family and supported their legal action towards the hospital. But they also said that back then, the hospital had submitted enough application materials for online ads and they have “adequate credentials” at that time.
A short history of “Putian Clan”(莆田系), who had a tense relationship with Baidu
Part of the No.2 Armed Police Hospital was alleged to be contracted by the “Putian Clan”, one of the most notorious names in healthcare industry of China.
Back during the days of 1980s, several local doctors from Putian of Fujian province decided to expand their small medical network outside of Fujian.
At first, their primary strategy was to become contractors of individual departments within hospitals. Later due to more stringent regulation, they moved to establish their own private hospitals and clinics, which till now has a significant share within China’s healthcare system – it was by far the largest private healthcare service supplier in China if combined, stretching across all provinces and have multiple listed companies. But the reputation of the “Putian Clan” was quite negative – they were frequently associated with malpractices in advertising and overpriced treatments.
Shanghai’s Renai Hospital one of “Putian Clan” notable chains, source: ifeng.com.
Baidu used to have a close relationship with the “Putian Clan” hospitals, as they were one of the largest clients of China’s largest search engine. But the alliance has turned sour ever since the negative press coverage took place- Baidu has been constantly raising its bars to reject online ads of hospitals associated with the “Putian Clan”.
One of its most recent disclosure in 2014 showed that out of the 13k+ medical service providers that were rejected by Baidu, more than 60% were actually associated with the “Putian Clan”. Baidu has in fact increasingly shown its discontent over the liability “Putian Clan” has brought upon its brand.
In early April, the “Putian Clan”, via its official association, has officially announced it will cease buying Baidu online ads, ending its long-term ties with Baidu. Wei Zexi’s death, however, put additional salt in Baidu’s wounds.
Baidu tried hard to remove bad image, but not enough
Baidu’s “moral dilemma” was quite obvious here – it tried hard to effectively end its ties with the “Putian Clan”, but on the other hand the ad bidding process was not ameliorated to the extent that a thorough verification could be realistically executed. Lots of netizens in China have compared Baidu’s policy with that of Google, but the limitation of such comparison is evident – Google has an in-depth policy to allow with limitations medical services providers(https://support.google.com/adwordspolicy/answer/176031?hl=en).
Adequate certificates must be provided, including practicing certificate and advertising certificates. But our sources from Google also told us that they practically accepted very few cases of such, primarily due to caution of operating in China and the high requirement for the “scale” of the business. In reality, Baidu and Google never had the same recognition of “scale” and they are practically operating in completely different markets and legislative environments.
Meanwhile, Baidu’s competitors, such as 360.com, Sina Weibo and even Tencent’s Wechat, have been waiting for this public outcry for long. They have used significant resources to cover this incident, in order to destruct Baidu’s image for self-benefits. However, this will never lead to a healthy conversation on how private medical chains should be regulated and how it could be penalised for misleading the customers.
From a legal perspective, Chinese legislations for advertising were very strict in nature – the latest advertisement law enacted in 2015 and the latest regulation on medical advertisement in 2015 by SAIC stipulated that “inspection certificate” is needed for a medical ad to be published; it also required that no ads could augment or falsify the results of a certain treatment. In reality, however, the execution of the law enforcement agencies was quite weak. You can easily bump into a Chinese website online that clearly violated the law that either did not have credentials, or augmented or falsified the effects of treatments. The consequence of the “laissez-faire” regulatory environment may have cost the life of Wei, and potentially many others.
Random ads on a major Chinese hospital, with possibly augmented results, reflects the current laissez-faire environment on regulating online medical ads.Source:Screen Shot 2016-05-02
A meaningful revamp or discussion on reinforcing the current legal framework on online medical ads is more than necessary. Baidu might be one of the largest players here that could shoulder some more responsibility, but that doesn’t mean it is the only relevant party here. Numerous top online portals have served pure profit interests with absolute disregard towards the quality of what it was presenting. Wei’s case may be a total tragedy, but the worst case scenario is that the tragedy continues and no one ever took affirmative action or responsibility.
Ling Zouis the founder of
cnspoon.com
, a business-focused news & commentary website dedicated to provide more up-to-date, on-the-ground and actionable information for global readers. Its content ranges from macro economy, business sentiment to specific industries, such as properties as well as entertainment and filming. Johnny currently works for a China-focused private equity firm in Hong Kong. He received his bachelor's degree in 2010 from Yale University with distinction in History major and Master of Science Degree in 2011 from London School of Economics with distinction in Economic History. He was originally from Shanghai, China and can speak four languages Chinese, English, French and Japanese.
(APD)
