Lady M setting an example of good corporate decency
Lady M, a New York-originated confections company, announced on Thursday that it would close all its Chinese mainland stores by September 10. While that is unfortunate news, the company's open and honest approach to its customers is heartening.
In its statement, the company made a point to state that those holding prepaid cards can use them before the stores shut down, or apply online through a relatively easy process for a refund.
It exemplifies good corporate ethics and decency.
Lady M may not be a cash-strapped company. However, at a time when many businesses are troubled by the COVID-19 resurgence in Shanghai, consumers worry about the fate of beloved brands and stores, particularly those in which they have invested in prepaid cards.
There was a time when I was a supporter of prepaid practice, but I'm a little more cautious now after reports of troubled businesses – from educational institutions, bakeries and restaurants, to gyms and hair salons – "evaporating." They have been known to leave their customers in the lurch as they fought to get their money back, sometimes large sums.
The problem is not just business, but the confidence and trust that are lost in such situations.
The government has long been aware of the risks. It has required companies to put up a reserve (up to 40 percent of prepaid money) as a guarantee if they want to issue prepaid cards. Also, there is an administrative cap on how much they can collect from each consumer. However, in practice, there is no reliable way to check the prepaid amount. So, when risks become a reality, it is a hard job to get the money back.
On the other hand, consumers are constantly warned to be careful with prepaid plans, but the lure of larger discounts often proves to be a case of fatal attraction.
The issue comes back to the company. Consumers will be more than happy to pay in advance if everyone can work like Lady M Confections, cherishing the brand value and following the basic rules of corporate ethics.
In 2017, I received a call from a stranger on a warm spring afternoon. The call was from the owner of a juice cafe where I had bought a 100-yuan (US$15) prepaid card. The owner told me to get back the 60 yuan left on the card as the shop was planning to pull down the shutters for good. I did get the money back, and with it, my faith in good business dealings.