Chinese appliance brand on the hook for US$12 million in refunds as France wins World Cup

Chinese kitchen-appliance brand Vatti, an official partner of France's national soccer team, is now on the hook to fulfil its audacious promise to fully refund Vatti products bought during 1 June and 3 July should the team win it all.

As Murphy's Law would have it, France did indeed win the World Cup last night in Moscow, an expensive victory for the Chinese sponsor totalling RMB79 million (US$11.8 million) in reimbursements, though many opine this isn't that expensive for the marketing returns Vatti is getting.

Its proclamation was made on 30 May as the buzz around the World Cup skyrocketed in China, prompting Vatti's chairman to capitalise on the buzz with a high-profile marketing manoeuvre and having the promotional offer sealed in full-page ads on the Nanfang Metropolis Daily.

Any consumer who bought a specific 'championship package', which could be a gas-stove-and-ventilator set, a water heater, or a dishwasher, can apply for the refunds. The refund method is not cash though, but Tmall or JD stored-value cards, possibly stimulating another round of buying.

However, more hefty is the payout from Vatti's 133 franchisees nationwide, thanks to Vatti's own stipulations for refund costs for products purchased offline being covered by its franchisees. Vatti itself will be only bear the cost of sales from online channels, which represents about 37% of total refunds at RMB29 million.

The company formerly known as Vantage also earlier announced in a regulatory disclosure that this World Cup marketing activation has "significantly improved" its retail business and its brand awareness, in exchange for "controllable" expenses that are within the company's annual budget.

While this appears to be a big coup for Vatti on paper, the brand's distributors and dealers are the ones responsible for the bulk of refunds during the campaign period, according to regulatory filings, estimated to be RMB50 million. Vatti's calculations, however, state that this accounted for only 7% of franchisees' total sales during the eligible period. 

Yet reports in Chinese media say some dealers have found the refund scheme difficult to swallow. On 29 June nearing the end of the campaign, a Guangdong province court seized assets from Vatti's Beijing and Tianjin dealerships after their representatives disappeared for more than 10 days reportedly due to cash-flow troubles linked to the scheme.