Rumor worse than crisis

Rumors about impending bankruptcies have become more of a problem for Turkish companies than the actual crisis itself. Many companies are so fed up with the situation and announcing plans to "fight against the hearsay press."

Groundless rumors leave companies in a tough position, they have to try and explain the situation to their contractors and they have to convince banks they are in sound positions. The fact that rumors emerge mostly in industries that have been badly hit by the crisis, such as the banking, textile and automotive industries, makes the situation even worse.

Fed up with the stress, some companies have announced they will be taking action against what they describe as "hearsay press." Through newspaper advertisements, 340 firms, members of the Merter Markalar Birliği, or MMB, a brand union in Istanbul’s Merter district, are going to declare they are not in or near bankruptcy and that any such news reports are unfounded.

"Hearsay is created and spread by firms that were facing problems prior to the crisis," said Oktay Özdemir, MMB coordinator and chief executive officer of Wenice Kids, a Turkish children's wear exporter. "Now, they are trying to benefit from the crisis climate by slandering other firms. We are launching a counter-attack."

Exaggerated impact
Hearsay has been floating around since September, when the impacts of the crisis began to emerge, said Özdemir. Stagnation has affected the textile industry, however, even companies that have remained immune to the crisis have been hit by rumors. "Companies that are the source of these rumors are trying to create opportunities for themselves."

Özdemir said the industry has a bright future, but rumors have had a severe impact, particularly on foreigners. "These stories scare foreigners. Moreover, there are actually some raw material suppliers who have enormously increased prices using speculation they have created out of bankruptcy stories."

There is a lot of bankruptcy gossip circulating in the market which puzzles some companies, Nurettin Eroğlu said, who is the owner of Eroğlu Group, which includes Loft and Colin’s brands.

"Recently, we heard one of our major exporters filed for bankruptcy. We could not believe this, made a phone call, and found out it was not true," Eroğlu said. "Rather than gossiping, we need to focus on work and make an effort to overcome the crisis."

The situation is not any different in the banking industry. A bank’s branch manager, who requested anonymity, said, " I went to another bank for a personal transaction. I could not believe the talk I witnessed in the manager’s room. The manager was trying to persuade a customer that our bank had filed for bankruptcy. Hiding my identity I listened for a while, but then I could not resist and had to intervene."

It is forbidden to spread news that could threaten the market, the bank manager said. "The sector should understand one thing and one thing only, if we sink, we all will sink."
Examples of slander

Negative rumors can result in severe damage to a company, but hearsay can also be used as an effective communication tool.

"Advertisement alone may not bring up sales. It is hearsay that enables the sale of products," said Michael R. Solomon, a consumer behavior expert who arrived in Turkey for the Brand Conference. "Advertisement creates awareness, but many buy products not by seeing advertisements but because they hear about them from friends."

Slander campaigns spread via chain mail have created a tough environment for many companies.

An example of that is LC Waikiki. The company was targeted by e-mails in 2007 that spread a false claim that it "supported terrorism."

French yogurt and pudding brand Danone was also attacked by false claims that its products had components that negatively affected children’s health.

Polonez, a Turkish meat firm, was also accused of using pig meat in its products.