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Part 2 of an interview with a Chinese PR student on crisis communications and social media.

Here is Part 1.

3. Does social media impact crisis communications in different ways in Asia versus the UK? Are there any characteristics exclusive to the UK?

In my experience social media can indeed impact crises differently in Asia, and much of this comes down to speed – parts of Asia are very highly networked – and the culture of the web, which can be immensely volatile, especially in a country like China. Compounding matters there’s the fact that customer and stakeholder opinion is evolving quickly across the region, not least concerning expectations about corporate good behaviour and transparency, while government attitudes towards foreign companies, in particular, can be hostile, and control of the internet notoriously uneven. These aspects – and plenty of others – require a close understanding of the context in which you are operating.

Operationally, the main difference is that Asian organisations tend to be more conservative, hierarchical and slow to make decisions, which can make the management of a crisis challenging. And where there is a culture of strong local political control, and a pliant local media, local companies may well have little experience of having to manage serious negative events in public and online – a notable example being Taiwan Formosa and the Vietnamese governments’ inept handling of a toxic spill earlier this year that ravaged hundreds of kilometers of coastline and damaged the livelihood of thousands of local Vietnamese fisherman.

Equally, some multinationals operating in Asia are reluctant to devolve crisis decision-making to their local businesses, resulting in precious time being lost when you need to respond quickly and appropriately at the start. And for the reasons pointed out above, foreign companies must be mindful of throwing the standard western crisis playbook at what may be a very different business, media, political and legal environment.

I’m not convinced there’s anything intrinsically unique about the nature of crisis communications in the UK – at least in a western context – other than perhaps the behaviour of the mainstream media, specifically the tabloid press, which can be very single-minded in their willingness to build up and then attack an organisation, and whose views tend to bleed quickly and deeply into the social web.

See also my Primer on Crisis Communications, which covers similar territory.

 

Despite an economic slowdown, the rout of its stock markets, a plunge in exports, and a crackdown on free speech and the media under Xi Jinping, China remains a huge opportunity for local and foreign companies alike.

It also presents its fair share of challenges, not least rapidly evolving consumer and stakeholder expectations, demands and behaviours, and a cut-throat, dog eat dog business environment typified by murky, closed-door government decision-making, high employee churn and widespread disregard for others’ IPR.

And while the internet, mobile and social media are powerful tools to raise awareness, connect and drive sales and loyalty, they are also highly demanding and unpredictable platforms for competitors, customers and others to attack you, something that is done with real relish in China.

How big a problem online attacks are in China, what form they take, and how they should be handled is the subject of an in-depth interview just published by Forbes (and builds on comments I had earlier given to PR Week on the necessarily complex and somewhat thorny topic of PR ethics in Asia).

I hope both pieces shed some light on China’s idiosyncratic internet culture and how it can best be tackled.

 

Amazon is suing over a thousand people offering bogus reviews on Fiverr.com for USD 5. Employees at Bell Canada are discovered ramping its apps without disclosing their affiliation. Researchers reckon 20% of reviews on Yelp are fake, an often cited report by Bing Liu at the University of Illinois estimates 30% of online reviews are not what they appear.

PR ethics — for want of a better description — are cause for concern across the world.

How do they compare in Asia?

chinawebscrubbersAs noted in a recent PR Week article on PR ethics in Asia (in which I am quoted), much depends on the local context, particularly consumer expectations, the regulatory environment and industry codes, the relative maturity of the PR and marketing industry, and the willingness (and sometimes naivety) of the mainstream and other media to keep its face clean.

Widespread ‘Black PR’ in China is sometimes cited as evidence that the problem is endemic in the region and it is fair to say that the brutally competitive nature of business in the Middle Kingdom, in which the opportunity to undermine detractors/the competition through fair means or foul is often pursued with relish, combined with widespread anon- and pseudonymity, pressure to buy advertising for better coverage, and all manner of other nasties, help make it a particularly tricky place to do business.

In my experience, China is an outlier. Despite a reputation for cosy political relationships and a pliant mainstream media in many parts of the region, and evidence of devious online practices, there’s little to indicate that shady PR is any more widespread and entrenched across Asia than in, say, Latin America or parts of Europe.

 

From GSK, Qualcomm, VW/Audi, Chrysler and Microsoft to McDonald’s, Yum Brands/KFC and most recently Walmart, it has been a long, hot summer for foreign companies in China as they fall foul of Beijing’s renewed clampdown on food safety and anti-monopolistic activity.

Same same you might say, a metaphorical shrug of the shoulders seemingly given weight by CIC/Ogilvy PR’s latest Crisis Management in the Social Era report which finds that most significant crises in China in 2013 involved foreign companies, including nine of the top 10, as measured by the volume of Weibo posts.

Yet hark back to 2012 and the majority of crises in the Middle Kingdom involved domestic entities, evidence perhaps that the current clampdown is deliberately targeting foreign firms, despite denials from Beijing.

Crises_in_China_2012_2013

 

 

 

 

 

 

 

 

 

The report also contains interesting data on the effectiveness of different crisis responses on short-term purchase decision-making. The findings will not be unfamiliar to crisis communications professionals:

  • Least damaging: acknowledge the problem and promise to investigate
  • Most damaging: outright denial.

Whether the impact of a crisis is best measured by the volume of Weibo posts is open to question; impact on sales or reputation/trust are arguably more useful metrics.

In addition, Weibo is only one of many social media in China, albeit the most influential, at least for now.

Concerns over the methodology notwithstanding, the report is worth a read.

Here it is in full:

 

If there’s one thing that jumps out from Nielsen/Harris Poll’s latest report on the most reputable companies in the US, it is that foreignness counts.

Many foreign firms have high brand recognition and loyalty in the US, not to say substantial manufacturing interests, yet not a single European entity and only Honda, Samsung, Sony and Toyota from Asia are found to have an excellent or very good corporate reputation in the country.

Harris_RQ2014

 

Perhaps the world is less flat than many imagine.

 

It is the time of the year when corporate reputations are paraded afresh, and first out of the blocks is the annual list of The World’s Most Reputable Companies from the Reputation Institute.

The 2014 list contains some interesting findings from an Asian perspective:

  • Three Asian firms make the top 10: Sony, Canon and Samsung
  • Only 20 Asian firms make the grade, all but five (Samsung, LG Electronics, Singapore Airlines, Acer, Lenovo) of which are Japanese
  • Lenovo is the only Chinese firm to be listed.

The fact that Japanese companies are still regarded as the most reputable in Asia comes as little surprise (despite Sony’s financial difficulties), and Samsung’s rise to the top ranks is probably only to be expected.

The list also underscores the huge reputational challenges facing Chinese companies as they go global – an issue I have written about previously.

The RI’s list is also interesting for what’s not there:

  • No energy firms
  • No banks
  • No Indian firms.

Here’s the list in full:

RI_WorldsMostReputableCompanies2014

 

 

 

The rush of tweets, infographics and animated gifs makes it challenging to get a real handle on longer-term communication trends. Thankfully, long-form journalism, storytelling and analysis are in rude health.

Here are the three best books on communication I have read in 2013 (ie. not necessarily published over the past twelve months):

Trust Me, I’m Lying, by Ryan Holiday

Billed as a warts-and-all confessional on modern-day media manipulation and spin-doctoring, Trust Me is actually principally a polemic on the state of the media in the US and a no-holds-barred expose on the inner workings of the blogs re-setting news industry plate tectonics, notably Business Insider, BuzzFeed, Drudge Report, Gawker and Huffington Post. If you believe your news should be informative and balanced, then this book makes for highly unsettling reading – Holiday’s thesis is that the media industry has effectively lost its bearings in a desperate quest for exclusives, page views and ad bucks, disregarding any pretence at accuracy, objectivity or integrity in the process. While Trust Me, I’m Lying reads a little like a personal slanging match in places (the author pulls no punches in fingering those he sees as chiefly responsible, amongst them Gawker Media’s Nick Denton and media talking head Jeff Jarvis), it holds valuable insights and lessons for both communications professionals and consumers.

Exposure, by Michael Woodford

When Michael Woodford, newly appointed CEO of medical to consumer optical manufacturer Olympus, got wind of a scoop by a niche Japanese magazine detailing massive financial irregularities at his firm, he could scarcely have believed that he would wind up blowing the lid on a cover-up of some USD 1.7 billion of losses and becoming one of the highest-profile and most effective whistle-blowers in corporate history. (Of course, Woodford has since been knocked off his perch atop the whistle-blower premiere league by one Edward Snowden.) While Exposure suffers from poor writing and can hardly be described as a balanced account (according to Japanese friends, Woodford is seen to have over-egged the publicity pudding and thrust himself to the front and centre of the story in an unashamedly un-Japanese manner), it is nonetheless a fascinating and, in this case, singularly unedifying insight into the culture of the keiretsu and big business in Japan. It is also an excellent example of how a reputable company can be brought to its knees by a rogue employee (or two) through bitter resolve and smart communication on the one hand and corporate secrecy and intransigence on the other. For fuller thoughts see this blog post.

The New Emerging Market Multinationals, by Amitava Chattopadhyay and Rajeev Batra with Aysegul Ozsomer

A book less about communication and reputation than about brand building, the authors use in-depth interviews with senior executives at emerging giants from Brazil, China, India, Turkey and other ’emerging’ markets to identify how a new wave of multinationals are building global businesses and global brands. Full of valuable insights into how firms like Asian Paints, Asia-Pacific Breweries, Godrej, Haier, Lenovo, Natura and Wipro are building their brands, The New Emerging Market Multinationals sets out a step-by-step process for global brand-building, including how to overcome country of origin perceptions, and ends with a look at how companies are – and should – manage their brands across their organisations, making a strong argument for centrally-managed brands. An excellent resource for professionals at emerging market firms and at established players figuring how to take on their new competitors.

 

Check my Goodreads profile for ratings and reviews of other books on communication and other topics.

Chinese brands are more than holding their own against western firms in the court of public opinion in China, according to WPP’s latest Top 100 Most Valuable Chinese Brands study.

Local brands the mainland Chinese most trust are:

MostTrustedChineseBrands2014

 
A few things jump out:

  • The fact that a majority of the most trusted firms are now privately-owned
  • The high level of trust placed in Baidu, despite its legacy of selling search placements, paid deletion of online comments, video copyright infringements and other misdemeanours
  • The absence of (and therefore relatively low trust in) well-known global Chinese companies, notably Lenovo.

Most noteworthy is that the study finds that Chinese companies/brands are (and indeed have been for some time) as trusted or more trusted in the China than their foreign peers, something that may come as a surprise to many outside the Middle Kingdom and to plenty of foreigners living in China.

ChineseversusForeignbrands_2014

Assuming the data is accurate, and putting aside concerns that the findings go against the grain of other (pdf) studies and that trust differs significantly by category (German cars and Italian luxury still get the nod in China), how is it that so many Chinese firms are building local reputations that are just as strong if not stronger than those of their foreign peers?

Some brief thoughts:

  • They understand local consumers and stakeholders better than their foreign competitors
  • They provide increasingly useful, valuable and high quality products
  • They have kept prices affordable, at least relative to some foreign firms eg. Starbucks
  • They are actively improving customer service and other functions
  • They provide many local Chinese with jobs
  • In an environment in which patriotism is being played up by the authorities, Chinese companies are seen as Chinese (though this can work both to their advantage and to their detriment)
  • Government and official media (CCTV) campaigns against foreign firms such as Apple and GSK are helping seed doubts about the quality of foreign products
  • Foreign brand failures, such as Fonterra’s botulism scare earlier this year, have given local brands an opportunity to cast themselves as caring and responsible.

As the study shows, companies of all types are generally held in fairly low esteem in China. The Chinese are notoriously price conscious and fickle – brand loyalty remains low in the country. As competition intensifies and food safety and pollution issues continue (as seems likely), trust will become an increasingly important factor in purchase decision-making in China.

Going forward, it will be interesting to see which Chinese companies manage to win the real trust of their domestic customers and other stakeholders, and how they go about it.

Equally interesting will be to see how foreign companies react.

Surely even the German car makers won’t be able to rest on their laurels for too long.

For a glimpse of what’s driving social media meltdowns in Asia, take a look at Bitches, Bones & Botulism, an article I prepared for ClickZ and published today. 

Whats driving these meltdowns?

  1. Poor quality product and/or customer service
  2. Misconceived or badly implemented product launches and promotions
  3. Lack of online disclosure
  4. Failure to handle fast escalating negative situations and crises in social media.

The accompanying deck highlights the top 10 incidents, selected principally on account of their impact:

 

Many organisations I talk to remain fearful of the potential for reputational fall-outs online.

As spelt out in the article, a good dollop of common sense usually helps miminise these risks.

More concretely, companies of all sizes are advised to undergo a comprehensive Social Media Risk Assessment to identify, assess, prioritise and mitigate the risks connected with social media specific to their business.

This can be done as a module of social media strategic planning, or before or during formal social media crisis communications planning.

Contact me for details of what such an assessment involves.

 

 

If ever there was a stark reminder of the lack of trust in Chinese companies in the west, it is surely the Committee on Foreign Investment in the US’ (CFIUS) recent investigation into pork as a national security threat as part of  Shuanghui International’s acquisition of US meat producer Smithfield Foods. Finally approved by shareholders on September 24, the deal is the largest takeover of a US company by a Chinese firm to date.

Given images of dead pigs floating in droves down the Yangtze River and the generally parlous state of food in China, food safety is a legitimate concern for US regulators.

However, while pork is widely consumed in the US, its availability can hardly be said to be critical to the health and welfare of the average American citizen. The real issue is that Shuanghui is Chinese and the deal is viewed in Washington as another instance of the long arm of the Chinese government willfully and steadily eroding US dominance in one industry after another.

For many in the west, Chinese companies continue to be seen as purveyors of poor quality goods produced at low cost with little concern for employee well-being or safety. Traditionally focused on increasing local sales, building market share and closely managing their relationships with key customers, investors and the mainland government, Chinese firms have had little reason to tackle the preconceptions – merited or otherwise – of foreign policy-makers and opinion-formers.

As they expand into western markets, China’s companies find themselves having to win support in Washington and Brussels. To gain the confidence of policy-makers and regulators, they must demonstrate strong governance and a substantive commitment to the local communities in which they hope to operate by hiring and empowering local people and developing strong local partnerships. Honest and open communication, something that does not come naturally to Chinese corporate leaders, is also vital.

More challenging are allegations of covert support from the Chinese government and close connections with the military, as Huawei has discovered. While difficult for third parties to prove, these claims are also tricky for Chinese companies of all types to deny plausibly, especially at a time when China is aggressively creating a roster of national and global champions.

With these concerns increasingly raised in western capitals, Beijing could help the cause of Chinese companies by clarifying how state aid is allocated and to which entities, further strengthening corporate governance standards and insisting on more detailed reporting. Better still, it should free up competition in the many sectors still dominated by China’s state-owned enterprises.

In light of the increasingly political nature of decisions regarding foreign investment in the west, Beijing should also pay attention to how China itself is viewed amongst opinion-forming elites and the general public. Research shows that while people across the world believe that the global balance of power is shifting in China’s favour, the country’s image remains poor in the west and has gotten worse in recent years due to perceptions of widespread corruption, growing military power and its increasingly vocal claims in the South China Sea. China’s growing commercial clout and the way it does business are also frequently cited as concerns.

Conscious of its image, Beijing has been attempting to improve China’s standing through a wide range of ‘soft power’ initiatives, including a huge investment in the expansion of CCTV and part-funding the roll out of Chinese language and culture Confucius Institutes across the world. In the US alone there are now over 70 Confucius Institutes.

Nevertheless, as Harvard political scientist Joseph Nye has pointed out, true soft power is rarely achieved employing top-down measures; rather it is only accumulated when businesses, artists, academics and others are allowed to flourish freely and independently and concoct ideas and products with real global appeal.

To win hearts and minds, China could usefully learn from its South Korean neighbour and specifically from PSY and Samsung, both of which have transformed perceptions of their home country more effectively than decades of institutional effort by the government in Seoul.

To turn heads in the west and open up new markets to Chinese products, Beijing has much work to do improving its own business backyard before its companies are trusted.

Its strongest long-term card may lie in creating a level and fertile playing ground on which individual voices and entrepreneurs can flourish.

Disclosure: Huawei is a former client.

 

Translated literally, ‘keiretsu’ in Japanese means ‘headless combine’. Sadly, it would seem a reasonable description of the state of Japan’s mega-corporations and their relationship with the Japanese mainstream media after reading Michael Woodford’s Exposure over Chinese New Year.

Exposure

Having slogged his way to the top of camera and medical tech firm Olympus, a rare achievement in Japan for a gaijin, Woodford memorably blew the lid on a cover-up of some USD 1.7 billion of losses, making him one of the highest-profile and most effective whistle-blowers in corporate history and Olympus a default case study in corporate governance abuse.

It is striking that while the story was broken by Facta, a small Japanese magazine, and lapped up by the international business media, Japan’s mainstream newspapers and broadcasters would not run what was probably Japan’s biggest business story of the past decade. Why? Apparently out of a fear of losing advertising revenue and concern that they might expose themselves legally.

Only when the independent Third-Party Committee had reported its findings and established the guilt of Olympus’ leadership did the local media jump on the bandwagon, even if (as Woodford points in an insightful interview with the Japan Times) they only then reported, not investigated.

Woodford was clearly adept at working the media. Yet he also knew that if he was to return to lead the company then he had to make his case directly to Olympus’ workforce, leading his team to set up olympusgrassroots.com, a (now defunct) website for Olympus employees, and to conduct an open interview/Q&A for website members on Japanese video site Nico Nico Douga.

This was a PR masterstroke, providing Woodford and his team with a direct route to communicate with and galvanise rank and file staffers and enable them publicly to demonstrate their support – not easy in a culture in which people rarely go publicly against the grain or express their opinion on controversial matters. It also proved a useful tool rebutting misleading statements being circulated by the Olympus leadership.

Worth watching is Woodford’s performance on Nico Nico Douga, in which he comes across as assured, sincere and objective, despite having had almost no sleep for days.

Of course, there’s nothing much new about using digital networks to circumnavigate formal communications channels. But its use as a proactive PR channel by a CEO against his board is a novel scenario. Certainly, nothing like it had been seen in Japan.

Ultimately, Exposure is a fascinating insight into the culture of the keiretsu and big business in Japan. It also persuasively demonstrates the power of communication and some of the techniques available to help force an issue into the open in a tightly controlled and conservative business and media environment.

 

Disclaimer: Michael Woodford kindly agreed to be interviewed for my book Managing Online Reputation

Compared to more developed markets in the west, trust in Asia is in fairly rude health, according to Edelman’s 2013 Trust Barometer.

Some data-points to bear this out:

  • 6 of the 10 most ‘trusting’ countries are Asian – topped by the Chinese, Singaporeans and Indians
  • Above average trust in business in many Asian markets, notably India, Indonesia, China, Singapore and Malaysia
  • Very high levels of trust in government in China and Singapore, with otherwise generally higher average levels of trust in most other Asian markets (with the exception of Japan and Korea)
  • Significant trust in CEOs in most Asian markets
  • The five countries in which the media is most trusted across the world are China, India, Indonesia, Singapore and Hong Kong
  • Other than in Mexico, NGOs are held in the highest regard globally in Asia.

The study also reminds us, should we need reminding, that trust in Asian companies in developed countries remains low – see the chart below.

Edelman2013_AsianCompanyTrust

While it is hardly surprising that Indian firms, many of which have been expanding internationally for some time, are held in higher esteem in developed markets than their Chinese counterparts, the reverse is the case in emerging markets.

My guess is that the principal reason for this is that Chinese firms have placed greater emphasis on expanding first in emerging Asian markets, whereas Indian firms have tended to leverage their Anglophile connections and shared English language to prioritise markets such as the UK and USA.

Equally, it could be argued that Chinese firms have a more substantive presence in the more widely known consumer electronics (Haier, Huawei, ZTE, Lenovo etc) and goods sectors, whereas Indians are better known abroad for B2B services (Infosys, Wipro, Tata Consulting etc) amongst business and technology professionals.

What do you think?