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Why Chinese trust local over foreign brands

December 5, 2013
Corporate reputation
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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:MostTrustedChineseBrands2014

 A few things jump out from this table:

  • A majority of the most trusted Chinese firms are privately-owned
  • The high level of trust 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 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 recent 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 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. Even the German car manufacturers shouldn’t rest on their laurels for long.

Made in China, with extra innovation

January 14, 2013
Corporate reputation
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For many, ‘Made in China’ or ‘Made in India’ imply derivative products manufactured at low cost in sweatshops. Some cast this as a mark of shame. But if Forbes’ latest list of World’s Most Innovative Companies is anything to go by, perceptions of Asian companies are changing rapidly.

Of the 25 companies listed, 9 are from Asia:

  • 4 from China
  • 3 from India, and
  • 2 from Japan.

One might reasonably expect to see consumer electronics, automotive and perhaps also BPO firms represented. Yet beverage, construction and internet companies are also baking innovation into their veins.

The most innovative Asian firms are:

5.   Baidu (China)
7.   Ratuken (Japan)
9.   Larsen & Toubro (India)
11. Tencent (China)
12. Hindustan Lever (India)
18. Kweichow Moutai (China)
19. Infosys (India)
20. Wuliangye Yibin (China)
22. Nidec (Japan)

A key challenge for many of these firms will be not just to increase awareness and interest in their products beyond their domestic markets, but also to strengthen their reputation for innovation amongst customers and other stakeholders.

The experiences of Huawei – and other Asian firms – show that despite a focus on developing higher quality products and services, investing significantly in R&D and boasting an increasingly strong armoury of patents (Asian firms dominate patent lists), building a credible and strong corporate reputation can take considerable time and effort, not least in terms of governance and a proactive approach to good citizenship.

With product considered the primary driver of corporate reputation, ‘Made in China’ is already taking on a different and more positive meaning.

However, there remains plenty of work to do.

 

A broader view of Online Reputation Management

October 30, 2012
Online reputation management
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Online reputation management (‘ORM’) is in vogue. LinkedIn records a 38 percent growth in people recording the term named as a skill or expertise.

A veritable cottage industry of agencies and individuals has sprouted to service the swelling ranks of organisations that keep them from going hungry.

What is Online Reputation Management?

LinkedIn describes ORM as: “the practice of monitoring the Internet reputation of a person, brand or business, with the goal of suppressing negative mentions entirely, or pushing them lower on search engine results pages to decrease their visibility,” a definition supported by a search on Google or a conversation with digital or other agencies offering ORM services.

In this scenario, ORM can too easily appear to be a dark art practised by shady search/SEO specialists and underhand PR types for organizations with dodgy practices experiencing crises or social media campaigns running amok.

As it is seen and practised today, ORM appears to be based on two key assumptions:

  1. That online reputations are made or lost on the first two pages of Google, Baidu, or Naver.
  2. That online reputations are somehow distinct from one’s broader reputation, and that ORM can succeed in isolation from other communications activities.

Mistaken assumptions

These assumptions are mistaken for the following reasons:

  • Important as search engines are to the consumer purchase path and in breaking news situations, other channels such as social networks and micro-blogs are increasingly critical access points to the Internet as a whole. And while customers may use search engines frequently to conduct research and purchase, stakeholders such as journalists, business partners, and government officials may be using other channels. An ORM strategy has to incorporate all key access points relevant to the audiences in question.
  • “Originating” sources of information are more trusted than the access points themselves, requiring an integrated approach to broader reputation management and ORM. The top originating sources, according to Nielsen, are word of mouth, online consumer reviews and opinions, editorial content, and branded websites. Word of mouth, so critical in emerging markets and Asia, is typically highly diffuse, ranging across social networks, micro-blogs, and a host of other channels. Online customer reviews play an increasingly important role in framing product and brand perceptions and when negative can travel far and wide, including to the mainstream media. Newspapers and broadcasters continue to play an important role in decision-making and reputation, not least during or after a crisis, when they continue to be seen as the most credible and authoritative voice. It also takes some serious gaming of Google to push a cover story from the top business media down the search rankings.

In addition to core search engine optimisation (as well as de-optimisation, as PR people are apt to describe the burying of bad news), a broader-ranging and sustainable approach to ORM is required.

This approach should be consistent with an organisation’s broader corporate and/or brand reputation strategy – as opposed to a much-need fix of online visibility (and budget) when the shit hits the proverbial fan.

Important questions to ask

Some key questions should be asked to inform a firm’s broader ORM (and overall reputational) strategy.

These might usefully include:

  • Who is the target audience(s)?
  • Who/what are their preferred information sources?
  • Who are the key players, i.e., influencers in these activities/conversations, and what are their needs, requirements, and preferences?
  • What are the objectives – to build, manage, or recover reputation?
  • What does success look like and how can it be measured?
  • How is your online reputation currently being tracked, if at all? Is it aligned with your broader corporate and/or brand reputation tracking and performance? What are the benefits and limitations of your current system(s)?

Successful ORM also requires the assigned team or teams – be it the PR agency, digital agency, media agency, or in-house – to work more closely with other relevant teams and to have a common goal.

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