Charlie Pownall 查理·保诺

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.

According to CIC/Ogilvy PR’s latest Crisis Management in the Social Era report, nine of the ten most significant crises in China in 2013, as measured by Weibo posts, involved foreign companies.

Hark back to 2012 and the majority of crises in the Middle Kingdom involved domestic entities.

Why the sea-change?

In the wake of multiple food safety issues, Beijing is clamping down heavily on food suppliers and retailers, as well as anti-monopolistic activity.

And, in time-honoured fashion, Beijing is using these clamp-downs as a pretext to target foreign companies.

Also worth mentioning is that the report 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 well worth a read.

Here it is in full:

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:

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.

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.