Tuesday, February 28, 2006

Who We Are

AC Capital Strategic Public Relations is a dynamic, innovative and well connected, China-based strategic communications consultancy firm. It was established by Alistair J. Nicholas in order to provide clients the valuable combination of international public relations agency experience with boutique agency focus and dedicated attention.

Our Strategic Communications Practice clients include multinational corporations who are leaders in their category in China and globally. The specialized areas of communications in which we operate include:

-Corporate reputation management and corporate branding;
-Issues and crisis management;
-Public relations training programs
-Public affairs and government relations;
-Employee Engagement and change management communications;
-Technology and telecommunications;
-Financial communications and investor relations.

AC Capital Strategic Public Relations is a Partner firm of Public Relations Organisation International, Inc., (PROI).  PROI is a partnership of independent public relations consultancies in 25 countries, each serving local, national or foreign clients. The partnership’s 1,500+ consultants operating from 72 offices worldwide provide more than 2,000 clients with a cost-effective structure to conduct international or multi-market public relations and communications programs. PROI is
Europe’s largest partnership of independent public relations firms and in the Top Three Partnerships worldwide.

We have offices in Beijing and Shanghai and a Greater China affiliate network that takes in other key cities across mainland China, Hong Kong and Taiwan. As well, we have an international affiliate network that enables us to provide support to clients across key markets in North America, Europe, Asia, and Australia.

More information can be found on our web site at www.accapitalpr.com

PLEASE NOTE: The views expressed on this blog are those of individual contributors and do not necessarily reflect the views of the management or staff of AC Capital Strategic Public Relations.

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Monday, February 20, 2006

2005 in Review

2005 in China – here are some of the issues that threw China, often unwillingly, into the world’s headlines last year.
 
Chemical spills…
     Chemical-spills around the country drew world attention to the fact that most Chinese companies are yet to learn the value of open and honest communications when things go wrong.  At least three Chinese companies found themselves in the spot-light and very much on the back foot during 2005 for failing to communicate with the public after industrial accidents, the worst of which saw the Songhua river in the northeastern province of Heilongjiang polluted.  
Take-over bids…
      China’s rising economic power during 2005 saw Lenovo take over IBM’s computer manufacturing business.  But other high profile takeover bids, such as Haier’s tilt at Maytag and CNOOC’s at UNOCAL, failed due to the “China Inc.” perception.
Anti-Japanese sentiment…
      Japanese companies felt the brunt of Chinese anger at Prime Minister Juinichi Koizumi’s persistent visits to the Yakasuni Shrineand at national and history text books which gloss over Japan’s WWII atrocities.  A wave of protests swamped Japan’s embassy, consulates and businesses during April.
Olympic mascots…
China launched its mascot for the 2008 Olympics – actually it launched five of them, going against conventional wisdom.  Foreign visitors to Beijing will need to remember the names of the five mascots, the elements of nature that they symbolize, and the sentence their names spell. Good luck!
Bird flu…
In contrast to its handling of SARS in 2003, Beijing has taken a more proactive approach to communications with respect to the deadly N5H1 bird flu virus.  China had reported eight human deaths (at the time of publication) and has commenced a programme to vaccinate domestic poultry nationwide.
Trade wars…
Trade jargon was thrown around last year with China fighting on the side of “free trade”, the West more often talking about “fair trade” and “anti-dumping measures”; all the while the media was just having fun writing about “bra wars.” With more trade tensions on the horizon, the minor revaluation of the Renminbi, which signaled a cautious flexibility by Chinese authorities, did little to stifle protectionist wails from US columnists and Congress.
Increasing Chinese leadership…
China continued to increase its leadership role in world affairs, hosting several rounds of discussions of the Six-Party Talks aimed at breaking the deadlock over North Korea’s nuclear program.  By playing a constructive and steadfast role, China is filling out its position in the international community.
 

That was 2005, but now its 2006 – in the year of the dog, go China, Wang Wang!?

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Sunday, February 19, 2006

“China Inc.” Perception Widens: Crisis of Trust Threatens Chinese Companies

by Ravi Garla*
What do CNOOC’s failed acquisition and Lenovo’s successful one have in common? They both played into a strengthening, negative perception, prevalent in western news reports, of China as a rising threat—a perception that few Chinese companies are taking into full account.
China hogged the headlines in 2005, but many of the biggest stories involved the more spectacular scandals and abortive acquisitions that hit Chinese private and state-owned firms. Reforming the lending practices in the banking sector and the corporate governance of firms, while necessary, isn’t going to change the fact, made ever more obvious in 2005, that there is a building crisis of trust that faces all Chinese companies.
The scandal with China Aviation Oil (CAO) is instructive. CAO, a subsidiary of a mainland state-owned enterprise listed in Singapore, hid mounting losses from risky oil speculations went bad. More importantly, the lessons foreign audiences are drawing from individual scandals with Chinese companies are much broader. The Economist’s December 9, 2004 headline for the CAO scandals was “Fool’s Rush In: A reminder of the risks of investing in Chinese companies.”
Perhaps, you might say, reforming SOE’s don’t really count, and investors can tell the difference between duds and stars. The coverage on the scandal at D’Long, a private Chinese investment group that just recently had to auction away its massive headquarters in Pudong, tells a different story. Here is David Murphy and Ben Dolven’s take on it, writing for the Far Eastern Economic Review:
“… as D’Long demonstrates, the companies joining hands with Chinese investors need to be wary. D’Long is like many private Chinese companies: a history of monumental entrepreneurial zeal combined with a penchant for shady ways of gathering funds to finance their ambitions. And perhaps most troubling of all, many of these companies display a real antipathy to telling anyone–even partners–what they are up to.”[1] (emphasis added)
The picture broadens, however. The scandal at D’Long, along with implicating private companies, also led some to worry about Chinese companies’ overseas M&A, owing to the fact that D’Long had made acquisitions abroad of Western companies, who are now in limbo.
Slick PR Not Enough to Salvage Oil Deal
These concerns - Chinese overseas M&A matched up powerfully with fears of China’s rise - came conveniently packaged for popular consumption during the CNOOC-UNOCAL controversy. CNOOC’s bid for UNOCAL transformed from the financial evaluations between the previously Western-approved stud of Chinese SOEs and a minor oil company in the United States into a full on political battle involving national security and bilateral trade issues.
The more daunting development, stated at the start, is that both Lenovo’s historic purchase of IBM’s PC division in 2004, a mutually beneficial trade, and CNOOC’s no less historic failure with UNOCAL, have somehow still played to the same negative narrative, in reportage, of China’s troublesome rise. A headline in The Christian Science Monitor on December 9th 2004 captures this popular journalistic trend: “A Landmark Move for China Inc.”

The last time there was rhetoric of the same magnitude was in the 80’s with Japan. Foreign audiences, especially in the United States, were afraid of the aggressive and unfair trading practices that they felt characterized Japanese companies, neatly stereotyped as “Japan Inc.” Today, within the growing China-watching industry, “China Inc.”, is beginning to gain currency as a meaningful description of the ambitions of Chinese companies and the government. Denoting an opaque and untrustworthy entity, the “China Inc.” perception represents something very different to China’s “peaceful rise”.
Fair or not, this is the reality—or perhaps more correctly stated as the perception of reality. The specific crisis of trust with Chinese companies is a growing perception that is a daunting, but ultimately resolvable, challenge. Apart from overcoming corporate governance challenges, companies need a proactive communications strategy that, first, moves beyond just dispelling rumors to building a strong reputation, but also has a long-term commitment to nurturing relationships with key stakeholders—media, government agencies, investors, consumers, among others.
These actions would go a long way towards distinguishing a company with its domestic audiences.
Conversely, for its foreign audiences, the struggle to change perceptions will be a long uphill battle. CNOOC knew what it was up against when it hired help in DC for its UNOCAL bid, retaining six PR and lobbying agencies in total. But the communications blitz was more like trying to hack a path through an uncharted jungle than cementing an already well-tread path. Sobering as the example is, any Chinese business that has ambitions that involve investors or companies beyond its home turf had better start moving to distinguish itself from the pack and improve its perception among stakeholders today.
To defeat the perceptual haze that threatens to suffocate rising Chinese companies, they will need to humanize and internationalize.
Cast Out the Devil
To distance itself from the “China Inc.” perception, a company must put a face and feeling behind it: it must humanize its image. This could include positioning the CEO as a leader in the field, something done far too little on the mainland, to profiling the entrepreneurial culture of the firm, or even highlighting how responsibly the company contributes to the communities in which it operates.
Companies need to build a brand based more on products and services than country of origin. This isn’t denying a company’s roots. Internationalizing means genuinely communicating and demonstrating to stakeholders that their interests are the company’s only agenda. A few of the most successful like BENQ and Pfizer, elude national identification. Building relationships with foreign journalists and consistently supplying rationale for strategy and actions will go a long way towards dispelling the conspiracy theories; while never fully admitted, these theories hold that all Chinese companies are controlled from within Zhongnanhai.
Healthy companies are often bolstered by statistics proffering hearty returns. But recent history has shown how numbers and their mavens can be wrong. Rating agencies still had positive recommendations for several Asian banks right before the Asian Financial Crisis uncovered all the crony capitalism and bad loans. Eight weeks before bankruptcy was filed, Enron was being touted as “the best of the best” by Goldman Sachs. Consequesntly, gaining and holding the trust of stakeholders requires more than a consistently solid financial performance. Profits can be fleeting, reputations must not be.
Chinese companies are being painted with a large brush; smart companies need to start distinguishing their specific outlines in the picture. Strategic public relations can help them de-demonize their images.
* Ravi Garla is an Account Coordinator at AC Capital Strategic Public Relations.


[1] David Murphy and Ben Dolven, “Entrepreneurship Gets a Bad Name”, The Far Eastern Economic Review, September 02, 2004.
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Public Relations- A Good First Step for Career-Oriented Graduates

by Cher Li*
The New Year heralds the start of campus recruitment for many firms, not least of all public relations agencies looking to attract “bright young things”. 
Advertising posters, seminars and workshops by PR firms arouse enormous interest among graduates-to-be. Many are attracted by the glamorous careers they believe PR holds. But, interest in PR is sometimes superficial, even misguided. Despite this, there are good reasons for smart graduates to be attracted to a position in a PR agency, even if does not lead to an entire career spent in PR.
PR agency work, unlike some first jobs, provides tremendous opportunities for both professional and personal development:
   
1. The scope of work, particularly in a strategic communications firm, requires knowledge and skills in communications, marketing and, more importantly, the general understanding of business in a range of industries.  The clients you serve could range from an oil company, to a bank, even a manufacturer of baby food. As a junior professional you would have to build up your knowledge and learn how to communicate effectively within both agency teams and with suppliers. These skills will stand a professional in good stead whatever career path they finally decide upon.
2. PR officers (PROs) receive many opportunities for training and learning as strategic communications is a highly-specialized field.  The knowledge and skills necessary for PR work must be updated regularly in order to meet the challenges of the job and the market.
3. PROs enjoy broad access to firsthand business news and information as they have very close contact with the business world. They can use this information to improve their own skills and to determine which industries most interest them. 
4. PR helps young professionals to better understand organizational structures and career development paths as PR firms generally have well defined structures and paths. PR firms give a clear picture of how to ascend the career ladder. Needless to say, PR is attractive to young graduates because of the potential for moving up — not only because the salaries increase, but also because of the career potential.  PR offers the opportunity to gain business skills that are transferable to many other industries — anything from consulting to finance, from IT to the media.
 
5. PR teaches you how to work within a team.  ”Basically in agencies, we work in teams,” explains an Account Executive in a PR firm, “so there are people from every level, from account coordinator to VP.  Everyone plays a different role in a project. It really helps you learn about the business and understand how your work fits into the big picture.”   Given the importance of team work in most organizations these days it is important to learn how to be a team player early in ones career. Because of the high pressure one is under in a PR agency, team work is learned very fast.
6. Working in a PR agency also helps shape your personality. PR is a detail-oriented and relationship-oriented job. ”To do well in this business,” adds another agency contact, “you have to catch things before the client does, and keep track of a lot of administrative things.  You have to document every phone call, remember everything you said to everyone, and remember what they said to you. PR manages communications and deals with crises — so you can’t be the ones making the mistakes.”  PR professionals also have to be sensitive and relationship-oriented — not only with clients, but also with the media.  You respect your contacts and make them comfortable dealing with you - a sense of humility is indispensable.
7. A PR agency also teaches people financial management skills. In a PR agency we often have to manage the budget for a project, people learn the skills to estimate project budgets and to bring projects in on budget.  
Public relations, therefore, is a good first step out of university or college and into the working world. A PR agency is a good place to learn the professional and personal skills that will stand you in good stead for the rest of your working life, no matter what industry or profession you end up in. 
 

* Cher Li is an Account Executive at AC Capital Strategic Public Relations.

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Sago Coal Mining Disaster - Lessons for Crisis Communications

As the world entered the New Year, a 2 January blast at the Sago coal mine in the state of West Virginia left 13 miners trapped underground.  As rescuers worked frantically to save the trapped men, the eyes of the world were upon the mine and the nearby town of Tallmansville where many families waited for word of their loved ones.

CNN provided live coverage - Non-stop 

   

Executives of International Coal Group (ICG), which owned the mine, were deep in a public crisis and had to do everything within their power to manage it.  And for the most part ICG’s executives did very well.  It was a text book approach to crisis management.

But then something went terribly wrong and the company was dealing with a new crisis – a crisis of trust.  A break down in communications resulted in news reports that 12 of the 13 trapped miners were found alive, whereas, in fact, all but one had perished.   Imagine the challenge facing company executives.  How do you tell 11 families still aglow with the news that their loved ones are alive, that the news was wrong, that their sons, husbands and fathers are dead?

So, what went wrong and what can public relations professionals learn from this awful incident to improve crisis communications systems and processes in their own organizations?

Chronology of the Disaster 

On the morning of Monday 2 January, miners returned to work at Sago Mine after the New Year’s holiday.  Two crews entered the mine.  At 6:31 a.m. there was an explosion and an electricity outage.  One of the crews was trapped nearly 3.5 kms from the mines entrance and more than seven metres underground.  The alarm was raised and fire, ambulance and rescue crews from towns in the vicinity were dispatched to the mine site.  It took nearly 10 hours to move bulldozers and drilling equipment to where the miners were believed to be.  The hope was that the miners had found an airlock in which to breathe.  At 10:30 p.m. drilling commenced to provide a shaft through which air could reach the trapped miners.  It took almost six hours to complete drilling.  At that point a camera was dropped down the hole, but no signs of life were detected and tests on air quality showed dangerous levels of carbon monoxide in the area the trapped miners were thought to be.

 

By 9:30 p.m. on Tuesday 3 January one miner was found and pronounced dead.  Rescue crews continued searching for the other 12 men, believing they were within one kilometer of them.  By 11:50 p.m. news gets out that the other 12 miners have been found alive and the town’s church bell was rung.  Families of the miners gathering at the church were overcome with relief.  Their smiles were broadcast around the world by CNN and other news networks.  People were hugging and kissing, giving each other high-fives.

 

But by 2:30 a.m. on Wednesday, just two and half hours after hearing all were safe, news reached the church that only one miner, Randall McCloy, had been retrieved alive.  Smiles and jubilation instantly turned to anger and despair.  Shortly after 3:00 a.m. ICG’s President, Ben Hatfield, and other company executives arrived at the church to tell the families that all but one miner had perished and to apologize for the earlier miscommunication.  The people gathered at the church, overcome with grief and anger, shouted down the executives and verbally abused them.

 

People wanted to know what went wrong and how such a miscommunication was possible.  What had been text book crisis management for most of the period of the event had failed and company executives were left in a very difficult situation.

 

Text Book Crisis Management 

 

In the first few hours after the accident a media centre was established and media were provided regular updates through briefings.  CNN and other broadcast networks carried each briefing and news conference live.   A special media hotline was put in place for reporters to obtain information efficiently.

 

Senior executives were in the forefront answering questions – again, by the book.

 

The CAP principle was highly visible as executives expressed their concern about the accident and for the welfare of the trapped miners.  They then detailed the action being taken to deal with the situation – with updates on the rescue effort.  And they provided perspective where necessary, such as pointing out that ICG was not responsible for the rescue effort and therefore not able to comment on why and how things were being done. The rescue operation had been taken over by West Virginia emergency and rescue services.   Parrying difficult questions, the company spokespersons looked well trained and comfortable dealing with the media even in such terrible circumstances.

 

Few PR professionals have managed crises communications so well.  The perception was of a company that was behaving responsibly.  Society understands that accidents occur and people are forgiving when they see that the company is doing all in its power to deal with the situation, that it is concerned for the welfare of others, and (perhaps most importantly) that its behaving with due humility.  ICG was doing what it could to assist the trapped miners and its efforts were appreciated by all.  The honesty of company spokespeople helped build trust with the media and with the public.

 

But all this dissipated immediately when company spokespeople had to correct a miscommunication that 12 miners had been found alive when all but one had in fact perished.

 

Communications Breakdown

 

In the days following the accident emergency response company officials and investigators tried to understand how and why the miscommunication occurred.  One reason put forward was that the initial explosion had destroyed the hard line telephone system into the mine, forcing rescue workers to rely on two-way radio communications for information.  Two-way radio communications are less than ideal – sound quality is poor and there is considerable potential for words and sentences to sound unclear and distorted.

 

In addition, communications from the lead rescue team had to be relayed several times to reach the surface and crisis operations centre.  The lead rescue team which was the first to find the 12 remaining trapped miners (one had all ready been found and confirmed dead) had radioed the back-up rescue team.  They said: “Twelve bodies; one alive.”  By the time this reached the surface, the message had been contorted to “Twelve bodies; all alive.”  The rescue teams that dashed into the mine to help bring up the survivors as a result of this message were shocked to find all but one alive.

 

However, before anything could be corrected, word had reached the families of the trapped miners waiting for news at the local Baptist Church .  They started rejoicing.  TV news crews standing by and even some newspapers started reporting the “Miracle in the Mine” story, saying all remaining trapped miners were found alive.  Importantly, however, none of the media had received this information from the crisis communications centre.  Nor had the families received the information from official sources.

 

News reporters waiting at the Baptist Church , where families were awaiting news, were the first media to hear the initial incorrect reports.  Their sources were the families in the church.

 

How did these families get their information if not from official sources?

 

The problem was the overwhelming jubilation of everyone involved in the rescue operations.  They had all heard what they wanted to hear.  They were euphoric and they wanted to share their happiness.  Rescue workers in the command centre started reaching for their cell phones.  They called friends and relatives who in turn called friends and relatives despite the time.  Word reached the church where families were waiting for news and where news reporters were waiting to get the reactions of families when news arrived.  In the strange world of the 24 hour news cycle and modern mobile communications, they received the news ahead of the reporters camping at the crisis communications centre, who were the first to receive any official news.

 

As newspaper deadlines closed on the east coast of the , headlines were quickly changed to declare “Mine Miracle”.  In the world of supersonic global communications the news spread around the world before anything could be confirmed or disconfirmed by ICG.

 

Mark Twain once said: “A lie will get halfway around the world before the truth has got its pants on.”  ’s worst mining disaster in more than 30 years proved him right.

 

After rejoicing for three hours that their loved ones were all alive, hope was shattered.  And ICG was managing a new crisis – a crisis of trust, a crisis caused by miscommunications.  A crisis that could have been avoided.

 

Key Learning 

 

Communications during a crisis have got to be secured.  In the age of the mobile phone this is especially important.  Today’s communications systems make it possible for lies and half-truths to spread incredibly quickly.  The more that can be done to reduce the risk of misinformation getting out, the better.

 

So what can be done?

 

First and foremost, make non-official communications impossible between those in a crisis operations centre and the outside world.  Officials manning a crisis operations centre should be asked to relinquish their personal mobile phones as should rescue workers.  Only official mobile phones and radios should be used and they should only be used for official purposes.

 

Related to this, companies need to make sure that only official e-mail systems are used.  Internet access, particularly access to personal e-mail accounts, should be restricted.  Needless to say personal chat systems and chat rooms should also be restricted.

 

Information flow is the key to successful crisis communications.  Everything possible should be done to ensure it is accurate and controlled.  Only information that has been cleared and approved through appropriate channels should be released to the media and the public.

 

The only way to make sure the truth isn’t caught with its pants down is to make sure its belt is tight to begin with.

Posted by AC Capital Strategic Public Relations in 20:07:40 | Permalink | Comments (1) »