Off The Record

In the recent National People’s Congress, we heard a strong voice calling for a restriction of foreign investment and for the government to give more support to domestic companies.  If you try and think of crises over the last four years, whose names jump out?  I bet they are Nestle, KFC, and P&G - just to name a few.

Doesn’t that tell us something?

Twenty years ago, when those big names entered the China market, everyone applauded - they were perceived as the provider of investment, leading technologies and management system.  Unfortunately, 20 years later, this perception has changed – the heroes are now seen as acting irresponsible and posing a threat to long-term economic development to China .

If the Danone case happened 20 years ago, the media and government would have definitely been on Danone’s side.  But now, when many successful Chinese companies are emerging - and going global - Chinese academics and the public have really started to think about the potential negative impact of the dominance of foreign investment in China .

Will foreign investment restrict the development of local industries in the long term?  Are foreign companies really bringing benefits to China or is it simply a capital game?  Is China just a place for them to make profits with very low costs?  These kinds of doubts are appearing more and more often in the Chinese media.

To make matters worse, countless foreign companies have been involved in crises making the Chinese public doubt whether they are really acting responsibly in China .

The media environment and public perception is changing a lot.  But are MNCs aware of that, or are they actually doing anything about it?

Just make a quick search for interviews conducted by many CEOs from MNCs and those common sound-bites immediately jump out, “we are the global industrial leaders”, “we come here to educate the Chinese consumers”, “we will contribute a lot to the local economy and taxation”.  It becomes worse in many crisis situations, “this is the standard we follow in other countries globally” or “we strictly abide the Chinese regulations”.

So the answer is “NO”.  Foreign companies have not realized the changing media environment and public opinion in China - or they do not think it is really important for them.  As a result, they still follow the “old” way of thinking in this “new” environment.  To make matters worse, many decisions are still made in the overseas headquarters who don’t understand or are even not aware of the changes taking place.

However, because of the development of new media and the transformation of traditional media in China, the media really have become a medium to reflect the public’s opinion and therefore have a real influence on government policy.  If MNCs are not doing anything to change these negative perceptions, the actual business environment will eventually change as well.

So the question is, what can the MNCs do to adapt to this shifting environment?

From a PR perspective, the author believes the Chinese public and academic world are beginning to focus on the non-economic and long-term contributions from foreign companies.  The messages MNCs need to communicate and the perception they need to build must reflect this shift in focus.  The author is not another old advocate for CSR programs, and actually the author thinks most CSR programs in China are not very successful.

When you do on-line research and read some in-depth media analysis on these topics, a good proportion of the Chinese public think most MNCs have CSR programs in China which are just part of their branding campaigns. Some even think it is just like a millionaire spending some pocket money.  A successful CSR program is a long-term, systematic partnership with the right organization – which is reflected in your overall business strategy and actions.

Again, a strategic communication plan is also needed to support it.  It is not about making some pleasant statements in your donation ceremony.  In any public speaking opportunity, you need to deliver the message that your company really takes actions and is committed to the long term social development of China.

It is also about changing your communication tones.  Instead of positioning yourself as the global leader to help China, you need to be perceived as a good company that respects and really listens and talks to the Chinese public, government, and your business partners.  Instead of positioning yourself as an educator of Chinese people, you need to be perceived as a company that really wants to understand Chinese culture and meet their needs.

Finally, remember that communication with the public is not the same as a legal debate.  Many companies win lawsuits - but lose their reputations and thus the trust of the public in the process.  This is more important for a foreign company in China because you are already perceived as a giant that does not respect Chinese people.

In Hollywood movies there is a famous saying, “nothing personal, just business”.  Here the author wants to say “nothing business, but perception”.  So to put it simply, it is not about business and it is not about whether you are following regulations and standards.  It is all about perceptions.  And these perceptions will finally impact your business and even the entire economic environment.

Coincidently, today a local IT person protested during a speech given by Bill Gate’s during his visit to China. There is some interesting “nationalism” coverage supporting this “hero” already.  So at least, the head of the most successful MNC in China has personally realized some changes.