As they move abroad, Chinese firms appear to be applying the same formula of scale to achieve success as they did at home. But they may be in for a rude awakening. There are now 95 Chinese companies on the Fortune 500 list, and notwithstanding a few notable exceptions such as Haier, Huawei, Lenovo, and more recently, Tencent, most are nowhere near to becoming global brands.
Their emergence on the world stage represents the most exciting commercial opportunity for the public relations trade today. But will these firms embrace PR and invest in it like the way their western competitors have done? We can take nothing for granted. As PR practitioners, we need to earn our way in.
They may be riding high on the mantra of ‘go global,’ but Chinese multinationals will find it really hard to compete in the other 195 countries of the world where ‘mind share’ will be needed to help secure market share. Corporate communication in many of these large Chinese firms – especially the state-owned enterprises (SOEs) – has been relatively rudimentary and usually ‘local’ in orientation. That means they are simply not yet equipped with the tools they will need to build an image, or the defences required to protect their reputation.
That’s a key point, because as Chinese companies gain traction internationally, they can count on being attacked by entrenched competitors, who in many cases may enjoy commanding communications positions supported by the most advanced PR capabilities available today.
Even before then, Chinese companies – as a national category – will be up against a laundry list of negative stereotype preconceptions before they even get started. In the West, for instance, they are variously portrayed as ruthless competitors who sell shoddy goods at bargain basement prices; untrustworthy partners who infringe copyrights; employers who mistreat workers; unscrupulous traders; culturally insular and sometimes even seen as a security risk. Huawei’s difficulty entering the United States market is probably the best-known example of that.
While these are indeed steep hurdles to overcome, the image problem is also a tremendous PR opportunity for Chinese companies. They hold the ‘power to surprise’. Ethical corporate behaviour and consumer satisfaction can turn around negative attitudes. Indeed, it is the contrast between poor perception and admirable performance that will determine the success of the Chinese multinationals overseas.
It is critically important that Chinese enterprises become renowned for the positive things they stand for in the first place, rather than become infamous first through negative mistakes. The key test will be when people hear about a new Chinese company they think of it favourably.
Let us look at the rise of Chinese companies through the lens of media history: British firms became world famous during the days of the printing revolution, American and then Japanese brands became known in the broadcast epoch, and the Korean conglomerates came of age during the early days of the Internet. Now the Chinese companies will become the first global brands to be born in the age of social media.
Social networks are an obvious opportunity for Chinese companies to foster stakeholder relationships and build new communities, but they also create lots of risk. Bad news can easily snowball into an uncontrolled and unexpected crisis. China’s social media ecosystem is impressive, but it is a markedly different domain than the international one. The platforms aren’t the same and the international channels aren’t as censored and controlled. Chinese companies need to understand the cultural contexts of overseas social networks and apply the resulting knowledge to their advantage.
That should represent opportunity for PR firms who are social media savvy. But there are many obstacles to overcome. For many Chinese companies, corporate communication is a relatively novel concept and one that is poorly understood and inadequately resourced.
At a time when Western multinationals are ramping up their PR budgets, Chinese firms are debating whether or not they need PR at all. This is prompting them to ask some very fundamental questions, like: What is public relations anyway? How is it different from advertising and other forms of marketing? Where does social media fit in all of this? How much does PR cost and how do we measure its effectiveness? As industry practitioners we need to be ready with compelling answers to such questions. By using the tangible analytics we can help Chinese firms make sense of it all. We can show what we do and how PR can help them achieve their objectives.
We also need to manage their expectations. Last week I met a potential client in China eager to build a positive global brand image. The question the executives asked would make any modern-day PR professional squirm. They asked me how we could "control" the media coverage and "place negative stories" about their competitors without anyone finding out? Such attitudes need to change if Chinese companies expect to succeed overseas. They need to recognise that communication works in a different way outside China. It is governed by a different standard. It is we who are on the front lines of PR practice in Asia who can educate corporate managers on the best practices in global communications and raise awareness about the risks they face when doing business overseas.
Just as a Western multinational entering the Chinese market needs to quickly understand and adapt to the local way of doing things, so too must a Chinese firm going West.
Bob Pickard is Asia-Pacific chairman, Huntsworth