International companies operating in China are facing new challenges around their positioning and messaging amid fresh pressure on the economy and financial markets. An economic slowdown, deeper than many commentators predicted, together with a surprise currency devaluation has contributed to a dramatic sell-off in domestic equities.
Attempts by Chinese authorities to stabilise markets have also so far failed to deliver investor confidence. China is increasingly looking vulnerable to the outside world and companies are no longer able to tell a story of easy growth and blue sky opportunity. The China ‘story’ could become a liability for companies, unless their positioning around the world’s second largest economy is carefully articulated.
For many of our clients, a challenge is managing the market’s expectation around China growth, which is the macro story, in addition to how this may impact sales of their products and services in China.
Financial clients and their stakeholders have been buoyed, up until recently, by a raft of measures to open-up the market: mutual recognition, QFLP (Qualified Foreign Limited Partner) and the Shanghai-Hong Kong Stock Connect. At the same time, professional services firms, real estate, logistics companies and other B2B businesses, had good reason for optimism around China. Today, there may be less cheer.
What is the best approach to communicate your views on China? Apple’s CEO Tim Cook took a direct approach and emailed CNBC’s Jim Crammer to help reassure investors that all is fine. The stock rebounded on the news. The Starbucks’ CEO sent a memo to staff as a way to calm all stakeholders that the volatility won’t impact growth plans. The head of mining giant BHP Billiton gave a broadcast interview to say he remained a "China bull", much to the bemusement of the anchors.
So, what is the best way to communicate around China in times of volatility?
The first question we ask is "why communicate at all"? Unless you are a global leader (Apple, Starbucks) where your stock price is tied to new growth from China, or a company that happens to be reporting earnings on the day of a massive sell-off (BHP Billiton), it may be better to not communicate at all until the immediate storm passes. Even as the immediate volatility eases, any publicly traded company needs to be very careful around exactly what it says.
If it’s decided that there is a need to communicate about a specific market, here is some guidance to help ensure your message is effectively delivered and has impact:
- What exactly is your "message"? Is it optimism, commitment, confidence, calm, growth or caution? The problem with executive communication during these periods is that the message can easily be mangled and confuse stakeholders. Be clear, concise and ideally repeat a single message.
- Once you decide the message, you need to have strong supporting evidence. If you are sending a message around "confidence in China" what are the specific reasons for this confidence? Is it recent sales, new data or insight? If so, which markets inside China: Tier 1 cities or Tier 3, and where? Be very detailed, otherwise, your message will not be credible and you will be open to ridicule.
- Consider anecdotes, if these are available, to again support the message. For example, has your spokesperson seen challenges and change in the past? Is there a story around visits to China that help back-up the message?
- Prefer written comments and statements over live interviews on broadcast or 1-on-1 interviews in print, unless your spokesperson is very disciplined and polished.
- Does it have to be the CEO or could it be the China head as the spokesperson? This decision will be partly driven by whether the interview is written or face-to-face.
- Which stakeholders are you seeking to reach both inside and outside of China? The answer to this question will determine which media you seek to engage with.
- Consider how you are distributing. Statements today should be in English and Chinese. They should be sent to traditional and social media outlets. Also, digital content on your own website can be a useful tool to spread your message.
- Be well prepared for follow-up inquiries. Nowadays top-tier Chinese press are as aggressive and professional as international newswires. Any additional information provided should be on message and relevant to the news trend. Ensuring a spokesperson is available in the Chinese time zone is also necessary.
The current volatility in China is an opportunity for companies to deliver a clear and concise message about their position in this market. Companies with an appetite for strategic thought leadership, sharp messaging and quality spokespeople will win the battle to position themselves as proactively tackling the market challenges we are now seeing in China.
Oscar Wang is Head of Ryan Communication’s Shanghai office.