China Business, Internet

Chinese Company PR: Not Good

China Public relations

PR guru David Wolf of Silicon Hutong just did a post, It Is Not Just Toyota, in which he lambastes Asian (including Chinese) companies for not properly preparing for or handling crisis.

Wolf starts out by commenting on a Wall Street Journal article that sees Toyota’s mishandling of its quality recall as “just one more example” of another “otherwise outstanding Japanese” company turning into a “headlight-bedazzled deer in the face of crisis.” The Wall Street Journal article sees something in “the Japanese corporate culture that causes companies in crisis to go into communications paralysis. The real story behind the Toyota recall is that even this most admired of Japanese companies is utterly incompetent when it comes to the fundamentals of strategic corporate communications”

Wolf sees this “non compus corparatus” problem as “endemic throughout Asia.” “For all their commercial, production, and engineering prowess, most of Asia’s great companies share this giant blind-spot.” Wolf sees the problem as stemming from big Asian companies no longer being able to keep their problems out of the spotlight

Twenty years ago, even ten, the severity of this problem might have been ignored. Protected by pliant local media all too ready to play down issues in deference to advertising dollars and coddled by governments at home and in countries where Asian firms set up large manufacturing bases, the specter of backlash was modest.

But in a world ruled by the radical transparency of the Internet, even the slightest stain on one’s corporate laundry becomes a red flag for the world to see. And it is not just bloggers and tweeters driving this change, it is also a media desperate to sustain their relevance in the new information environment, and a nascent but growing anti-corporate, anti-globalization movement seeking to prove that corporations are, by design, malignant social actors.

Wolf then tells of his experience with Asian companies trying to deal with a public relations crisis and he is not impressed:

In over a dozen years in the communications business in Asia, I have encountered all manner of companies, startup to MNC, new and old, American, European, Japanese, Korean, Chinese, Singaporean, Australian. In all that time I have never had cause to discard my initial impression of Asian firms as almost utterly incapable of anything but the most planned, scripted, stilted and disconnected communications, suited for an age long past, and incapable of protecting themselves when the wolves come howling.

This must change, and it will, because the crises will not go away. Even after we stop reading about Melamine Milk, Lead-Laced Toys, Rotten Drywall, Tainted Dogfood and similar examples of Asian corporate moral failure, China’s companies will discover that even enterprises with the best of reputations and purest of intentions can become overnight targets of a global foaming-spittle lynch mob.

He then assesses blame where it must go, which is right to the top:

It is time to stop seeing corporate communications as PR, to stop seeing PR as the “press wrangling” function of marketing, and to stop choosing earnest and attractive but otherwise incompetent individuals to take charge of a company’s reputation.

But let’s make this clear: the fault here does not lie in the under-staffed, under-funded, under-appreciated PR departments stashed in back offices around the region. The problem goes all the way to the top. Poor corporate communications bespeaks inattentive or incompetent corporate leadership.

Until Asia’s CEOs and managing directors start paying some careful attention to this problem, we are going to watch an embarrassing procession of our best firms self-immolate. After all of the effort to create world-class Asian companies, what a pathetic waste that would be.

Okay, I agree with all that, but are Western companies really much better? My sense (and it is just a sense as I do not have nearly Wolf’s wealth of experience) is that some are and some aren’t and the better ones are mostly limited to the larger companies that have a really professional in house public relations staff and/or regularly use top flight outside public relations consultants. I say this because I have seen my fair share of really successful small and mid-sized American companies (including clients) get pretty much annihilated due to what I perceived as their unwillingness to get on top of a bad situation early by bringing in outside help.

My sense is that many business owners who started their own companies become of the view that something like public relations in a crisis is something they are going to handle on their own and they do, oftentimes to disastrous effect. I think the business owner believes either that no outsider can know their business well enough to help or simply because bringing in a public relations/crisis management person will cost too much.

What say you?

17 responses to “Chinese Company PR: Not Good”

  1. Dan, when it comes right down to it, the similarity that nearly all companies in East Asia have to small-to-medium firms in the West is not coincidental. SMEs in the west are mostly firms that have grown up around one person or group of people, in which the leader takes the lion’s share of responsibility and is supposed to be on top of all the company’s business, something which to varying degrees they actually achieve. However this dynamic is the case with every East Asian firm I have worked in, even the one with 500,000 employees world-wide. Whereas in large Western firms different dynamics take over once the company grows above a certain size, in the firms in which I have worked in Asia this is not the case, the boss still exercises much more control over the firm than even the most charismatic/control-freakish of big-firm bosses in the west would try to exercise. Foxconn’s PR was still pretty much designed by the boss, and more to the point designed to please the boss, and most definitely suffered from a bunker-mentality that failed to see how their actions would appear to anyone who didn’t believe that the company could do no wrong. The inevitable result was PR efforts like quietly funding sympathetic films based on Terry Gou (the boss and Taiwan’s richest man)’s life, and tone-deaf PR offensives against negative news which accused reporters exposing alleged wrong-doing of essentially being evil and hating China. I personally knew one PR head at a firm I worked for who treated his position as 1) a free opportunity to set up a casting couch for all the various models/actresses he came into contact with, and 2) was, by profession, an engineer. It is this kind of man who is put in front of a microphone to answer questions when a scandal arises.
    The problem is a twin one – bosses who refuse to believe that there is nothing which they are not qualified to do (like my current boss who believes that he knows how to make films) and under-qualified employees who not only refuse to criticise the boss, but design work which should be designed to please the public to instead please the management.

  2. Questions: (1) Does any of the Toyota scandal stem from the Asian systemic cultural value on never expressing fault skyward? (2) When Watergate test applied (What did you know? When did you know it? What did you do about it?), amazing how many America companies would fail a passing grade. Remember, tobacco? How about American Airlines?

  3. Thanks for a great post, Dan. I would say Western companies in general are better at managing issues/crises, partly because, as FOARP says, they aren’t quite so boss-centric. You can disagree with the boss and suggest he reconsider his strategy. That’s harder to do at Chinese companies where everyone stands up when the boss enters the room and lowers their head. (Which isn’t to say many US companies haven’t handled crises absolutely terribly.)
    The most obvious examples were highly public crises like the hijacking of the 2008 Olympic Torch Relay by various activists, where BOCOG thought they could control the news in France and England the way they do in the PRC. They ignored all the warnings that they were unprepared for a crisis and when the s*** hit the fan they were literally paralyzed. The guys at the top thought they knew it all. They learned the hard way that they knew nothing.

  4. I’ve seen this pattern with internal failures in Asian organizations. And internal differences, as in a Western team is doing something and a higher level Asian manager breaks the threads so the team’s results fail, and the failure path visibly leads to the manager. I think it’s linked to face and their strong need/sense of control. Even PRC government PR is bare bones in such cases. And the indirect approach, using others to pave over or deter or defuse the matter is common. A Chinese company pays the newspaper reporter to keep quiet.
    I suggest that relationship cultures, polychronic in Hall’s words, using relationship/social/cultural ways, not so much abstract PR that sort of throws info into a relationship void.

  5. East Asia is a big place. Mainland Chinese, South Korean, Hong Kong, Taiwanese, and Japanese firms are all ***very*** different from each other.
    Having one boss that thinks that they can do everything is one way that things can go bad.
    Having a committee and bureaucracy run a company in which no one has responsibility for anything is another way that things can go bad. In the case of the Toyota fiasco, I think the latter is the problem.
    I don’t think that the Toyota problems was specific to Asian companies. The curious thing is that Toyota had a really good reputation for quality until the latest bump.
    Let me ask a question. Suppose we found out that **GM** skimped on quality and there turned out to be a major defect which everyone was ignored. Would anyone be surprised?
    For that matter, if we found out the a Chinese car company did this, I think it would be less news, because everyone would have expected it.
    I think that the big lesson is don’t fall into stereotypes.

  6. And what happens to western SMEs that try to bury, confuse and obfuscate bad corporate behavior, especially shoddy products? Crippling, sometimes fatal lawsuits, as in the case of the E.coli tainted peanut butter.
    Consumers in Asia do not have such a recourse. Dan, you do have S. Korea experience, I would guess that product liability lawsuits end in a quite, small payment of compensation, regardless of the severity of injury. And in China, the plaintiffs may be beaten or imprisoned.

  7. Since most of Asian culture is based on Confucian beliefs, and underlying theme can be generalized across Asia, to varying degrees.
    Questioning authority and respect for superiors is a major theme of Confucian belief and undepins Asian values. Throw in the avoidance of shame (i.e. the “face” issue) and the inability to admit fault.
    Try to question the authority of an Asian in a position of power or hold them to account for their actions and what you get is a “deer in the headlights kind of reaction”.
    Westerners, for the most part, are taught that it is better to try something and fail, than to not try it at all. Also, that if we make mistakes, it is best to admit to those mistakes, and to fix them as fast as possible.
    Asians want to avoid conflicts, bring harmony to the situation. Westerns want justice, and want it immediately.
    Furthermore, most Asian economies are based on the idea of “What is good for the supplier, is good for the economy”, while Western economies follow “What is good for the end user (consumer) is good for the economy”.

  8. causalobserver: Consumers in Asia do not have such a recourse. Dan, you do have S. Korea experience, I would guess that product liability lawsuits end in a quite, small payment of compensation, regardless of the severity of injury.
    But the same thing happens in Germany, France, Sweden and every other country other than the United States. The United States is pretty much the only country that allows for large punitive damages for product liability, even Canada doesn’t. Also the United States is pretty much the only country that allows plaintiffs lawyers to collect a fraction of the damages.
    In pretty much every single country except for the United States, it’s simply not considered the responsibility of the judicial system to shut down companies that manufacture bad products. It’s the responsibility of some administration agency.

  9. richard: I would say Western companies in general are better at managing issues/crises,
    Sure you can see this in the stellar way that US investment banks have been open and honest, and how General Motors has such a stellar track record of product safety.
    richard: That’s harder to do at Chinese companies where everyone stands up when the boss enters the room and lowers their head.
    It can be easier. If the boss says “OK people, we have a problem and I want people to talk openly about how to fix it.”
    Vic: I’ve seen this pattern with internal failures in Asian organizations. And internal differences, as in a Western team is doing something and a higher level Asian manager breaks the threads so the team’s results fail, and the failure path visibly leads to the manager
    I’ve also seen this with Asian teams and Western managers.
    Vic: I think it’s linked to face and their strong need/sense of control.
    Which is hardly unique to Asian companies.
    Look, I think this discussion is weird because people are using the same tired stereotypes of “Asian” versus “Western” which ignores the fact that I don’t think this is an Asian/Western issue. Toyota screwed up. Toyota is a multinational corporation headquartered in Tokyo but with large parts in the United States.
    What’s got me really concerned is that with the economy in bad shape, people are starting to think in terms of Asian versus Western stereotypes which don’t accurately describe what is going on. Something that has been noted is that there has been a role reversal with China starting to exhibit the worst habits of arrogance of the US after the collapse of the Soviet Union. I’m also starting to see some in the US xenophobia and stereotyping toward the outside world that China had in the 1990’s.

  10. Great points on the tendencies of Asian firms to be extremely boss-centric. However, it is more than just a question of structure, the problem of communication in business also stems from culture and mentality. In China, business communication is seen as only used “when necessary”, and usually, that means its some kind of mandate or contributes directly to profits. Making efforts to become more transparent or provide “free information” are seen as a waste of time. But as you can see, communication is absolutely necessary in crisis-mode, and that’s an uncomfortable, unfamiliar spot for the Chinese or Eastern company.

  11. I think we REALLY need to qualify the whole “communication thing” into the recognition that companies that get “communication” down are the exceptions rather than the rule.

  12. Part of what I find bizarre about this conversation is that there are a lot of stereotypes about “Chinese companies” and “Western companies.” Corporations (whether Chinese or Western) are not democracies, they are hierarchical and authoritarian institutions. If the boss doesn’t want to hear the truth, he isn’t and that’s regardless of Chinese or Western company. This is very important to remember if you are ever in any authority position.
    One thing that also makes communication difficult is that most real communications is hidden to outsiders so it’s hard to know what’s really going on. It’s possible to have a company that makes a big show of “transparency” but which in fact dissenting e-mails are ignored, and people that write dissenting e-mails are stigmatized as “uncooperative.” The code word that tells you that you are in trouble is “lack of teamwork.”
    It’s also possible to have a company that looks opaque on the outside, but in which there are channels for frank and honest discussions and for dissent and disagreement, as long as you phrase it the right way.

  13. The other thing is that personally, I think that Toyota handled the PR aspects of the problem reasonably well, certainly better than Audi did when they handled a similar problem in the mid-1980’s.
    They were extremely slow to realize that they had a problem, but that is an issue of crisis prevention rather than crisis management, and that wasn’t a PR problem.

  14. I wonder if Toyota’s problem is another example of ringi gone wrong. Many large Japanese corporations use the so-called “ringi process” of decision making, which requires approvals up and down the chain of command in a very formalized, methodical process. (Google Toyota with ringi). I know that this is more of a product development/overall management process, but am curious if some elements of it are used to deal with public communication on something of this magnitude. If so, the vaunted “Toyota Way,” which has certain roots in East Asian thinking, may be to blame.
    As to generalizing the PR awkwardness of “East Asian” companies, you have to understand where they’re coming from. First, their way of doing things has long been accepted as appropriate for the “East Asian” countries to which they belong. Of course, once you become a global player like Toyota, that kind of mentality can be fatal to your overseas operations.

  15. “strategic corporate communications”? That’s code for lying.
    The gas pedal was bad, end of story. Applying “PR” is inherently unethical. No surprise that’s what American businessmen do.

  16. Will Toyota ever recover from what has occurred? The world is now suspicious of Toyota’s quality and no longer trusts it as well. Will Chinese companies learn from this?

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