by David Liu
July 13th, 2012

Nowhere do the polar forces of globalisation and localisation converge as clearly as they do in the “Middle Kingdom,” an ancient designation for China. Thirty years after the reform and opening- up policies of the post-Mao era, the civilisation with over 5,000 years of history is more global than ever before. But the pace of that change shrouds what is a critical success factor for multinational corporations in China – localisation.

As a historical hub for global trade, Asia has long been at the forefront of globalisation. Today is no different. Of the 60 “global cities” listed in Foreign Policy magazine’s most recent Global Cities Index, 22 were in Asia. Seven of those were in China. The combination of an upsurge in foreign direct investment, a rise in international tourism and greater access to technology has heralded China’s relevance to, and appetite for, globalisation in the 21st century.

Yet it is in this environment that localisation continues to flourish.

One area which is always hugely difficult, of course, is in the differing global and local perspectives of highly sensitive issues such as ethnic conflict and human rights. Across the world, ethnic conflict shows little sign of becoming extinct. In 2008, the Heidelberg Institute for International Conflict Research revealed that self- determination (the desire of a group to gain independence for itself) was the second leading cause of medium and high-intensity conflict around the world.

As we know, there have been several instances in the past few years of civil unrest in China’s ethnically distinct areas of Tibet and Xinjiang – and these are widely and critically reported in Western media.

In China, there are different perspectives about these conflicts. In one case, Chinese netizens reacted with the creation of a website, anti- CNN.com, that criticized the Western media’s reporting of the situation. And in a move of patriotic unity, 2.3 million Chinese around the world demonstrated their national pride by adding the “I (heart) China” logo to their instant message usernames in just one day.

The impact was profound.

The point here is not whose perspective is right or wrong. But that Western companies operating in China have to be sensitive not only to the social pressures which comes from their customer and stakeholders in the West; but also be mindful of how their views and behaviors are perceived in China too. That can be very difficult and takes considerable balance, sensitivity and diplomacy.

Another such example occurred in the run up to the 2008 Beijing Olympics. When rumours that respected French hypermarket company, Carrefour, had contributed funds to the Dalai Lama’s cause, the backlash in China was crippling. Fuelled by the fact that Tibetan independence protestors had reportedly disrupted the Olympic torch relay in Paris, there was a swift call in China for the boycott of French goods – with Carrefour quickly becoming the number one target.

Carrefour’s response was clear and precise. It issued its employees new uniforms bearing the colors and pattern of the Chinese flag and a cap that read “Beijing 2008.” And shortly after the Olympic Games, when Western China was hit by a devastating earthquake, Carrefour immediately donated 23 million RMB (US$3.58 million) to relief efforts – the largest contribution by a French company in China. In some respects, it was not the size of Carrefour’s donation that helped re-establish its position in the market; it was the absolute lack of ambiguity with which it did it. The company acted as a local company would have acted, demonstrating compassion, generosity and goodwill in equal measure, and in China that matters enormously. And it did all that without any mention of Tibet or the Dalai Lama. What helped it overcome the crisis was sensitivity and clear communications.

This is an example of how taking the local approach to the introduction of brands can be pivotal to commercial success. Like most consumers, the Chinese want to consume on their terms.

We also see this in the work Weber Shandwick does for our clients. As McDonald’s approached its 20th anniversary in China in 2010, it recognised that future success in the country would depend on its response to a shifting audience. China’s explosive growth has intensely increased pressure among today’s competitive workforce of young adults who had outgrown McDonald’s Happy Meals. Meeting local market need, McDonald’s rolled out a new brand messaging especially for China. ‘Make Room for Happiness’ positioned the restaurant as the destination for consumers to take a moment out of their stress- filled lives and enjoy themselves. A unique campaign driven by Weber Shandwick generated consumer excitement on a scale not seen since McDonald’s entered the market. Newspapers declared “McDonald’s is now trendy!” Such success came as a direct result of understanding the local market and responding to their needs.

Right now, the eyes of the international community are on China. And as the rest of the world works to recover from the global recession, China’s economy and GDP continue to improve. Compare that to the steady or negative growth across developed nations, and doing business in China is more attractive a proposition now than it ever has been.

But the pitfalls of business in China are as deep as the opportunities are wide, which means the rules are simple.

Understand the nuances of Chinese culture and the aspiration of its people and their communities, and business will flourish. To simply apply the tried and tested rules of other markets and assume they will work is to not only miss the point but create the prospect of long-term reputational damage that has far reaching consequences at home as well as abroad.

David Liu is chairman, China, at Weber Shandwick


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