by admin
November 5th, 2012

Not too long ago, in the pre-digital age, corporate reputation was something that was considered manageable. Companies and the media used to have control over their messages. All a disgruntled employee or customer could do was tell a few friends and the drama would end there. However, in today’s age of always-on social media, that’s no longer the case. Discontented individuals can easily share their unhappiness with an international audience in a matter of seconds, and build a like-minded community in hours. As such, corporate reputation has become a priority for many companies, as the pressures and consequences caused by social media make it too serious to ignore.

The online media landscape in China

In China, there are a whopping 538 million registered Internet users, more than double the whole US population. Most of these Chinese Netizens use the microblogging platform Sina Weibo. Although microblogging was only introduced to China in 2009, it has quickly developed into a major channel for the public to express opinions on a wide range of topics.

One factor driving Chinese interest in microblogging is a desire among the public to seek out more diverse news sources. Despite the government’s eye on major topics posted on Weibo, microblogging is often seen as a source of independent news and opinion, and is often used for fact-checking, particularly as the rate of discussion on the platform can outpace the news cycle. This was the case in the summer of 2011, after a high-speed train crash left at least 35 people dead, and fast-tweeting microbloggers drove discussion of the catastrophe on Weibo. Even the mainstream media had little choice but to quote the microbloggers in their coverage of the story. Ultimately, these external pressures influenced the Chinese government to open a full investigation into the accident and the Ministry of Railroads’ high-speed rail strategy. This situation would have played out considerably differently in China just a few years ago, before such platforms existed.

How important is reputation 
in China?

The standard line in China has traditionally been that companies shouldn’t waste their efforts building brands and corporate reputations. Rather, they should focus on making money quickly by producing high-volume, low-quality products. But a realistic look at today’s market confirms that this view is outdated. Due to a number of scandals affecting consumer products, particularly foodstuffs, Chinese consumers are very much concerned with brand and corporate reputation. Research conducted by Weber Shandwick, surveying 1,375 consumers and 575 senior executives worldwide (including a Chinese segment), revealed three very interesting results:

1. A large majority of Chinese consumers (87 percent) report that they increasingly check labels to see what company is behind the product they are buying. This suggests that a company’s reputation is extremely important to the brand’s reputation and in the buying decision.

2. Nearly half of Chinese consumers (47 percent) frequently or regularly discuss a specific company’s reputation with others.

3. Consumers are more confident about buying products from a company with a “most admired” standing (61 percent) than one with a positive share price forecast (23 percent).

Indeed, many Chinese are attracted to foreign brands because of their reputations for quality. In the cases of food and beverages, and pharmaceuticals, Chinese consumers are attracted to (and willing to pay a premium for) foreign brands because of their reputations for standards in hygiene, health and safety. Take, for example, milk powder products. In 2007, demand for infant formula from the local dairy manufacturer Sanlu was strong. Because it was a local manufacturer that had recently entered into a joint venture with Fonterra of New Zealand, the world’s largest dairy company, consumers believed that the company’s products were safest for their children. But just one year later, Sanlu’s infant formula was found contaminated with the industrial chemical melamine, leading to multiple deaths and thousands of hospitalised children. Sanlu went out of business shortly thereafter, and Fonterra established its own independent infant formula factories in China as a way to reestablish its reputation for quality. The incident also resulted in action from the government, including senior-level resignations within the State Food and Drug Administration’s Administration of Quality Supervision, Inspection and Quarantine; the establishment of new dairy regulations; and a call for stronger adherence to food safety policies at all levels.

There are no two ways about it: reputation is important, and it is especially important in China today. But building, enhancing and protecting your brand in China has become even harder with the emergence of new media, the Internet and microblogging in particular. While China’s Netizens have managed to expose malfeasance and pressure major players (both public and private) into operating more transparently and more responsibly, they have also created an unwieldy juggernaut that has on occasion caused reputational crises for major corporations, based on the flimsiest of pretexts or with little due cause.

In part two, the authors will look at how to best protect corporate reputation online in China

Natalie Lowe is vice-president, Emergent China practice, at Weber Shandwick; Alistair Nicholas is executive vice-president, Asia Pacific, at Weber Shandwick

This article first appeared in CW magazine, published by the International Association of Business Communicators (IABC)

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