by Michael O'Neill
November 14th, 2013

In 1999, the Chinese government initiated its “Going Global” strategy (走出去战略), to promote Chinese investments and encourage brands to go abroad.  This followed a path similar to Japan in the 1970s and 1980s with brands such as Sony, Honda and Toyota; Taiwan with Acer and HTC, and Korea, which took the world by storm with homegrown brands such as Samsung, LG and Hyundai.

China, which only embraced the market economy in the early 1980s, was eager to have a place in the global market place.  Since its launch, the going global strategy has been implemented in two distinctive ways: what I call  Buy Tactics and Way Out tactics.

Buy Tactics:
With strong government support, the going global strategy really took off with Lenovo’s purchase of IBM’s personal computer division in 2005.  While this purchase was completed by a Chinese publicly-traded company, many Chinese state-owned enterprises recognised the use of acquisition as a quick-win tactic. During the 2008-2009 financial crisis, China — with the highest foreign reserves in the world — took advantage of the downturn and began a massive “shopping spree” led by state-owned enterprises focusing on industries such as energy, minerals/materials, financials and industrial (heavy machinery and construction). However, their aggressive approach eventually raised issues from policy makers in a number of countries, and in the  past few years the bar has been raised in terms of protectionist rules and regulations.

Way Out Tactics:
While the home market has been dominated and controlled by state-owned enterprises, Chinese entrepreneurs have been looking overseas for a way out by leveraging cheap labour and strong government export subsidies. These private companies manufacture anything from apparel to toys, from auto parts to consumer electronics, and their products have been filling the Wal-Marts of the world. While these private and sometimes publicly-traded companies are not state-owned, most of them, if not all of them, have strong relationship with either China’s central or provincial governments. Yet in the past few years, with the raising cost of materials and labour costs, these companies have realised that being an OEM does not guarantee sustainable growth, and that only by improving product quality — together with raising brand awareness — can they achieve a more profitable margin.

One issue that impacts both types of Chinese companies is that the “Made in China” brand has suffered lots of negative connotations, whether deserved or not, and this is hurting the overall perception of Chinese compnaies (for example, Huawei pulling out from the US market due to security concerns by the US Congress, poisoned Chinese toys and pet food, and more). A successful going abroad strategy cannot be sustained if these perceptions continue. Unfortunately, Chinese companies have very little share of voice overseas and this leads to weak opinion-shaping mechanisms. The ABC principle developed by Weber Shandwick serves as a roadmap for Chinese companies on how to effectively control their message and story outside of China. Only by doing this can the negative perception be controlled and minimised, if not reversed.

The ABC principles of communictions abroad

A for Adapt (入乡随俗)

When in Rome, do what the Romans do” is a well-known proverb across all cultures. China has a similar saying — “Follow local customs when entering a new village” — yet when it comes to communications, many companies stick what they do back home, which in many cases does not work for the new foreign market.

Storytelling, not propaganda, is the dominant model of communication in most Western markets. Chinese companies need to understand the way local audiences consume information, what will attract their attention, what will engage these audiences to learn more about the brands, and above all, how to create messages relevant to the target audience.  Finding a shared common value between your company brand and the local consumer is critical when shaping your story and message. Adapt to local customs, local tools, or even hire local agencies to do the work for you. This is what US/European companies did when they first arrived in China, so why can’t Chinese companies do the same? For instance, lobbying is legal in the US, but many Chinese companies don’t even understand what lobbying is, let alone engage such professionals. Therefore hiring a good local consultant is the easiest way to adapt to local common practices.

Adapt to what local successful companies are doing and at the very least you will avoid making unwise decisions.

B for Balance (和谐之道)

For many Chinese companies in the home market, their biggest stakeholder is usually the government. This is not the same case in most Western countries It is critical for Chinese companies to conduct a thorough mapping of the stakeholders that will impact them, short and long term. While the local market’s government might be one of these stakeholders in terms of policy and regulation, they are rarely the only one. Investors, partners, media, academia, NGOs, employees and consumers at large are all critical and important stakeholders, that will affect, if not shape, your brand perception.

One group in particular that Chinese companies need to pay extra attention to are NGOs. A non-governmental organisation is a difficult concept to grasp for a lot of Chinese, because in China everything is related to government one way or another. Yet this group can be particular influential in shaping public opinions and affecting public policy in the West. I recall in 2008, when the Olympic Torch was touring the UK and France, where it met with wide resistance and  was interrupted by several NGO-organised protests. A retired government official from the Ministry of Culture asked me why the government of UK and France wasn’t doing anything about it, and when I told her about the nature of the protest and the role of NGOs, she was shocked and speechless.

This kind of reaction is not uncommon among many Chinese CEOs or managers. It is therefore even more critical for Chinese companies to understand NGOs, engage them ahead of time, and routinely communicate with them in order to minimise misunderstandings and miscommunications. NGOs have their own agenda and can successfully rally public opinion on certain issues. NGOs are not the enemy; they can sometimes become a strong ally for Chinese brands that share a certain common vision. Engage them, do not run away from them. They are not going to disappear. In fact, given the growth of digital communications, they are more equipped to spread the message and shape public opinion than ever before.

Balance your attention among your different stakeholders — this will ensure you to have a more balanced view on the market and its trends.

C for China (酌水知源)

I recall in the early 2000s when I was living in the US, on average there were one or two stories per month on CNN about China. By the time I sold my belongings and was heading to Shanghai in 2005, this had quadrupled to one or two stories per week. Today, not a single day goes by without a China story appearing on international channels. There are entire segments devoted to China on most international cable news channels. This interest is a direct reflection of the power and influence that China has on the world.

While Chinese companies need to take advantage of this ever-growing interest, they also need to be careful, since most foreign correspondents currently in China speak Chinese (or they hire locally — adapt anyone?). And unlike the famous Las Vegas city tagline, what happens in China, does not stay in China. What you say at home will be heard by millions within a matter of few clicks. And since the level of trust in Chinese companies from foreign news organisations is already low due to the lack of transparency, having two sets of messages — one for home audiences or government, and one for overseas audiences — will complicate things even more. It is imperative for Chinese companies to have one brand story to tell regardless of audience or geography. The messages within the story can be adjusted to account for local variations, but the spirit, the essence of the story, should be consistent across all markets.

At the same time, if Chinese companies have done something worth recognising, they are often encouraged to only promote this success selectively in China. But by sharing good news, you are encouraging other Chinese companies to do the same, and only through collective efforts can the “Made in China” brand gain more constructive acknowledgment and create a positive perception around the world.

China brand can only improve its perception when more Chinese brands collectively do the right communication across the world.

No one said that communicating abroad would be easy – new language, new culture, new policies, new customs, etc… all these elements affect the level of effectiveness of your communication strategy. Yet Chinese companies need to start somewhere, and like learning a new language, you start with A-B-C.  I believe these principles will help Chinese companies in tackling their communications challenges abroad. Only by mastering the ABC, can the Chinese companies and brands walk with a bit of confidence and continue down the path of globalisation.

Lydia Lei Lee is China chief strategist and co-lead of the Emergent China Practice, Weber Shandwick.

This article first appeared on the IPRA website

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