REPORT
Facing the public J
Silence no more – some Chinese executives are starting to speak up in times of crisis
ack Ma could have tried to deal with matters behind closed doors. But in February, Alibaba Group’s founder chose to tell the world about
the scandal rocking his company: An internal in- vestigation found that about 100 salespeople for
Alibaba.com, the flagship platform, were cheat- ing thousands of foreign merchants, helping to create more than 2,300 fake storefronts on the website. Fraud among suppliers is nothing new in
China. And the financial damage – US$1.7 mil- lion – is relatively small by corporate standards. Even so, Alibaba’s managers came out strong with an attack plan to deal with the scandal, an- nouncing that a criminal investigation was al- ready underway and that Ma had accepted the resignations of
Alibaba.com COO Elvis Lee and CEO David Wei, even though neither were charged with any wrongdoing. Te message from the management of Chi-
na’s most famous internet startup was clear: It had to take responsibility and protect the com- pany’s reputation. “I love Jack Ma even more after this crisis.
Te fact that he came out and embraced this is- sue, and actually offered to the public that ‘We have this information, we know about this prob- lem and are addressing it’ – it takes courage and I think people trust the company even more now,” said Debby Cheung, group managing director of Ogilvy Public Relations in China. “It’s very un- usual for a local CEO to take this approach, and I hope he sets a standard to follow.” In times of crisis, a brand’s reputation is only
as resilient as its leaders. And as more domestic firms grow up and look to global markets, some Chinese businesses are starting to make a bigger effort to win public trust with better crisis man- agement strategies. It’s a far cry from many other companies’ approaches – where silence has been seen as the easiest way out.
Controlling the message
Cheung said that for some other local firms, public relations is more about using government guanxi to suppress press reports. Another route is to simply do nothing and wait for the media spotlight to hone in on a new scandal. One of the worst examples of crisis manage-
ment was seen with New Huadu International Group, where the company’s CEO, Tang Jun, was accused of faking his California Institute of Technology PhD. His initial response was a long period of silence. “When Tang finally did come out to say
something, he was trying to defend himself. He explained that his degree came from Pacific Western University and that it was not forged,” Cheung said. “Tis was all handled quite badly. Newspapers were saying, ‘don’t lie to us.’ It be- came an issue where people wondered, can we really still trust this company?” Te news that Tang had faked his academ-
POST IT: Chinese companies are figuring out how to best utilize social media as a public relations tool
6 China Economic Review • May 2011
ic credentials became a matter of public anger largely because of his continued refusal to own up to the fact. In times of crisis, acting quickly and being the
first to tell a story is crucial, said Bill Adams, as- sociate director of Eastwei MSL, a PR agency in
Imaginechina
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