“How CEOs respond and behave is very important in China. Many Chinese look up to leaders, whether it’s the gov- ernment or an organization.” Companies all around the world are
working out the opportunities and chal- lenges of using social media, but the is- sues may be even more pronounced in China. Te country’s internet users are among the most active in the world, Ad- ams said. “Internet-based communications,
CRISIS TIME: To win back public trust, Alibaba Group’s founder, Jack Ma, chose to tell the world about his company’s fraud scandal
China. Any delay could be interpreted by the public as an effort to hide or a struggle to come up with excuses. “Leadership is obviously always
important, but it’s maybe even more important during a crisis when critical decisions have to be made and managers must communicate effectively,” Adams said.
Tat seemed to be the chosen path
for Ma and Alibaba. By disclosing the scandal to the public first – as opposed to being exposed by another party – and planning what to say and how to say it, the company controlled its message and preempted negative criticism. As a re- sult, the time frame in which Alibaba’s crisis made waves on the internet and in the public sphere was relatively short.
More pressure
Meanwhile, the advent of social media has increased both risks and rewards in terms of how companies approach crisis management. Online micro-blogs like Sina Wei-
bo and Twitter have added a degree of openness, as consumers can commu- nicate their affection or unhappiness about brands 24 hours a day. It has also provided businesses with a platform to disseminate their own corporate mes- sages. Take Beijing Huaqi (Aigo) Infor- mation Digital Technology, for ex-
ample. When the consumer electronics giant was accused by one of its suppli- ers on Weibo of owing a large sum of money, the company’s CEO, Feng Jun, responded directly. In his Weibo post – which is accessible to all internet users – he apologized immediately, admitting he had not heard about the issue but would look into it. Such instances, where an executive
shows regret and humility in response to a mistake, resonates with consumers. People can connect to a personal emo- tion much more easily than an official company statement. “Because [Feng Jun] was able to act
quickly and respond to the complaint, people were impressed,” Cheung said.
“How CEOs respond and behave is very important in China. Many Chinese look up to leaders, whether it’s the government or an organization”
DEBBY CHEUNG GROUP MANAGING DIRECTOR, OGILVY PUBLIC RELATIONS
with the absence of responsible editing, mean that every rumor or conspiracy theory – true or untrue – is instantly magnified, amplified and distributed at the speed of light,” said Jeffrey Gandz, a professor at the Richard Ivey School of Business, in an email interview. “It becomes almost impossible for com- panies or even governments to address these multiple information channels and, in any case, corporate communica- tions have less credibility than those that appear to be from fellow consumers or friends.” Furthermore, as a growing num-
ber of domestic firms are looking to go public and develop their brands globally, many are feeling pressure to meet in- ternational transparency standards. Tis has led some Chinese firms to boost their PR departments – something that has been helped by the maturation of China’s PR talent over the last two de- cades. “If you look around at the leading
Chinese companies and ask who their PR leaders are, more and more they are individuals with very long and deep experience,” Adams said. “Tey’re for- mer leaders of international PR agen- cies who have moved to companies’ in- house departments.” At the same time, crisis manage-
ment isn’t just about how to respond. It also requires prevention strategies – es- pecially in China, where businesses of- ten come under suspicion. “Problems of corruption and fraud
are spread throughout the economy. It doesn’t matter if it’s in goods or services – the same risks arise,” said Peter Hum- phrey, founder and managing director of ChinaWhys, a risk management con- sultancy. “Every business should have certain
operational controls and procedures in order to spot quickly any side of some- thing strange going on in their business – and then nip it in the bud.”
China Economic Review • May 2011 7
Imaginechina
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