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Public Relations

For Immediate Release:

In China's increasingly competitive business climate, companies find they need to make full use of the media

by Janet Carmosky

As China's commercial landscape matures, the nation's business environment grows more competitive and offers more choices to increasingly sophisticated audiences. Now more than ever, media, consumers, current and potential employees, and prospective partners and industry allies need to know what companies stand for, what the companies bring to the table, and why they should do business with these companies. Regulators, too, are increasingly influenced by media portrayal of domestic and foreign firms.

Media reform

In recent years, China's media sector has changed profoundly. For example, the Chinese Communist Party phased out compulsory subscription and subsidization of most newspapers and magazines in 2003. This forced publications to compete for readers and advertising dollars and thus, in many instances, to change their editorial content. Today the central government is the major source of funding for only three media outlets: China Central Television (CCTV), the People's Daily, and Xinjua News Agency (though local governments provide smaller subsidies to some local media).

Independent media have blossomed in the space left by the retreating state and now, in some cases, wield as much or even more influence than the government-sponsored publications. A regulator is now as likely to read the Chinese edition of the Harvard Business Review as the Xinhua produced Jingji Cankao (Economic Information Daily), and to get news from the online news source Sina.com before reading the government flagship People's Daily. Trade media, few of which ever experienced direct government supervisory control, also wield significant power in their industries.

Though there are areas in which journalists tread carefully — for example, in matters of public policy, international relations, and local issues, especially in the interior — most Chinese have access to independent media, and they trust these independent sources more than state-sponsored media outlets.

Corporate demands spark PR industry growth

Just as China's media sector is changing, China's public relations (PR) industry is growing. PR agencies such as Edelman and WPP Group companies Ogilvy, Burson-Marsteller, and Hill & Knowlton, have passed the 15- if not the 20-year mark in China, while newer entrants, such as Ruder Finn Inc., Ketchum Newscan, Weber Shandwick Worldwide, Fleischmann Link, and the Hoffman Group, bid for the China business of their global accounts. Local PR agencies have proliferated, particularly specialist firms that focus on a single region, such as the Pearl River Delta, or a single sector, such as personal computers, mobile phones, or pharmaceuticals. According to the Chinese International Public Relations Association, in 2004 PR billings totaled nearly ¥4.5 billion ($543 million), up 36 percent from 2003, and China had more than 2,000 PR agencies that employed roughly 20,000. Rising corporate demand for communications services underlies the expansion.

In response to this new demand, and to capitalize on changes in media and media relations services, foreign media firms are paying close attention to opportunities in China. One company, PR Newswire Association LLC, established a China operating company—Xinhua PR Newswire (XPRN)—in 2002. The company set up news distribution circuits that cover the whole country, reach important trade and industry media circles, and access Internet and web-based news archives. XPRN aims to supplement the existing domestic reach of multinational corporations (MNCs) and Chinese companies, help China-based headquarters coordinate their global communications initiatives, and allow US-based clients with limited or no media relations capability in China to reach audiences in China through Chinese media. XPRN has several hundred clients, including Continental Airlines, Inc., which recently took advantage of PR Newswire's global reach to support the June 16 launch of Continental's daily Newark-Beijing service. The launch was announced to audiences in the United States and China through American media, general and trade media in China, and Chinese-language media serving the North American Chinese population.

Media pointers

At a two-day conference on media relations in Shanghai this May, the head communications managers of several MNCs and large Chinese companies presented their top suggestions for media relations in China.

• Prevent and defend against bad press
  Mature businesses in China often face similar challenges. Companies must hold market share in the face of lower-priced competition, strengthen relationships with government, partners, and employees—and defend against negative press, which can undermine these goals.

  Negative press is a consequence of an increasingly sophisticated and competitive business and media environment. Because big brands are so visible, they are often targeted in negative stories, especially tabloids, fiercely nationalistic media, and the relatively free and aggressive media in Guangdong. In the first six months of 2005 alone, several MNCs had to work quickly to repair damaged reputations. For example, Procter and Gamble Co. initiated a major face-saving campaign after consumer activists, supported by Chinese-language media, disputed advertising claims for Pantene V shampoo, which claimed to make hair 10 times more resilient than normal. Extensive media coverage also accompanied the recall of two Nestlé baby milk formula products that had iodine levels above PRC government safety standards. And General Mills brand Häagen-Dazs felt the heat after being investigated for sanitation violations in the production of ice-cream cakes in Shenzhen.

  But even companies innocent of any wrongdoing can face PR crises and thus would do well to prepare crisis communications plans. Because news is so accessible on the Internet, negative news in the international media easily enters and spreads in China. When the banned food-coloring agent Sudan I was found in some sauces used by McDonald's Corp. in the United Kingdom earlier this year, the news traveled through the Internet to China before McDonald's could clarify that none of the sauces were ever used in China. PRC health authorities subsequently found Sudan I in sauces distributed by KFC Corp. and H. J. Heinz Co., further fueling the media frenzy. Though the ingredient was not used in any McDonald's foods in China, the company mobilized a team to respond to media inquiries and to distribute statements on the Sudan I issue. A good crisis plan includes training spokespersons to handle crisis communication and to cultivate media relationships to preserve a channel for positive news during crises.

  One strategy to maintain or enhance a brand's image is to develop a comprehensive corporate social responsibility (CSR) program. Giving back to the community, coupled with communications, helps both localities and the corporation. Bayer AG, which has emerged as a champion of CSR in China, manages a program of a dozen CSR initiatives that range from university partnerships to nongovernmental organization-building programs to providing leadership in China's AIDS forums. In partnership with Mercy Corps, the China Foundation for Poverty Alleviation, and other corporate sponsors, Bayer also funds a microfinance program in rural Fujian.

• Extend the life of your press release
  XPRN's Managing Director Chen Yujie shed some light on media relations tactics that other market leaders use. "While there is such a thing as communicating too much, more often companies communicate far too little. Our China-based clients all have in-house communications teams, and often PR agency relationships as well, where messaging, strategy, and key media relationships are handled. We simply deliver news releases, in text and multimedia format, to databases like Lexis-Nexis and Factiva, news portals and archives, and to the broader cohort of industry influencers and observers. All of these services extend the life of a news release and expand the reach of any organization beyond the privileged 'key' media group. This strategy is more similar to those used in a media market such as the United States, where a news release is sent to thousands, not just a handful, of media."
• Monitor media coverage
  If best-practice use of PR resources involves high-volume media relations efforts that articulate successes, industry leadership, thought leadership, and other justifications for premium pricing, monitoring media coverage is the most common best-practice tool to justify the PR department's budget. Some companies, like Sony-Ericsson Mobile Communications AB, have in-house resources to log, track, and analyze their China media contacts and coverage. Alcatel Asia Pacific uses the analytic services of the media-measurement company CARMA International, Inc. Alcatel's Shanghai-based team manages all of Alcatel's Asia-Pacific communications, so it needs to monitor multiple languages, which is where a regional company such as CARMA comes into the picture.
• Beef up your brand's reputation
  Companies with limited physical presence or minimal in-country communications staff face the same highly competitive landscape as companies with a larger presence and staff, but they have fewer resources. It is nearly impossible for an unknown entity to achieve satisfactory market share, especially considering the vast scale and competitive nature of China's economy. But as many examples in the United States demonstrate, small and medium-sized enterprises can build their businesses through trade shows, customer referrals, and informal networking. In these cases, however, building a dedicated communications function can be a significant challenge.

  Fortunately, media relations is an accessible discipline, and counsel is readily available. Newcomers can quickly learn the basics: map your audiences and compile a message template that articulates not only your company's value in the industry overall, but its importance to industry, customers, and the PRC government. This would normally be the first task of any PR agency. The next tasks are to find opportunities for coverage, maintain communication channels with members of the media, and adjust messages and delivery with new developments.

  For companies building a reputation in China, having a Chinese-language press kit—with a company summary, backgrounder, product or service information, and relevant press releases archived on the company website—is a milestone in the journey toward credibility and influence. Investment in a virtual presence, that is, use of a Chinese-language website and periodic press releases distributed to Chinese media, will greatly magnify the effectiveness of a company's physical presence such as events, planned executive visits, trade show appearances, and partner announcements. Media are more inclined to cover companies they can easily research than those about which it is difficult to find information.

  The National Football League's (NFL) attempt to build brand franchises in China provides an interesting example of how good communication is needed for a brand to succeed. Though well known in the United States, the NFL was essentially unknown in China when it first entered the country in 2004. According to David Turchetti, CEO of the Shanghai-based, Internet and mobile communications marketing agency 21 Communications, "The NFL was smart enough to know that success in China was going to be a much taller order than just getting their games into distribution on Chinese TV, which of course they did. They also knew, as did the NBA [National Basketball Association], that there would have to be plenty of grassroots work, so they paired up with Zou Marketing, a sports promotion company, to send teams of Americans to teach flag football to Chinese kids. Still, without communications, it could all be money down the drain. They knew they would need an effective Chinese-language website to educate media as well as fans. They knew [NFL Commissioner] Paul Tagliabue would need to lend a high-profile face to their entry, so they not only set him up to speak with AmChams [American Chamber of Commerce offices], they sent our press releases to Chinese media, organized lots of media lunches and interviews, and hired a Chinese-language spokesperson."

  If the NFL, with its huge brand recognition and its fun, sporty message, knows it needs a serious media relations campaign to attract attention in China, why do so many industrial and service companies assume they do not? The problem may lie in budget concerns. But, done with the right partners, sending a press release in Chinese in China may cost only a few hundred dollars, while translating a website, designing a message template, or organizing an executive visit around a trade show need not surpass a few thousand.

  When resources are tight, companies should, at a minimum, consider using diagnostic tools that will arm sales and marketing people in China. For example, a company can benefit from a third-party "perception audit" to show how its brand and competing brands are seen by customers, distributors, suppliers, potential employees, or any other audience important to success. A media audit can review coverage of the company's brand and key competitor brands. When companies know where a brand stands, they can clarify how to get the brand where it is wanted and can define what messages they need to deliver. An audit can also demonstrate to management why the PR department needs a strong budget and how it will be used.

• Strengthen local and global communication
  No matter how strong a company's China-based presence is, headquarters always has a role to play. But because there tends to be a split between marketing and sales communications, which are usually driven entirely by local teams, and corporate initiatives—such as research and development, personnel or financial announcements, and major sponsorships, such as the 2008 Olympics—best practice in global communications always involves well-designed internal coordination. For example, Motorola, Inc. has a global communications management system based on Vignette Corp. software in which all releases and events in any location where Motorola operates are uploaded and available to all Motorola communications managers worldwide. Thus, a marketing manager in China may decide to localize and distribute a release about a new product in Europe that would be interesting to media in China, or an investor relations manager in the United States may edit and release news about a sales increase in China.

  Translation is a necessary step in global communication, but a good translation needs more than fine language skills; as with all marketing materials, translations need internal review to ensure consistent tone, manner, voice, and language. An inexpensive translation agency should be able to quickly render a draft that is technically consistent with the original meaning in English. Wordsmithing and fine-tuning are best left for a PRC-born and -educated, Mandarin-speaking, full-time employee who understands the company's communication objectives, technology, and values. At minimum, companies must avoid dated or regionally inappropriate language, which can creep in when an employee who has been abroad for many years, or an overseas Chinese from another country, is involved in the editing process.

Map and message

At some point, every serious China communications program needs a few reliable partners fluent in Chinese: a strategist, a translator, and a spokesperson. Companies should begin by focusing on strategy. To develop a successful strategy, companies should first observe and then address existing consumer and industry perceptions. No matter how well known a brand may be at home, in China the brand could start with a blank slate or be perceived differently. Second, messaging and delivery should be based on the culture in China. Companies should map out, then articulate the elements of their brand, product, or culture that resonate in China. Third, companies should find the right channels for media outreach—whether web, print, or video releases; media briefings; dinners; or seminars—and commit to keeping them open. Companies must also recognize the need to continually educate media. And to receive optimal funding and internal support, PR departments should design a communications program that measures results.

Regardless of a company's stage of development in China, communicating about its brands' values, assets, heritage, and philosophy will benefit its business objectives. Whether a business is defending a leading brand from cut-rate competition, building a brand to gain a market share that supports economies of scale, strengthening a new foundation, or supporting a search for partners or regulatory support, companies will achieve their goals faster and maintain their desired position for a longer period if they support their efforts with strong media relations.

Janet Carmosky is a marketing strategist providing counsel to PR Newswire and other US companies doing business in China.

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