The Asian Century - Glenn Schloss

Get a grip on what's happening in your China factory

Glenn Schloss — Fri, 15 Feb 2008 05:08:00 GMT

Too many multinationals with operations in China are not enforcing quality standards in design and right through the supply chain. The consequences are becoming painfully aware as a slew of companies announce product recalls or are embroiled in consumer-related scandals in their home markets such as the US or even Japan.

Take the case of Mattel which recalled almost 20 million toys made in China in the latter part of 2007. And 10 people in Japan have fallen ill this month after eating dumplings imported by Japan Tobacco from a Chinese food factory. There are a plethora of other cases.

With lower wages and a plentiful supply of skilled labour, China's urbanised eastern and southern provinces have been an attractive manufacturing destination for companies from around the world which then export products to third markets. There's plenty of upside but also loads of risks as many multinationals are finding, with damage caused to their reputations.

Mattel's handling of the toy recalls is a matter of some debate. However, its chairman and chief executive Bob Eckert is now saying the right thing. According to an interview in the Financial Times, Mr Eckert has expressed his view that companies need to take responsibility for their manufacturing processes:

"One of the first things we did in early August, with a major recall, we ran a letter from me to consumers that basically said 'I'm sorry'. I've got four kids. I get it...

It could always happen again. One of the things I've learned is you never say never. But we're doing everything we can to prevent it. The important thing is to catch it quickly and do something about it...

Countries don't make products; people do. The fact is most of the toys today are made in China and most of the toy manufacturing problems are in China...

But we've had manufacturing problems in other markets. So the important thing is for companies to take responsibility for their manufacturing process. I don't know that we need more government intervention."

Full marks now to Mr Eckert who can (some months after the event) eloquently communicate in a way which puts a human face on the company, takes responsibility (without shifting blame) and puts the issue in perspective. These are all essential components for effective communication when a serious issue or crisis confronts a corporation.

Here are some other reputation management suggestions for multinationals operating in China:

audit all your operations to ensure compliance with local Chinese laws as well as those in the markets where you are exporting

abide bv international standards

check all ingredients at your production centres as well as those of materials purchased from suppliers to ensure compliance as well as safety

bring in a third party auditor to conduct checks

be prepared for the worst to happen

have crisis management and communications plans including ready-to-go statements in place

be a good corporate citizen: communicate regularly with stakeholders locally and in important foreign markets. Goodwill, relationships and trust built up during good times can be invaluable when confronting a crisis and then embarking on the lonely, tough task of brand rebuilding

Hong Kong, Friday February 15 2008

Hitting the jackpot in Macau

Glenn Schloss — Thu, 14 Feb 2008 10:15:00 GMT

If you're looking for further signs of the rise of the Asian Century (and some of the associated risks), there's interesting news from Macau today.

Wynn Resorts - operator of one of the new casinos perched at the mouth of the Pearl River Delta - now makes more money in Macau than in Las Vegas, according to a report by Neil Gough in the South China Morning Post. Profit or operating income at the Wynn Macau in Q4 2007 was US$50.56 million, beating the US$42.38 million profit at the Las Vegas Strip property. And for those more interested in just how much gamblers fork out: estimated net revenues in Macau were US$387 million (up 55 percent) versus US$324 million in Las Vegas.

The huge opportunities on offer in Macau since it deregulated and loosened the gambling monopoly of Stanley Ho have attracted some of the heaviest and brightest operators from Las Vegas and they're doing well on paper. Walking through the playing rooms with the moderate-sized crowds of mainland Chinese throwing down the red HK$100 notes with apparent ease onto tables gives some sense of how well the casinos are doing. And when you think that only a small proportion of China's 1.2 billion population will have access to the gambling tables of Macau, then the sheer size of this massive opportunity becomes clearer. And that's what many foreign and local investors have been focused on during the past few years.

The Macau authorities have done very well so far to manage the risk. The days of shootouts, bombings and executions on the streets of Macau have thankfully faded into memories as the local scene has been progressively cleaned up. Long may that remain the case.

But the massive opportunity that lies across Macau's border in mainland China is also the potential source of risk. Where is the money that flows across the gaming tables so freely coming from? [Visitors to the VIP gambling rooms talk of gamblers with huge sums of money looking like taxi drivers or the offspring of wealthy families]. What happens in the event of a slowing of the Chinese economy?

In the meanwhile, the good times are rolling.

Hong Kong, Thursday February 14 2008

Is Asia flat?

Glenn Schloss — Wed, 07 Nov 2007 13:46:00 GMT

Asia is not flat. Surely that's the riposte we need to send to Thomas Friedman, author of the incredibly popular tome, "The World is Flat".

A mistake made by many in assessing Asia is that "it's all the same". That essentially is the thesis of Friedman's book writ large and applied to the world, thanks to the trend of globalisation. However, Asia as a region remains - and will continue to be - so diverse in terms of cultures, languages, political systems and business practices that the only thing that really unites the region is its diversity.

With this in mind, it was with relief that I stumbled across a brief review today of a new book by Harvard Business School professor Pankaj Ghemawat, "Redefining Global Strategy". According to the reviewer in The Economist, a better and more accessible title would have been "The World is Not Flat".

"Differences between countries matter enormously, Mr Ghemawat explains, and unless companies seek to understand those differences - which can be cultural, administrative, geographic or economic - their global strategies are likely to fail," says The Economist article.

"Particularly revealing is Mr Ghemawat's account of how Coca-Cola has gradually developed a global strategy that ‘neither ignores the differences across countries nor caves in to them entirely-that is, it recognises the reality of semiglobalisation.' This book deserves to be a bestseller ..."

It's my view that multinational companies operating in Asia need to develop not only corporate reputation and branding strategies relevant to each market in the region where they operate but also adopt a local "face" and approach. That involves dropping the typical multinational-style template overlay some companies still insist on keeping for all aspects of their business - and they provide little freedom or room to maneuver in accordance with local preferences. Instead a core set of products or services, principles, values and messages aligned with the global business are required, but much more latitude should be given to develop or alter goods, services and communications materials which also resonate locally.

This is the point I was making in my post, "Five trends that will shape the Asian century", when referring to the region's economic rise on the world stage: "Few multinational companies with operations in Asia have yet recognised the impact this massive shift will have on communications and brand strategies - including where the power over related decisions still resides geographically."

Support for a local approach has recently been expressed by McKinsey & Company which found in a large survey most Chinese consumers trust domestic brands more than foreign brands. In its report on the survey, the Financial Times highlighted "the good news for multinationals [which] is that there is considerable confusion about the national identity of some products, with many Chinese consumers believing that brands produced by multinationals are actually home-grown. In the case of two well-known US toothpaste brands, for instance, more than 80 per cent of respondents said they thought they were Chinese. ‘The successful foreign companies have usually made a real effort to listen to Chinese consumers and create local brand management teams, rather than import approaches from other markets,' " said Andrew Grant, the head of McKinsey's China practice.

The days when foreign brands were generally preferred over local ones are fast disappearing in a complex, dynamic and more confident Asia.

Persuading and convincing in Asia's court of public opinion

Glenn Schloss — Tue, 06 Nov 2007 11:40:00 GMT

How often in Asia do communications professionals truly view themselves as advocates of their clients' causes? To what extent do they engage intellectually with the tough issues clients are grappling with and then use all the tools at their disposal to present the case persuasively in the court of public opinion?

Those are the questions which occurred to me after reading a really interesting post by Michael Netzley, a fellow blogger in Asia and corporate communications professor in Singapore who writes thoughtful pieces on his CommunicateAsia site. In his fascinating, almost philosophical, discussion of the rhetorical significance of the terms "convincing" and "persuading", Michael reveals his interest in the topic was reawakened by a Canadian PR site where the writer defines conviction as "a person [who is] convinced by evidence or argument made to the intellect" while persuade refers to, "a person [who is] persuaded by appeals made to the will, moral sense, or emotions."

Kudos to Michael for highlighting the origins of an important subject for the PR profession in Asia. Let me take it a step further: can we be doing more to convince or persuade stakeholders and audiences? Certainly, our colleagues in advertising and marketing are doing their best to persuade - they are increasingly raising the bar with more creative work. I reckon there's a huge market emerging in this part of the world for PR professionals who can cut through clients' own distractions or overcome clients' seeming reluctance to be forthright in defending their own reputations when coming under attack. At the same time, consultants are working hard to develop the skills, commitment and courage to articulate their clients' position in compelling terms. The ability to convince and persuade will be increasingly important as the stakeholder environment in the region becomes more sophisticated - and complex.

Time for Japan’s grey-suit political kabuki show to end – a revolution in political communications is needed

Glenn Schloss — Mon, 05 Nov 2007 13:18:00 GMT

Beyond the glittering skyline of Tokyo, the innovative electronic gadgets and cutting-edge technology, the excitement of manga comics and J pop, there has existed a mind numbing, boring grey zone, the existence of which raises doubts Japan's future prosperity. That's the world of Japanese politics - the smoke-filled rooms and ultra-expensive restaurants where dull men in dark suits have traditionally cut deals which doom the world's second largest economy to an uncertain future.

Japan has been a nation with so much to offer during the 60 years of its phoenix-like rise from the ashes of World War II. But at the centre of despair about its future is a sense of hopelessness about the Japanese political scene, its uninspiring politicians and their general lack of vision for the future.

That could all change in coming days following the resignation of the opposition party leader on Sunday which came two months after Shinzo Abe quit from the post of Prime Minister as a broken man. That's because the downfall of Ichiro Ozawa, leader of the Democratic Party of Japan, opens the way for a fresh opposition leader who could turn Japanese politics upside down. However, the prospects of an outsider taking charge of the DPJ is remote as the likely successors currently being touted are the same faces. There's a sense of growing crisis in Japanese politics which provides a sense of opportunity, and hopefully bring more openness and the potential to harness the power of communications.

What all this highlights is the need for a fresh approach to political communications in Japan. Last week, I wrote that one of the defining trends of the Asian century will be increased political choices for Asians. Unfortunately the prospect of greater choice for Japanese voters appears as elusive as ever unless a breakthrough comes soon. Real choice will only emerge in Japanese politics, hopefully in the close to medium-term future, thanks to the onward rush of globalisation and the growing realisation that the nation risks being left behind by the rest of the region.

What really needs to happen in Japan is for the reservations and lack of direct communication which still smothers much of the nation's dynamism to be lifted from its political system. Appeals to the interests and needs of voters must replace the focus on factions and service for vested interests. Populism is not an alternative but a more popular, appealing and dynamic form of politics needs to be developed. What is missing primarily is dialogue between the elected and their true electorate, the people.

Politicians need to develop policies which answer not only the nation's myriad problems as well as the real concerns of their voters and then effectively communicate their proposed solutions. Apart from the traditional methods of consultation such as the election period speech, kissing of babies in shopping malls and community meetings, social media on the Internet should be better utilised by politicians to explain their platforms as well as listen to the voters.

And to put the icing on this cake of reform in political communications, politicians should craft more compelling "political and life stories" about their policies and themselves. They need to put a human face on their political persona, not present themselves as yet another grey suited factional operative. Remember Junichiro Koizumi, the pint-sized lion-haired reformer? Now he had a story to tell.

HONG KONG, Monday November 5, 2007

This t shirt will get you arrested in Hong Kong – who says Asian marketing is not creative?

Glenn Schloss — Fri, 02 Nov 2007 11:56:00 GMT

[Photo: Apple Daily]

The Chinese characters on this t shirt - seized with hundreds during a police raid on a trendy fashion outlet Thursday in Hong Kong - say "14K". That's the second biggest triad, or organised crime gang, in "Asia's world city". Who says Asian marketing and branding isn't innovative or creative enough?

Police swooped on the headquarters of G.O.D. (Goods of Desire), arresting 17 staff including sales people and designers for selling the t shirts. Triads have long been a menace in Hong Kong to the extent that the law prevents anybody from claiming to be a triad or possessing any insignia related to the gangs.

The fashion for ironical statements on t shirts which has been sweeping the globe has clearly been gripping Hong Kong too, shirts bearing cannabis leaves and marijuana leaves are popular. Whether the 14K shirt episode is a step too far or the police have overreacted will be decided in the courts of law and public debate. Already media have suggested freedom of expression extends to the wearing of t shirts. Apple Daily, the local equivalent of a racy tabloid which also advocates democracy, shouted sarcastically about the raid on its front page: "14K t shirts confiscated - police put on big show"

G.O.D. is a great Hong Kong lifestyle, fashion and furniture brand oozing creative flair. It evokes an East-meets-West mood which captures the current zeitgeist. Its handbags are fashion items - featuring pictures of Chinese-language classified newspapers or red, white and blue clutches as a twist on the much larger, plastic bags used by domestic helpers or the elderly to lug goods around, known locally as "amah bags" or "Kowloon Samsonites".

Its "Delay No More" t shirts and fashion line sells incredibly well, given the pronunciation of the English phrase in Cantonese sounds similar to the local insult suggesting something offensive involving your mother.

It has won creative design prizes from local establishment bodies. Asia needs more brands and marketing like this which taps into local tastes while reinforcing high design standards.

However, unless you are an advocate of "any publicity is good PR" methods, G.O.D. could have followed some basic communications protocols in Asia:

Don't do anything illegal or (in this case) which is in the grey zone until ambiguity is clarified - triad symbols are extremely sensitive in Hong Kong and the law forbidding their use is well known
If in doubt about any commercial activity, seek legal advice or discuss informally with the authorities before setting off
If a law appears wrong or stifles a legitimate business activity, mount a carefully-planned public affairs or lobbying campaign - don't get caught selling a product (this had been on sale for a couple of months) unless the risks associated with high profile arrests, extensive media coverage (no matter how sympathetic) and an unhappy police force are those that you are willing to bear

Nevertheless, here's to the team at G.O.D. - in the pursuit of innovation and creativity, artists and designers sometimes cross the line. From a communications perspective, the most important thing is to demonstrate a commitment to operating within the law or having the law clarified. In the final analysis, G.O.D. is a business, not an artists' collective.

www.goodsofdesire.com

HONG KONG, November 2 2007

Five trends that will shape the Asian century

Glenn Schloss — Thu, 01 Nov 2007 15:41:00 GMT

The Asian century is unfolding with full speed. Here are five trends currently unfolding that will be pivotal in shaping the years ahead: 1. The rise of Asia on the world stage 2. Choice in markets, politics and brands 3. Asian brands going global 4. Taking the race out of the Asian space race 5. Turning green ...(read more)