The impact of ‘emerging markets’ on corporate reputation is a trend that is always worth exploring. Just last year, for example, Apple found itself on the wrong end of a CCTV investigation in China, culminating in CEO Tim Cook’s remarkable apology.
The Apple example is emblematic of the pressures that many Western companies face in international markets, where a suitable motto might just be ‘crisis as usual’. Meanwhile, ambitious multinational companies from Asia (see Huawei) are aiming to prosper beyond their domestic markets, a process that typically requires a much stronger commitment to transparency than they are used to.
So I was lucky enough to moderate a panel discussion last night at the Royal Society, hosted by Tata Consultancy Services. The panel featured a diverse range of views, from the following people:
Abhik Sen, managing editor at The Economist Group in London.
Christian Malard, senior foreign analyst on CNN, NBC, BBC, Al Jazeera English and Al Arabiya.
Cathy Pittham, European MD at Racepoint Global.
Nigel Fairbrass, ex-SVP of global communications & reputation at SABMiller.
It was, to put it lightly, a lively debate. The journalists on the panel proved particularly adept at framing the geopolitical backdrop in practical terms, helped by Malard’s track record of interviewing no less than 41 heads of state and Sen’s experience of India and China. Fairbrass and Pitham, meanwhile, used that context to explore how companies are navigating the reputation challenges posed by febrile foreign media markets.
Sadly, the Chatham House Rule prevents me from attributing specific comments, but I can reveal the three themes that stuck with me from last night’s event.
1. The national ‘stigma’
One smart question from the audience asked whether perceptions of a country can affect perceptions of its brands. Perhaps it can, answered a panellist, pointing to Huawei’s troubles establishing its business in Western markets, a problem that is a direct consequence of fears over China’s rise. Indeed, you could argue that tech brands from China have it easy; I suspect that luxury and FMCG products would have a far harder time, thanks to lingering perceptions of Chinese product quality and safety. Meanwhile, you only need to look at a country like Sweden to see how a positive reputation can help a country’s brands.
2. The bottom-line impact of reputation
This one is an old chestnut in PR circles, but always worth asking anyway: ‘Does a reputation crisis really have a bottom-line impact for companies?’ The question was asked in reference to the Bangladesh factory collapse, which one audience member suggested was unlikely to have actually stopped people from shopping in Primark or Matalan. Maybe not, but all of those retailers (well, apart from a few well-known American ones) have since signed up to a legally binding safety accord, which will certainly increase regulatory costs. And rightly so; without the threat of a bottom-line impact, it seems unlikely that corporate behaviour can change for the better.
3. Companies must give as much as they take
The key to building a long-lasting reputation in an emerging market, agreed the panellists, is a commitment to the local community. This is easier said than done, particularly when some companies continue to think that they can simply address this via ‘chequebook CSR’. More enlightened businesses have recognised that they need to be responsible citizens, investing in schools, water etc..and giving as much as they take. A good example is probably Rio Tinto’s work in Mongolia. For one that has got it wrong, look no further than Vedanta’s activities in India.