Cases Studies: Observations of Chinese PR</li></li></ul><li>1.1 The growth of China’s Oversea Investment<br />In 2010, Chinese foreign direct investment has reached to 56,5 billions of USD, and the amount of overseas investment for past 5 years in total has reach to 215,9 billion of USD.<br />
1.2 Chinese brands in the world<br />The importance of low price as a reason for bonding with Chinese brands decreased, while the importance of other factors such as being trendy, popular, appealing, and functional has been increasing.<br />
1.3 Motivation of Chinese Foreign Direct Investment<br /><ul><li>Resource acquisition</li></ul>-- Natural resources (non-ferrous metals, oil, forests)<br />[e.g., China National Offshore Oil Corporation (Oil and Gas)]<br /> -- Human resources <br /> [e.g., HuaWei set up research center in India (Bangalore)]<br /><ul><li>Market expansion</li></ul> -- Be competitive in overseas market <br /> [e.g., Lenovo (Computer Systems) acquired IBM PC group]<br /> -- Obtain market advantages as locally operated business <br /> [ e.g., Haier Group (Home appliances) set up factories in US]<br /> 1. Decrease transportation fees and service fee.<br /> 2. Easy access to local market and utilize local resources<br />
1.3 Motivation of Chinese Foreign Direct Investment<br /><ul><li>Access to and assimilate core technology </li></ul> -- Innovation capacity in China is not competitive<br /> Acquire know-how from foreign companies and local workforce.<br />[e.g., Zhejiang Geely Holding Group acquired Volvo Car Corporation]<br /><ul><li>Anti- trade protection (e.g., Nipeco Oy), Internal strategy , Production iteration, Policy encouragement</li></li></ul><li>1.4 The failures of the Chinese oversea investment<br />70-80% of the investment intentions end in failure. <br />The main reasons<br />Unclear business strategy and plan<br />Unfamiliar with local policies, regulations and culture.<br />Lack of local employees in the management team<br />Lack of cooperation and support from local employees<br />Trade protectionism<br />
1.3 Chinese investments in Finland & Sweden<br />
Main reasons for Chinese investors to nordic countries <br /><ul><li> State-owned and Limited enterprises</li></ul> -- Resource acquisition (Minmetals)<br /> -- Market expansion (Air China)<br /> -- Anti-trade protection (Nipeco)<br /><ul><li> Jointed and private companies</li></ul> -- Technology improvement (HuaWei, GEELY)<br /> -- Resource acquisition (Neusoft, HuaWei)<br /> -- Market expansion (GEELY, HuaWei)<br /> -- Policy encouragement (GEELY, China Medical Center)<br />
Characters and motivation<br /><ul><li>Features of the companies in Finland and Sweden that China will be interested</li></ul> -- Small scale, but high tech<br /> -- Own patent, product, high market share<br /><ul><li>Motivation of acquisition</li></ul> -- Accelerate industrial upgrading<br /> -- Enhance product quality and support technical renovations<br /> -- Improve brand awareness,<br /> -- Avoid anti-dumping measures set by EU<br /> -- Investment policies are good<br /> -- Finland is the only Euro-zone member in Nordic countries, there is no exchange risk<br />
Potential fields<br /><ul><li>Finland</li></ul> -- Energy saving and environment supervision<br /> -- Clean technology<br /> -- Medical and health care<br /> -- Waste management<br /> -- Water resource and treatment<br /> -- Telecommunication<br /> -- Minerals <br /><ul><li>Sweden</li></ul> -- Forest ecosystem<br /> -- Bio-pharmaceuticals<br /> -- Telecommunication<br /> -- Banking and Financial strategic knowledge<br /> -- Car industry<br /> -- Clean technology<br />
Public diplomacy in China<br /><ul><li>Government has tight control over all media outlets.
Media in China includes authoritative media and mass media
Authoritative media works as a guidance or "wind arrow”</li></ul>Reference: China Public Relation association<br />
Phenomena<br /><ul><li>Empiricism</li></ul> -- non-methodology, no clear logic, not enough background research<br /><ul><li>Power of government media (e.g., CCTV, XinHua News Agency)</li></ul> -- cultural background, less personal opinions<br /><ul><li>Geographical unbalance </li></ul> -- Beijing, Shanghai, Guangzhou, Chengdu <br /><ul><li>Short-term effect </li></ul> -- one-off events, activities, non-strategic, even non-predefined <br />(Emotional relationship can not be ignored in China.)<br />
Challenges of PR Industry in China<br /><ul><li>Start from 90s, barely 20 years old, media relation is still the core
Senior consultants are from outside (Singapore, Taiwan)
Government has tight control over all media outlets.
There is no guarantee that coverage will be timely.
PR industry relies heavily on PR practitioners' personal relationships with journalist. (rather than having a good story to tell)
Quantity of journalist is more important than quality of coverage
Different areas of China have their own economic and cultural characteristics.
Misconceptions of PR in China (organizing events and entertainment)</li></li></ul><li>Company: Zhejiang Supor Co., Ltd. (founded in 1994, headquarters in Hangzhou China, owning six production sites and more than 7,000 employees) <br />(Market leader of Cookware industry in China)<br />Background: 2004.07.08, US Environmental Protection Agency accused Dupont. (Science-based products and services company) of violation of federal reporting requirements for potential health risks. Because they refused to offer the materials of PFOA which might affect humen health and environment. Supor used the products of Dupont. in their nonstick pan.<br />Effect in China:<br />2004.7.10, <Cankaoa> forwarded the news sina.com reported the newsother media reproduced the news from Sina.<br />2004.7.11, CCTV reported the news. (taken as an important signal)<br />2004.7.12, Dupont. China claimed that PFOA is safe in a public statement. However, it did not work in this way in China.<br />2004.7.13, Media were not satisfied with the result and started to investigate the truth. Issues such as the toxicity of the PFOA were actively discussed in media. (72 newspapers, 32 internet media, CCTV, CRI)<br />The sales in July and August 2004 decreased by 77.33% from a year ago.<br />Case 1. Supor Crisis Management<br />
The solution:<br /><ul><li> Obtained certificate for the product</li></ul>7.10, Turned to Dupont for safety certificate from FDA; investigated and traced the nonstick pan in oversea market.<br />7.13, After obtaining the safety certificate and the issue became stable in oversea market, Supor sent their products to Quality Supervision and Inspection center for inspection<br /><ul><li>Seeked the support from authorized organization</li></ul>7.20, proof from Inspection center was published, Supor headed to AQSIQ and related association for communication and support.<br /><ul><li>Seeked the support from media</li></ul>7.21, Supor invited authorized media to a press conference and explained the whole story, so that negative news would be minimized.<br />7.22, Supor had meeting with regional media.<br />Case 1. Supor Crisis Management<br />
<ul><li> Get the trust from consumers</li></ul>1. 7.12, Supor trained and communicated with sales people for this case. <br />2. 7.13, Clarification on its website for consumers, listing the certificates and the explanations.<br /><ul><li>Collaboration with Dupont.</li></ul>7.15, CEO of Supor met management of Dupont. to clarify the case and to reported the market loss in China. Finally, they agreed that Dupont. will ask FDA to explain the situation and help Supor to increase the market share.<br /><ul><li>Contact with regional distributors</li></ul>7.12, Supor published “Supor to distributors”, explaining the situation and seeking help.<br />7.13, Supor organized a video meeting with all the regional distributors to show their frankness. <br />Case 1. Supor Crisis Management<br />
Case 1. Supor Crisis Management<br />Result:<br /><ul><li>Supor made the successfully listing on the Shenzhen Stock Exchange.
Supor was awarded as one of the national free - inspection product.
China’s National Press Office issued a notice prohibiting the hostile speculation from news media.</li></li></ul><li>Case 2: PR war between 360 and QQ<br />Event:<br />2010.09.27, Qihoo 360 released its new software “360 privacy protector”, which showed that QQ examined the private files of users.<br />
Case 2: PR war between 360 and QQ<br />Reflection <br />2010.10.1, CEO of Sohu, Mr. Zhang posted on Weibo (Chinese Twitter) to express support to 360.<br />2010.10.05, CEO of Sdo.com(1st online game platform), Mr. Chen showed support to 360 in an interview. In addition, a prompting message was shown on the platform, asking users to close QQ software before any change and explanation from QQ.<br />First Round<br />2010.10.14, Tencent sued Qihoo 360 for alleged unfair competition. Later on, Qihoo did counterclaims.<br />2010.10, Tencent and Qihoo 360 kept pushing fighting messages to their online users through pop-ups windows everyday. This lasted fro one month.<br />Second Round<br />2010.11.03, Tencent decided to stop QQ software on all the desktops which had Qihoo 360 software installed. Immediately after that, Qihoo 360 said they would make the software run even with QQ software installed in the same machine. 360 seeked emotional support from users, saying they were the vulnerable group compared with QQ.<br />
Case 2: PR war between 360 and QQ<br />Third Round<br />2010.11.04, Tencent held media conference to clarify that they had no choices in deciding that “QQ will not be compatible with Qihoo 360 software”, and showed the evidences that Qihoo attacked Tencent maliciously.<br /> 2010.11.05, Qihoo retorted Tencent’s statement, and sent their source code to National Information Security Testing Center for evaluation. Furthermore, Qihoo 360 told all users that “For protecting the benefits of our dear customers, we would like to stop fighting.”<br />Result<br /><ul><li>Ministry of public security got involved in this case and asked both sides to stop.
Tencent QQ got compatible with Qihoo 360 safeguard.</li></li></ul><li>Chi Zhang is a student of International Design Business Management at Aalto University in Helsinki, Finland. She is originally from China and has experience from the fields of information technology and networking technology.<br />
Chi Zhang (firstname.lastname@example.org) <br />TekirOy<br />2011<br />