china 2008: pr in an olympic year
TRANSCRIPT
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China 2008Communications in an Olympic Year
January 8, 2008
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Agenda
+ Welcome to China+ The context for communications+ A two-faced monster: The media in China + Communications challenges+ Strategies and tactics that work+ Conclusions
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Welcome to China
+ GDP Growth: +11.5 percent in 2007+ Forecast +9.9 percent in 2008
+ Industrial production index: +17.3 percent
+ Population: 1.3 billion
+ Currency: Renminbi+ US$1=RMB7.26
(up from 7.8 in Jan 07) + Euro$1=RMB10.71
(down from 10.27 in Jan 07)
Terracotta soldiers
Shanghai
Three gorges dam
Llasa
Hong Kong
Beijing
Shanghai
TaiwanHong Kong
Macau
Chengdu WuhanChongqing
Xi’an
Tibet
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Welcome to China
In 2007+ China's electronics and information industry realized sales revenue of $747 billion,
ranking second in the world. + China is world's second-largest auto market and its sales are likely grow 20 percent
to hit or surpass 8.7 million units + There will be 539.4 million mobile users in China in 2007, ranking number one in the
world, with an annual growth rate of 19 percent + China will be the world’s third largest buyer of luxury consumer goods, accounting
for 12% of global demand+ By 2009, 105 million households will have $3,000 or more in annual disposable
income - a tripling in size of the consumer class in three years
In 2007+ A total of 135 million people live below poverty line - 10% of total population+ Average annual rural income is just over US$300+ Sixty million people live on less than US$100 per year
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1. The Context for Communications
+ Politics
+ Economic development
+ Nationalism
+ The consumer
+ The environment
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Politics
Political system+ One-party communist state
+ 25 years of economic reform
Government priorities+ Economic growth
+ Social stability
+ The environment
+ Anti-corruption
Focus industries+ High tech
+ Financial services
+ Automotive
+ Services
Deng XiaopingMao Zedong
Jiang Zemin Hu Jintao
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Economic Development
WTO & Competition+ China acceded to WTO in 2001. By 2008, all major markets have been significantly
deregulated+ Despite significant remaining protection for local players, competition now intense
in every industry+ Huge benefits to consumers and private enterprise
+ Rust-belt industries and some rural areas in danger of being left behind
US consumer activist flyer
Foreign Trade+ China accounts for 30% of global
merchandise exports+ Domestic suppliers facing tremendous
pressure from global importers and appreciating currency
+ Wal*Mart alone bought US$ 26.7 billion of goods from China in 2006, almost 10 percent of China’s total exports to US
+ Quality has become a huge issue, also a matter of national pride
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Economic Development
+ Capital markets, currencies and banking+ Renminbi value being managed upward. Slowly.
+ China’s stock markets grew 97% in 2007+ Foreign access beginning with QDFI and QDII schemes+ Hong Kong status as financial center being questioned
+ Banking industry showing some signs of recovery, boosted by IPOs and successive bailouts
+ Innovation and technology+ National goal to move up the value chain
+ China is the second-highest investor in research and development behind only the US
+ Technology transfer is a stated goal of joint ventures with foreign companies
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Chinese Brands to Watch
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Nationalism
+ China is literally “the middle kingdom”, at the centre of the world
+ The Olympics+ Hard to overestimate the significance of the 2008
games as a source of national pride+ Positioned to showcase the best of China to the world
+ The Taiwan issue+ Remains extremely sensitive+ Foreign companies often caught out
+ Nationalism in business+ Several major companies seen as national champions+ Foreign companies can be discriminated against
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The Consumer
+ Sustained economic growth has led to the rise of a new consumer class
+ Credit cards becoming common+ 31 million credit card holders
+ Young people driving consumption+ Little emperors
+ Seeking quality of life and individualism + Xiao-Zi (little bourgeois) = “yuppies”
+ Influenced by advertisement, product review, feature articles and endorsement
+ Fast-growing e-commerce market+ More online payment users that credit card
holders
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The Environment
+ China has 16 of the world's 20 most polluted cities
+ Fast rising consumer and government awareness
+ National government “green GDP” targets not met in 2007 – this year civil servant’s performance reviews directly linked to progress
+ China is a signatory to the Kyoto Accords
+ Recent criticism of foreign companies applying different standards in China
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2. The Media in China
How broadcast, print and online media are
changing fast
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A Two-faced Monster
+ Propaganda machine vs. money machine
+ Propaganda machine+ Still tight control over policy related
report, to keep the country under one voice
+ Money machine+ More than 10,000 publications, each one
of them need eye-catching news for survival
“The capitalist theory of journalism is…wrong”
Opening lines from a Chinese University Journalism School textbook, 1980s
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Broadcast Media Overview
+ The most two-faced: the most government controlled, but also the most lucrative
+ Major TV channels+ CCTV (13 national channels)
+ Regional TV: Hunan Television, Phoenix TV (more than 300 channels)
+ Others: CBN, CCTV9
+ Trends in programming+ CCTV becoming more modern
+ Entertainment programs are popular among young people
+ China not immune from flood of reality TV
+ Brand-sponsored programming common
Show some reality show (Chinese pop idol?)
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Print Media
+ Over 10,000 print media titles+ Fast becoming more market focused
Reference News
Circulation: 3,000,000
Used to be the only international news resource for high ranking government official. This newspaper now can be bought on the newsstands.
21st Century Business Herald
Circulation: 400,000
One of the most influential business newspapers in China
Cosmopolitan
Circulation: 400,000
Chinese version of Cosmopolitan, a leading consumer magazine featuring fashion news
Caijing
Circulation: 80,000
Regarded as the most criticizing media, and has built its reputation as the leading voice in Chinese business and financial circles
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Online Media
+ There were172 million Internet users in China (2007) – making it the world’s second largest market after the US
+ Of these, more than 100 million have a broadband connection, and 20 million now access the Internet primarily via a wireless device
+ Internet users are more likely to be urban dwellers, with nearly 60 percent of all users living in Beijing or Shanghai
(Source: Asia Digital Marketing Association Yearbook, 2007)
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Editorial Styles
+ Foreign media+ More objective + Tend to investigate and understand + More critical and persistent + Focus on hard and timely news + Prefer market comments + Working relations are critical
+ Chinese media+ Tend to bring personal feelings to
work + "Copy and Paste" reporting + Less inquisitive and forceful + Prefer macro-policy related
numbers/percentage + Personal rapport important + Nationalism matters
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3. Communications Challenges
PR pitfalls and how to avoid them
Need a photo to illustrate
Chinese consumers smashing a Mercedes-Benz
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Communications Challenges
+ Nationalism and pride + Double standard to MNCs and domestic
companies, more critical to the former
+ March 15 is national consumer day: Each year, several foreign companies are blacklisted
+ Paying for media+ Travel allowance (US$30) is a commodity
and a cost of doing business
+ Traditionally these allowances have made up to 1/3 of reporters salaries
+ Advertorial approach rampant (more so outside of main cities)
Headline - Focus 3.15: 10 MNCs Criticized by Chinese
Subtitle: Foreign Companies weakening in China
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Communications Challenges
+ Dealing with joint venture partners+ Interests are often not aligned
+ M&A issues under increasing scrutiny
+ Dealing with crises + Slow MNC reaction can be translated into
“arrogant” and evoke a wide-spread nationalism
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Communications Challenges
+ Working with the government+ Criticism of China is frowned upon
+ Nationally sensitive issues and industries
+ Local competitors supported by government
+ Localization + 99.9% people do not read English
+ 99.9% media do not care about non-China related corporate news + IT media can be an exception – but don’t bank on it
+ Local spokespeople are best+ But a Chinese speaking foreigner can be very effective+ Global CEOs also in demand
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4. Strategy and Tactics: What Works
+ Align with national issues+ What’s good for China is good for your business+ Go beyond the Western headlines and identify real policy-making dynamics
+ Focus on the major cities+ National media and government focused on Beijing+ Financial and auto industry based in and around Shanghai
+ Localize+ Don’t just translate – ensure content resonates in China
+ Educate+ In many areas of business, China has a comparatively short history + Don’t patronize
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Strategy and Tactics: What Works
+ Feed the media with information + To suit “cut and paste” approach to reporting
+ Personal rapport + Invest in long term relationships…or people with access to such relationships
+ Give face+ The higher the level of the executive to be interviewed, the more “face” and respect
reporters will grant
+ Be humble in attitude and show commitment to China market+ Local materials, spokespeople+ R&D commitments, facilities, investment
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ConclusionFive Truths About Communications in China
+ China IS different+ Western ways will not work+ You are a foreigner+ Be a partner+ Keep learning
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Q&A & Resources
Paul Mottram
Upstream Asia
+(852) 2973.0222
Hua Foley
Upstream Asia
+(86) 10.6530.7200
Shannon Latta
Horn Group, Inc.
+1.415.905.4030
www.oriellaprnetwork.com
www.upstreamasia.com
www.eastwei.com
“Catching Up Fast” – A bible for Web 2.0 PR and Marketing in China
“China PR” – Knowledge Driven Media Relations
www.horngroup.com