PR Industry Gears Up For Long-Awaited China Inc Expansion
Charting the future of public relations
Holmes Report

PR Industry Gears Up For Long-Awaited China Inc Expansion

For the Asian PR industry, the prospect that local brands will spread their wings beyond the region has always seemed tantalisingly out of reach.

Arun Sudhaman

For the Asian public relations industry, the prospect that local companies will begin to spread their wings beyond the region has always seemed tantalisingly out of reach.

For certain, there are numerous Asian brands that have tasted worldwide success, particularly when Japanese players are factored into the mix. And there is plenty of evidence to support the view that wealth is shifting from West to East, bringing with it a more expansionary mindset among cash-rich Asian companies.

In public relations terms, though, the pickings have been slim, a verdict that is only accentuated by the glaringly contrasting communications spend of Western-based MNCs in various Asian markets.

New China practices

A flurry of new international China practices on the PR agency side (Ogilvy, Burson-Marsteller and Fleishman-Hillard), suggests that this might be changing. Chinese companies, flush with cash and eager to grow, have often seemed likely contenders for international expansion. In common with many of their Asian peers, however, this has yet to translate into a substantial global PR revenue stream.

For one highly-placed comms executive at a major Chinese company, these new agency practices may be “premature.” Part of the reason, he notes, is that many enterprises remain locally focused, thanks to the size and rapid growth of the Chinese domestic market.

Those that do make the leap tend to hail from industries that either require global scale, or the resources to support continued growth: minerals and mining, telecoms and electronics, construction equipment, automotive. Lenovo, after buying IBM's PC business in 2005, is the most-cited example of this trend; other potential players include telecoms giant Huawei, Taiwenese mobile player HTC, white goods company Haier and auto major Geely.

For most Chinese companies with an expansionary mindset, though, plans are yet to involve substantial consumer outreach - effectively excluding brand PR opportunities.

“I think it’s going to be a while before you see any business of volume coming out of China,” says Edelman global corporate president Alan VanderMolen, who ran the firm’s Asia-Pacific operations for seven years until 2010. “I’m an outbound sceptic - unless it’s money coming out of India, the Middle East and Brazil.”

Others are less sceptical. “The first thing you have to realise is it’s not about Chinese brands going global,” says Ogilvy PR China CEO Scott Kronick. “It’s Chinese companies with outbound interests.”

PA or PR?

More often than not, to hear Kronick tell it, this involves acquisition or market entry. Ogilvy, accordingly, is part of a Global Solutions Group alliance with KPMG, Jones Day and Ascension Capital - which focuses on providing a one-stop service for Chinese companies that require international deal advice.

“They are not thinking about comms so much,” adds Kronick. “What we see as the first conversation starter is discussion around regulatory approval.”

This means that money is being spent more on public affairs than on public relations. Yet even the smartest regulatory engagement strategy can come a cropper when faced with opposition from local activists, as Chinese companies have found to their peril in the past. To name two examples, both CNOOC and Haier saw US acquisition plans founder because of poorly-handled communications outreach.

“They do recognise they need to do something about it,” says Kronick. “There’s a heightened degree of understanding that you don’t launch without thinking about the local sentiment. It’s about telling the story.”

Adding a little more substance to the idea of a China-based PR windfall are the opportunities that exist around nation branding. There are many Chinese cities and provinces that are looking to attract increased investment or tourism dollars, and public relations firms are proving adept at handling this type of business. Hill & Knowlton, for example, works for the city of Beijing, while Ogilvy has handled briefs for Chengdu and Jiangsu province.

The agency challenge

Agencies hoping to capitalise on these trends may require more than an elaborately titled new practice group. Both VanderMolen and Kronick agree that boots on the ground in China are a prerequisite, providing the kind of insight into Chinese decision-making that is of particular importance. And a cohesive network can help less experienced clients navigate the likes of London, New York and Perth.

But the most important factor? “Commitment,” says Kronick. “This is not our traditional MNC launch in 10 markets type of thing. It’s highly fluid and we need committed people to work on it.”

The theme of Asian brands going global will form the centrepiece of the Holmes Report’s ThinkTank Live Conference in Singapore, on 3 November. For more information click here.

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