Arun Sudhaman 28 Feb 2019 // 8:22AM GMT
No one ever said it would be easy for a Chinese brand to go global. Yet at a time when the value of public relations is being scrutinised like never before, Huawei's harrowing experiences over the past couple of years provide a salutary reminder of the perils of underestimating the need for a sophisticated PR strategy — one that is rooted as much in credible behaviour as it is in verifiable messaging.
Huawei's attempts to win over international scepticism are hardly a new phenomenon. For the better part of a decade, China's flagship tech company has been locked in a seemingly neverending series of battles to ease suspicion, particularly in the West, where its links to the Chinese government have made it easy fodder for the charge that it could act as a proxy for Beijing. And neither is it the first Chinese company to complain about unwarranted scrutiny from the West.
Those concerns have effectively served to scupper Huawei's attempts to break into America. And they have taken on heightened magnitude in recent months with the arrest of CFO Meng Wanzhou for allegedly helping to breach sanctions against Iran, charges that Huawei denies.
Meanwhile, the US government is leading geopolitical opposition to Huawei's rapid expansion, warning countries not to allow the company to help develop 5G networks. So far, Australia has joined the US in banning Huawei on national security grounds, while the UK, Germany and New Zealand are yet to make a final decision.
All of which will probably make my next contention, that Huawei might actually — at long last — be making the right PR moves, sound more than a little fanciful. But, bear with me as we examine why the technology giant finally appears to be listening to its PR advisors, in a manner that other Chinese companies would do well to emulate if they hope to build sustainable, global brands.
China Inc vs the world "There isn't any separating business from politics in this era"
Huawei is hardly an isolated case. For more than a decade, I — along with many others in the PR industry — have observed Chinese companies attempt to make international headway without the kind of public relations focus that typically accompanies such efforts. Yes, many agencies have set up high-priced cross-border China practices, but few can point to clients that have embraced the traditional public relations virtues of long-term transparency, corporate citizenship and reputation management.
Instead, most have emerged blinking into a world where their traditional approach to PR — underpinned by domestic success and supportive local media — counts for little. As one PR agency executive familiar with Huawei notes, the company's approach a decade ago rested on its superior products and track record for growth.
"The big executives said our PR strategy hasn’t failed us yet, it won’t fail us tomorrow," recalls the advisor. "We’ve got to where we are today not by crowing about it. We don’t need to be out there and the CEO is very reclusive."
There are good reasons for why this kind of mindset appeals in China. Ironically, Western companies have often found this out to their own cost, particularly as Beijing has clamped down on their mainland expansion plans. And, of course, there are echoes of the US tech industry's own faltering PR moves, whether illustrated by Facebook today or Microsoft before its anti-trust case.
As a Holmes Report panel recently explored, furthermore, China Inc's reticent attitude towards the international media has only proved counterproductive in an era when its every move is greeted with reactions that appear to run a narrow spectrum from intense scrutiny to all-out hysteria.
"Western businesses had twenty years of pain and failure in China while they learned how to do business there," says an in-house PR advisor with considerable experience of Chinese tech companies. "Now Chinese companies are repeating those mistakes in their own ventures overseas. Step one: trust your local teams to know the local political environment and guide you accordingly."
In a recent editorial for the EE|Times, Hoffman Agency CEO Lou Hoffman points out that anti-China rhetoric cannot be blamed solely on the Trump administration. "Negative characterization of Chinese business goes back years," writes Hoffman, pointing to high-profile media and political examples of this trend. "This history is important because Huawei must take into account how the United States perceives China."
Huawei's reluctance to communicate, furthermore, is only compounded when the stakes rise, as exemplified by the company's experiences over the past 18 months. "Huawei's mismanagement of its international image is typical of Chinese entities — governmental or corporate — who simply can't respond to challenge," says former JWT China CEO Tom Doctoroff, now chief cultural insights officer at Prophet. "The instinctive impulse to lurch into a defensive, self-protective hunch precludes mutual understanding and win-win collaboration."
You could argue that all the mutual understanding in the world cannot help Huawei's current plight in the US, where the Trump administration, aided by a hawkish Congress, has taken on a fiercely adversarial approach to the company. "Huawei is a fascinating case because fear of its waxing power and dread about its potential to wreck waning Western tech rivals have become the dominant emotions in many mature developed markets," points out Signal Leadership principal Bob Pickard, who previously led Huawei agency BCW in Asia-Pacific.
"Arguably the ship sailed some years ago, and there is no amount of damage control that can overcome them being positioned as the tool of a potential strategic rival," adds the in-house PR advisor.
"They can continue to do PR here, but it's questionable what value there will be as long as the US government is incentivized to portray them as a villain. The opportunity was back when there was still some sense of potential partnership between the US and China. It's way harder now that everyone thinks the WTO/constructive engagement era is over."
"Ultimately," adds the advisor. "There isn't any separating business from politics in this era. It will be difficult as long as they're seen as a tool of state policy."
Beware the 'wolf' "Results are prioritized above all else at Huawei"
Instead, many observers point to Huawei's missteps from its early years of international expansion. That low-profile approach only complicated matters further when the company made serious errors, involving — for example — allegations that it stole trade secrets.
In a podcast last year by China Tech Talk, Huawei's fabled 'wolf culture' is explored at length, helping to explain how the company's meteoric growth has been propelled, in part, by a "dog-eat-dog" internal mindset. For the Western media, more accustomed to ceaseless Silicon Valley posturing about enlightened employee empowerment, the Huawei culture can be difficult to grasp. Yet, it helps to explain how a company that now ranks as the world's second biggest smartphone maker can so effortlessly appear to be incentivizing bad behaviour.
"Huawei, with its military background, tends to have a culture that can encourage a battlefield-like mentality," wrote corporate trainer and writer Elliott Zaagman in 2017, after conducting research with several current and former employees of the company. As one former employee describes it to Zaagman: "In Huawei, 'wolf culture' means you kill or be killed. I think the idea is that if you have everyone in the company competing fiercely with one another, the company will be better at fighting and competing with external threats."
There is no doubt that Huawei's unique workplace culture has given the company something of an edge over its rivals. "Huawei wants people who are hungry, works them hard (it is said the average Huawei employee works a 12-hour day), but also rewards them with good salaries and quick promotions if they achieve results," wrote Zaagman. "And those results are prioritized above all else at Huawei, creating an intensity that produces the high-speed, low-cost deliverables that the company is famous for."
But neither is it difficult to see how this mindset can turn into a liability when the company faces the kind of global scrutiny that has become the norm in recent years. "Huawei’s wolf culture, whilst commercially effective, breeds low trust externally," adds a former agency PR advisor to Huawei. "Wolf culture is a low trust internal culture and that has reverberated out."
That attitude, of course only poses more risks where foreign staff are concerned. As Zaagman explains, Huawei "is notoriously untrusting of local staff" in foreign markets.
"If someone works at Huawei and they are not Chinese, regardless of their title or salary, I guarantee you, they have very little real power or authority, even if they are based in their home country," a former Huawei employee told Zaagman. As an industry expert told him: "I cannot think of another company in the world that has such a global presence, but pays so little attention to localization and integration."
Last year, Huawei's former US PR and PA head William Plummer wrote a book that detailed how the company regularly ignored advice from its staff in foreign markets. And numerous Huawei advisors — both current and former — freely admit that the company's exclusion of foreign staff from decision-making has proven to be a calamitous strategy.
A well-researched article by Kathryn Hille in the FT last week, for example, lays bare Huawei's consistent inability to act on 'difficult' PR advice. As Plummer added recently on LinkedIn, the US campaign is "utterly unfair", but "where Huawei fails, miserably, is in owning its own narrative. The world has told Huawei's story — falsely, with next-to-little contradiction."
That is unsurprising when you consider that Huawei's approach to communications has typically prioritized corporate loyalty instead of public relations savvy, a state of affairs that is not unknown at Chinese companies. At Huawei, for example, the key HQ communications department is now led by Song Kai, former deputy CEO of Huawei US and former CEO of Huawei France, who recently replaced Joy Tan upon her shift to Washington, DC.
Song Kai is supported by former Australia CEO Guo Fulin, and it is only below that level where communications experience can be found, in the shape of VPs Joe Kelly, Glenn Schloss and others.
"They don’t look for a qualification in PR, but in management and proven ability to deliver," says the Huawei PR advisor. "The last several bosses of the media affairs teams are very successful country managers, apart from Joy Tan."
Culture = strategy
"How much money are we paying these agencies?"
Even if Huawei's culture is probably more extreme than most, it represents an approach to public relations that is — say China veterans — emblematic of the country's corporate giants. One points to ZTE as another example, a fellow Chinese telco that parted ways with its PR agency support shortly before it was indicted for violating sanctions, charges to which it eventually plead guilty.
"Certainly it’s very commonplace with Chinese companies in Western markets," says an MNC PR agency executive. "There might be a few exceptions like Lenovo. Tencent is trying to go proactive but even they are quite secretive."
"They see PR as an expenditure," adds the agency exec. "They don’t understand or appreciate the value. They have these reshuffles all the time. Huawei does as well. How much money are we paying these agencies?"
Huawei's PR agency arrangements suggest that these observations are well-founded, underpinned by concerns over trust and value. As the Holmes Report has covered in extensive detail, the company subjects its PR agency roster to frequent reviews across the globe. It is unsurprising, perhaps, that a select group of agencies — BCW, Racepoint, Ogilvy, FleishmanHillard, H+K Strategies — has emerged that can handle the unique demands of servicing Huawei's PR business.
To be clear, Huawei now invests tens of millions of dollars in its communications function, which has expanded significantly in recent years, and PR agency support. Yet, this investment has rarely (until very recently, at least) been accompanied by a sense that its core PR strategy is evolving. "I’ve watched the in-house teams balloon in numbers," says the agency exec. "They have more Western expatriates, but the strategy hasn’t changed."
"Once a PR dinosaur with only the most primitive concept of corporate communication, in a remarkably short span of time," adds Pickard, "Huawei has built a world-class communications platform with an advanced and well resourced in-house capability serviced by a roster of Western PR agencies — including some of the biggest names in the business — who are collectively billing many millions of dollars."
And while a good PR agency can hardly be viewed as a panacea to all of Huawei's woes, there is no question that an empowered corporate communications strategy could have helped the company better handle the fierce scrutiny that it first began attracting a decade ago.
"There is a lesson for a lot of Chinese MNCs that are growing quickly and find themselves a Fortune 500 company all of a sudden and are grossly underprepared to deal with different cultures," says the agency exec. "The lesson is don’t wait until you get into much trouble or let others define your narrative or define your story. Huawei's lack of effectiveness in telling its stories and being transparent is starting to have a material impact on its business."
Transparency under duress
"What Huawei is doing now is what they should have done five years ago."
The fundamental charge against Huawei is that its telecoms equipment poses a security risk, one that is heightened by the advent of 5G technology. Thanks to persistent questions about Huawei's ownership and PRC government links, US politicians have long contended that China's flagship technology company could spy on foreign countries or, even worse, operate as an enemy agent should a state of war ever break out.
Huawei has made fleeting attempts to address these security concerns but has rarely tried to engage in any kind of a sustained public relations campaign. The latter option would, presumably, require the presence of CEO Ren Zhengfei, a man for whom the term 'reclusive' has somehow seemed like an understatement.
Again, this is hardly unique to Huawei among companies in China (or even Asia), where CEO visibility is far more commonly viewed as a risk, rather than a benefit. Until 2012, Ren was barely visible in the international media; that changed when he gave his first interview, rather randomly, to New Zealand journalists in 2013, before returning to relative obscurity for the next six years.
Meanwhile, a new administration took power in DC, and opposition to Huawei's rapid global growth intensified. The company's remarkable rate of expansion may once have seemed like the best insurance against political risk, but it now found itself facing increasing scrutiny of its technology and motives.
"As China’s national champion multinational," continues Pickard, "Huawei is now a red flag of warning in most of the Anglosphere countries of China’s rise as a technologically advanced superpower that many are afraid could surpass and dominate a divided and declining West, where governments may be reaching the conclusion that if they don’t stop Huawei now — stop Chinese encroachment into the Western telecoms infrastructure — they never will."
Regardless, Huawei appeared unruffled by the charges, proceeding as if it were business as usual and turning a blind eye to the rising risks posed by a far more adversarial White House and Congress. The turning point, curiously enough, was not the Canadian arrest of Ren's daughter and Huawei CFO Meng Wanzhou, but the Australian government's decision to bar Huawei from its 5G networks.
Until that moment, it appears, Huawei had viewed the risks as, effectively, contained to the US, a country that had long appeared immune to its charms. Not only is Huawei excluded from US telecoms networks, but US carriers do not offer Huawei smartphones — a state of affairs that Huawei could live with given its eye-catching growth in European and Asian markets.
"Then Australia banned them," says the agency executive. "Then New Zealand banned them. Now they realise [their PR strategy] was a mistake. What Huawei is doing now is what they should have done five years ago. They are finally listening to the advice."
With the US actively lobbying foreign governments to ban Huawei, the company's strategy reversal is not a moment too late, but still raises some uncomfortable questions.
"There should have been an aggressive transparency push starting way back in 2011-12 or so — much more open about the business, much more availability of Ren Zhengfei, disclosure of the ownership structure etc..." says the in-house PR advisor. "The problem now is that they look like they're being semi-transparent under duress. They can claim whatever they want, but there is no trust established, so the natural reaction is, 'well of course they have to say that, but who knows?'"
The charm offensive
"Huawei has played it safe for too long"
Even so, Huawei's efforts over the past three months reflect a company that is finally getting to grips with the scale of its PR challenge. Led by Huawei board director Chen Lifang, who now oversees the company's public affairs and communications department, other key figures in the campaign are understood to include European SVP and former UK government CIO John Suffolk and UK comms head Ed Brewster. Meanwhile, the global BCW team is led by Asia-Pacific president Matt Stafford, whose Huawei relationship now stretches back to almost a decade.
Rather than resorting to bland corporate branding efforts, Huawei's latest moves demonstrate a marked shift in its messaging strategy, focusing attention on why the US might be pressuring other countries to ban the Chinese company. Could it be to benefit the likes of Qualcomm and Cisco, while also turning into leverage for US/China trade negotiations?
Huawei and its representatives are also pushing the line that excluding the Chinese company will compromise the delivery of 5G technology at an affordable level, a message that appears designed to appeal not just to politicians, but to their voters. A recent New York Magazine feature, for example, states that "the US would be tying one hand behind its back by denying its carriers the ability to use Huawei equipment."
Meanwhile, a new page called 'Huawei Facts' appeared on the telco's website in February, aimed at answering questions about the company and collating its responses to recent setbacks.
For anyone accustomed to the cut and thrust of public affairs work, this may all seem like business as usual. But for Huawei, this probably counts as a brave new world, one given an extra dimension by the dramatic reappearance of CEO Ren Zhengfei in front of journalists.
Interestingly enough, Ren was not rolled out immediately after the arrest of CFO Meng Wanzhou, presumably because it might look like he was responding on a personal level to his daughter's plight. Instead, his charm offensive began a month later, even if he admitted that he had been ‘forced’ into it by Huawei’s PR team. Further appearances from their CEO have made it clear that Huawei is willing to take some "calculated risks", as a PR advisor puts it.
"You’ve got to get Ren out of his building," says the PR advisor. "He’s so gregarious, so honest, so authentic. He’s a bit risky — he says some things that might get picked up in media training. But Huawei has played it safe for too long. It’s time to take some calculated risks."
Huawei's newly emboldened attitude might also explain some rather unusual trolling by rotating Huawei chairman Guo Ping at Mobile World Congress earlier this week, who used a mainstage address to draw attention to the US PRISM program, which compelled some of America's largest tech companies to spy on their own citizens.
"Prism, prism on the wall, who is the most trustworthy of them all?" asked Ping. "It is a very important question and if you don’t answer that, you can go and ask Edward Snowden."
Those risks might be paying off, especially if the company continues to position itself as a victim of unwarranted US aggression. In a rebuff to the US, UK officials have said that any risks Huawei poses can be managed. Unsurprisingly, Huawei has pounced on this as welcome vindication, noting that the UK already subjects its products to rigorous safety reviews.
With New Zealand likely to follow the UK decision, and Germany also considering allowing Huawei into parts of its network, it may be that Huawei's savvier PR mindset is finally helping to stem the tide. At MWC, meanwhile, Europe's carriers have made it clear that banning Huawei risks delaying 5G in the region.
And many other Chinese companies are likely to be watching their counterpart's moves closely, particularly Huawei's contention that the Chinese Government would hardly risk its flagship technology company's reputation in return for intelligence.
"Enlist the Chinese government to back up their messaging, and keep it believable," advises the in-house executive. "Nobody believes them when they say they'd never share info with the Chinese government because everyone gets that it's simply not true — it just makes people roll their eyes. But there is a believable argument that it would be business suicide for them to engineer their products to support state espionage. They'd only need to be caught once. So stay on that line."
As for Huawei's US reputation, that may well be a lost cause at present, but there are still plenty of lessons for China Inc as more and more companies, led largely by its technology players, spread their wings across the globe.
"Recognize that the job of rehabilitating their image in the US is the work of a decade," adds the in-house exec, amid advice that could be applied to any Chinese company going global. "It's not something that will be fixed in a year or two. Concentrate on building their successful developing market businesses. Do some R&D and keep releasing good, reasonably priced products. Don't make silly mistakes and stop incentivizing bad behavior. Be more transparent. Be a constructive force in international standards development."
Communications is never enough
"It really is a salutary lesson about the value of PR"
Six years ago, Weber Shandwick and Prime Research released a study that investigated how Chinese brands can successfully bridge the communications gap with Western audiences. The recommendations were innocuous enough — embrace transparency, make their CEOs more visible, engage early and often with regulators — the kind of advice that PR firms regularly dole out by the hour.
What is startling is how few Chinese companies have committed to these basic tenets of global reputation management. Perhaps, as we noted at the time, it is because much of the advice in this area focuses too much on communication and too little on behaviour. As China PR veteran David Wolf put it, "transparency is useless if all it reveals is a company engaged in unsavory or nefarious behavior."
But one of the report's recommendations still rings true, now more than ever — that Chinese tech companies "make social impact real."
"With most Western governments still focused squarely on economic recovery and specifically job creation, Chinese companies should consider aligning their communications with the creation of employment and economic development in their target markets. Many Chinese brands have good stories to tell stakeholders and the media on this front and should proactively take the opportunity to build goodwill with target communities and their political representatives."
This still serves as sterling advice for China Inc, bringing a useful focus on actions rather than just words. And, in doing so, it demonstrates why communications alone will never be enough to help Chinese companies win over Western audiences. Huawei's experiences tell us as much; the hope is that the PRC's flagship tech company, and indeed its China Inc counterparts, have learned that any credible PR strategy begins with culture and behaviour.
At Cannes last year, a FleishmanHillard panel featured Huawei, Alibaba and BYD, concluding with the insight that Chinese companies view innovation "as a marathon". There is much to admire about this approach, helping to explain how Chinese companies have — among other things — integrated communications and e-commerce in a manner that their Western peers can only hope to imitate.
But it is a mindset that they would do well to apply to their international reputation management efforts too. Public relations is also a marathon, and any attempts to underestimate its long-term value or importance are likely to result in the kind of morass from which Huawei is now extricating itself.
As one Huawei advisor puts it, "it really is a salutary lesson about the value of PR."