ASIA NEWS NETWORK
WE KNOW ASIA BETTER
China's global firms face 'trust gap'
Publication Date : 12-09-2013
China's multinational corporations face a wide gap between how they are trusted at home and abroad, according to an international survey released on Wednesday.
While enjoying an 83 per cent trust rate in the domestic market, these companies won only a 50 per cent trust rate among respondents in other emerging markets--and the figure was just 24 per cent for developed markets, a survey by global public relations firm Edelman found.
The level of trust in Chinese corporations in developed markets is even lower than for companies based in South Africa and India: 31 per cent of the respondents in developed markets trust corporations based in South Africa and 28 per cent trust companies from India.
China-based companies rate particularly low in Germany (19 per cent), France (22 per cent) and the United States (26 per cent), the survey found.
Edelman interviewed 5,400 "informed online respondents" in nine developed and emerging countries.
The report attributed the trust deficiency mainly to low brand familiarity and sensitivities about State involvement. Respondents in developed markets believe that companies from the emerging markets have close ties with their national governments.
While respondents in developed markets have a 50 per cent trust rating in listed companies, only 37 per cent trust State-owned companies.
Richard Edelman, president and chief executive officer of Edelman, noted that people in developed markets are increasingly nervous about Chinese companies entering their markets.
He noted that only one-third of the respondents in developed markets are willing to see a Chinese company buy a company in their markets, and only 38 per cent want a Chinese company to get access to their markets.
"This is a big problem. 'Branding China' is not helping if Chinese companies want to go global," he said.
But a few Chinese corporations stand out. Lenovo Group Ltd earned a 72 per cent consumer awareness level in the US and Air China Ltd enjoyed a 63 per cent rating. These levels were much higher than corporations in other emerging markets.
Wang Jianlin, chairman of Dalian Wanda Group Co Ltd, a major Chinese real estate developer that has expanded aggressively overseas in recent years, said the trust deficit is "normal" because corporations in emerging markets are still in the early stages of development.
He said at the World Economic Forum Annual Meeting of the New Champions in Dalian that his company's overseas expansion, including the acquisition of US cinema conglomerate AMC Entertainment last year, had not been affected by the trust issue.
He added that Wanda had discussed the move fully with AMC executives before seeking shareholder approval.
The survey also found that in developed markets, the most common perception of China-based corporations is they lack transparency and openness. Developed market respondents also think that Chinese companies have failed to produce high-quality products and act responsibly in a crisis.
David Brain, Edelman Asia-Pacific president and chief executive officer, warned that companies will pay the price if they fail to respect employee rights and protect intellectual property rights.
"Trust is money. Low trust among customers will surely lead to artificially low valuations in initial public offerings, or delays or failures in overseas acquisition," he said.