China’s Attractiveness to Foreign Companies and Potential PR Risks

There is no doubt that China’s booming economy takes slower speed amid the global financial crisis. However, foreign companies are still flocking to China for business opportunities.

InvestHK, the Hong Kong department that promotes the city as a place to do business reported Wednesday that it had advised 257 companies setting up business in Hong Kong this year, more than in any other year, according to the International Herald Tribune’s story. But going to China to deal with business is not an easy decision,  not only because China is as big as the U.S. and its market is very much segmented, but also because of the under-the-table skills and potential risks doing business in China.

I remember On Sept. 14, 2006, SK-II, the high-end cosmetics product of Procter & Gamble (my previous employer), was found by China’s quality supervision authority traces of two elements that could cause potential side effects such as rashes and liver problems. The alleged quality defect, together with P&G’s stubborn reaction in the first few weeks, triggered a nation-wide negative media coverage. Angry online comments and sporadic outbursts of violence in SK II stores escalated the crisis and forced P&G to suspend sales of SK-II products in China for a few months.

P & G mismanaged the crisis on three key elements: failure to correctly evaluate the influence of the burgeoning Internet; failure to execute local strategy to manage the crisis according to consumer habits; failure to avoid potential political risks in a country with difference political systems.
In the digital times, the crisis spread path both on traditional media and on the Internet, which spreads news and people’s dissatisfaction much faster. This fast track also made SK-II, a brand P&G spent huge amount of money and time to promote, sink in a few weeks. From a PR perspective, I’d like to advise people on managing public relations in China: keeping low-profile; paying more attention to the Internet; quick and accurate response; avoiding political risks. If you can do all these, you can at least avoid the potential PR risks in China.

Automobile Industry in Turmoil

Honda has cut its annual profit forecast by 62%, Toyota delayed its U.S. plant plan, and the Big Three were still waiting for the rescue plan amid falling global car demand and the global financial crisis. In China, BYD launched a new clean energy car series – F3DM, which is the first electronic sedan in China.

What happened in the automobile industry and what’s the future ahead? None of us knows the right answer right now, just like 50 years ago, everyone was eagerly looking forward to a job opportunity in that industry for no reason.

Car-makers around the world have been announcing lower forecast of sales and profit together with job cuts, and leading US car-makers have been trying to persuade the government to approve a car industry bailout plan.

Everyone is talking about clean energy new model for automobile industry. But after every big manufacturer has Hybrid car series, no one knows if the clean energy cars

can rescue the automobile industry out of trouble.

I’d support the bankruptcy plan of the Big Three, since only on this way, they can get rid of the heavy pressure of retired employees’ compensation and medical aid packages. I’m no idea why in a free market country, there are companies who have to take responsibilities to cover all the retired employee’s compensation and their medical care packages for such a long period.

Additionally, the Big Three haven’t focused on automobile industry for a long time, but investing in the finance field, which made them slump with the crisis. In our impression, automobile industry should be the representative of the real economy, but recent turmoil disclosed that they’ve been involved in the finance economy for a longer time than we expected.

Missing Billionaire Huang Guangyu in Trouble

When I visited the 17 miles drive in Pebble beach of California, I was not only amazed by the scenery, but as a business reporter, I also remembered that was the place Zhang Enzhao, former chairman of China Construction Bank took millions of bribes. The economy engineer and top official in major Chinese banks, was caught and accused of accepting bribes in a civil law suit filed in 2004 in California, the United States .

And nowadays, another Chinese businessman Huang Guangyu is in trouble. Huang Guangyu used to be the wealthiest person in the country, according to Hurun’s Report on top 100 billionaires in China. He built up a fortune of $6.3bn (€5bn, £4.1bn) from the Gome electronics retail chain he founded.

Yet for the past week he has been missing. Gome suspended its shares on Monday as rumors of Mr Huang’s arrest swirled around the capital and company officials could not explain his whereabouts. Only late on Friday evening did the authorities give the first details about the case – a two-line statement saying Mr Huang was suspected of manipulating the share price of two small companies with links to Gome.

The mystery of his disappearance does not reflect well on the rule of law in a country that has promoted market reforms for 30 years but where political connections and personal feuds still often trump legal due process. It has also exposed the complex attitude to wealth and business in modern China where the new rich are lionised for their dynamism but are also considered suspect at a time when social inequality is widening.

The updated news is that the Chinese authorities confirmed last night Huang was suspected of manipulating the share prices of two small companies. Born in a small rice-farming village near Shantou, Huang was a typical example among the richest in China of overnight fortunes abound. However, when the economy downturn raised the social unrest and anger to billionaires in China, the Communist Party has to find out some scapegoats.

Gome’s rivals, such as Suning and Yongle electronics retail chains, would be happy to see the crisis in Gome. But some analysts believed that Gome’s executives can calmly settle down the founder’s crisis and make it stock trading back to Hongkong Stock market.

Chances to Go Back to China for Working

When a close friend working in Silicon Valley as senior manager was fired last month, I asked him if he had interests to go back to China. Then we began to talk about the career opportunities and culture difference between the U.S. and China. Our conclusion was that we were always outsiders, no matter how hard we tried to fit in. But he still wanted to pursue his career dream in the high-tech center of the world.

I’ve heard from other friends in China, since the financial crisis hit the New York and Wall Street so hard that lots of senior traders, brokers, and managers were fired. Some lost their jobs only because they were Chinese. So Chinese financial institutions came to the U.S. to recruit high-level managers and talents.

Financial Times reported:

The Shanghai Financial Service Office has told state media the city is sending a delegation to New York, Chicago and London to recruit specialists in risk management, asset management, product research and development, macro­economics and policy analysis.

The head of human resources at the office said at least 27 financial institutions in Shanghai, China’s commercial and financial hub, had listed more than 170 vacancies for foreigners.

China Investment Corp, the country’s sovereign wealth fund has begun their global recruitment since the beginning of this year. They even published advertisements in the Wall Street Journal, but no one knows if they have recruit appropriate talents yet.

Working in China, in the booming market or the financial industry, the companies need candidates can speak and write fluent Mandarin, sophisticated social skills, know the global financial system and China’s local regulations. Some extra capabilities would be good alcoholic drinking capacity, sensitivity of political risks and issues.

My previous employers were all multinational companies, which have rare experience on dealing with officials successfully. Companies, such as Proctor & Gamble was dragged into troubles or crisis easily. So while the whole world tries to find its way out of the global financial crisis, if you decided to go back to China, my friends, you need to figure your way out of dealing with the under-the-table  rules.

China Media Censorship and Internet Freedom of Speeches

My teachers always asked me about China’s media censorship and its statue quo. I posted it from the materials for an assignment, but there are more and more cases and details not included in this post.

Nowadays, there are over 2,000 newspapers, 8,000 magazines, and 3,000 TV channels in China. People have no right of getting a license for a TV station, all the print and broadcast media belongs to local or central government. Therefore, censorship is everywhere, from blocking a piece of sensitive news to be published to shutting down newspapers, magazines.

I have a friend, who used to be editor-in-chief of 21st Century Worldwide Herald. But in 2003, after publishing an interview with Lirui, former secretary of Chairman Mao, the newspaper was stopped by the department of propaganda and he was removed from the chief editor position. And this year, Southern Metropolis Weekly’s managing editor, Zhangping, known as Changping, a renowned Chinese columnist lost his job over commentaries on unrest in Tibet which did not conform with the official line.

They are just among the cases of being censored or so-called “harmonized” media and journalists. The other circumstance is self-censorship from media. I remembered Changping said in one of his column article: “I am afraid of other people praising me as a brave newspaperman, because I know I am full of fear in my heart. I did write some commentaries on current affairs, and edited some articles that exposed the truth. I lost my job and was threatened for speaking the truth. However, in my various media positions in the past decade, what I’ve practiced most is avoiding risk. Self-censorship has become part of my life. It makes me disgusted with myself.”

While print and broadcast media (hereafter “traditional media”) have been strictly controlled by the government, online speeches enjoy a relatively larger space. Internet users are able to make online speeches anonymously. When Internet booms up in China, we hoped that anonymous and two-way communication platform – Internet can give more freedom of speeches to Chinese people. Is it another way to avoid the censorship? It seemed to be. People can talk about anything, as long as their speeches are not about politics and other sensitive topics. Comparing to traditional media, speeches on new media such as the Internet really enjoy more freedom.

But it is not.

Recent events also indicated that the government has regarded the Internet as media and started controlling and supervising it. According to government’s surveillance practices on traditional media, the Internet could also be converted into an official mouthpiece. In Xiamen’s PX protest, the famous online blogger Lianyue’s blog was blocked and he was asked to talk to the policeman.

All the events indicate that the government is considering further enhancing restrictions on online speeches. On the policy side, for example, the education network, which is composed of different university websites, is regulated as an internal network, and no external IP is allowed to take part in the discussions on campus BBS. For another example, no commercial websites are allowed to do independent interviews and news releases. And, as a hot topic, the Chinese government is brewing an online real-name registration system.

On the technology side, a good example is GFW (the Great FireWall). As the government gains more knowledge on technical skills, Internet portals and domain analysis, the censorship and surveillance on the Internet are expected to be tighter than on traditional media. The Internet policemen have been cultivated to track IP addresses, block sensitive speeches, and work closely with multinational companies, such as Google, Yahoo, and Microsoft.

Wikipedia, Youtube, Facebook, and lots of other oversea website has been blocked in a period of time, especially on important moments, like Olympic Games, the National Congress of the Communist Party of China or the Chinese People’s Political Consultative Conference every year.

Tainted Infant Formula，Chinese Babies Worth Less?

I asked around anxiously to see if there is any friend who will go back to China recently, and can take a box full of Enfamil nextstep formula for my little daughter. Fortunately, there is one. Since the government still banned people shipping power items during the ending period of Olympics, we have no other choice.

I was shocked by the Sanlu tainted infant formula crisis, especially when watching the pictures on New York Times or the Wall Street Journal. Those are vulnerable babies, who are eager to suck in formula. Why businessmen dare to poison the babies, the next hopeful generation in China. From this astonished issue, I was disappointed again by two aspects:

First and foremost, there is no transperancy in China’s media. Therefore reporters have no freedom of expression and the public has no freedom of knowing the truth. Here is a piece of news broadcast from CBS. In fact, on August.2, 2008, the Sanlu milk power has already caused infant kidney failure and death. But the news was “harmonized” in China because of Olympics.

Nowadays, companies, and the government figured out that more babies were in the danger of kidney-stones and they can not cover up the issue anymore. Then the breaking news came to the public. Chinese media used to read the red-headlined reports (红头文件) from the central government, and follow the censorship regulation every time. Otherwise, the media will be banned, and the editor-in-chief will be removed. But this time, they have to disclose the whole truth. To learn more on Chinese media censorship, please click here for another post of mine.

The two-standard system made me and other Chinese netizens angry about the government.

Li Changjiang said in a conference: “All products supplied to the Olympics and Paralympics was secure. We applied special scanning management procedures for all Olympic products. All stages of food product supplies–including milk products–was step-by-step strictly monitored by us, with no loopholes in the process. All products supplied to the Olympics were monitored from their source.”

Take a look at the forum, blogs and comments online. The anger was triggered by the disclosed fact that during Olympic Games, all the milk provided by Mengniu for foreign athletes were safe, without any Melamine at all. Does this mean Chinese lives are worth less than foreigners? Many netizens asked.They can only posted satire pictures to criticize Sanlu, which used to be a famous domestic formula brand in China.

Liuxiang: “O, coach, I drank the Sanlu milk, I cannot urinate now.”

Thanks a lot, my friend Tina and Xiang to bring back infant formula for my little princess. I hope my little Carolyn is fine and other Chinese babies can recover as soon as possible.

Hillary Failed, But Another Woman is Coming – Sarah Palin

When I stepped out of the elevator at Journalism school of CUNY, where I just started my new semester as a graduate student, I’ve heard girls murmuring excitedly in front of the TV screen. At that moment, Sen. John McCain announced that Sarah Palin, the governor of Alasaka State will be his presidential campaign running mate, and maybe the next vice president of the United States of America.

In the Democractic National Convention, some women supporters to Hillary Cliton, felt heart-broken when listening to her speach calling for uniting for her former competitor – Barak Obama. Although as a non-citizen, I don’t have the voting rights for next president, but I do wish Hillary Cliton to win the primary, at least to be the nominee for the November final.This year’s competition is fierce, and historical: the first woman candidate, black candidate, oldest candidate, and the youngest in the history. Now, here comes another woman political star – Sarah Palin.

She delivered her fifth baby in April, but now, she stood there in front of her supporters and her family, giving encouraging speeches, smiling, calling everyone to support a gentleman, who served his country for many many years. I was persuade by her words emotionally. In social and political issues, she seemed a traditional republican party member, anti-abortion, anti-terrorism, and conservative. In economy issues, GOP always supports free trade agreement, less governmental control on financial market. I think for current surging problems on real estate market and financial market, America needs more automatic capitalized methods to adjust for the future, but not governmental interfernce. China can be the example to show how good and bad government can do to the economy.

Hope Mrs Palin and Mr McCain can win the war at the end, then we can welcome the first American woman vice president. [Photo from New York Times.]

Where Is The Future, Eastern or Western?

Americans were amazed by the Beijing Olympics, not only on the fabulous opening ceremony or the trimpet of Michael Phelp’s eight golden medals but also on the beautiful scenery of Bird Nest and National acquatic center. They think twice now before they call China as a third world country. But if foreigners has the chance to go to rural parts of China, they can tell what the third world country is like.

Thomas L. Friendman wrote on how Americans should catch up, focusing on domestic construction for New York Times. From his experience in Beijing, he suggested presidential nominees to China to see where the future locates.

I do agree with his ideas of China’s development on economy and national power based on its concentration on internal improvement. Digging out its potentials and caring less about the rest of the world are main international policies in China for these ten years. However, China sacrificed rural parts to develop its centerpieces. Beijing, Shanghai, Guangzhou and Hongkong become metropolitan cities now, but farmers still struggle with their poverty, coal miners are still under the danger of working safety. That’s why the rest of the world critize us lacking of human rights.

Looking back to the Tibetan protest and the crackdowns, the protesters behaviors on Olympic torch relays, I realized the different opinions on one issue are mostly based on media reportings, their bias, censorship (a big problem in China, right?), and cultural backgrounds. These comments are from a Chinese Blogger named A Dai when the riot in Tibet just happened in late March. (translated by me, first published on China Digital Times.)

Recently, whenever I watch TV or read news online, there are Tibet riot stories from Chinese mainland media and foreign media. Regardless of the standpoint, at least, there are some true facts: someone protested in the street, someone lost financial assets, someone died in the riot.

Chinese media reporting suddenly raised nationalists’ patriotic enthusiasm. Some blamed foreign media for intentionally distorting stories; someone criticized violence, even some of the overheated discussions appeared on the portal’s news discussion column. Everyone knows that in China, commercial news websites are under severe censorship nowadays, so if even the overheated discussions can pass the tightened scrutiny, we can only imagine about the blocked ones.
After reading domestic news these days, I still have the following questions:

The Chinese government contributed millions of dollars every year for Tibetan construction, so why do Tibetans still go protest in Lhasa?

How could the Dalai Lama, who was regarded as worthless in China, win the Nobel Peace Prize? And why can he meet frequently with top officials from the U.S., UK, Germany and Canada?

If it was an organized, premeditated riot with violent damage, why didn’t we let foreign media report and win their sympathy?

Before clarifying all these questions, can we give up our anger first? I don’t want to be the hunter with evil hands and blind eyes.

See, Chinese people and its government have their own problems, and lack of transparency makes it more severe than before. My conclusion is who can fix the problems inside, who will win the future at hands, either Eastern world or Western World.