October 31, 2005

Tech's Road Map to China

By Andrew Gordon

The tech industry is a good prism through which to look at Chinese-US comms.

When Google invoked the wrath of Microsoft and its lawyers for trying to hire Dr. Kai-Fu Lee from the technology giant, Google took its case directly to the Chinese people.

Google, which hired Lee to help with its nascent presence in China - including recruitment, the building of a research and development center, and related government relations - reached out to the country with a blog in Chinese to make its case about what its presence meant for China and its citizens.

Google's move shows an understanding of the country that many companies take years to develop - regardless of a company's motives and aspirations for being there, audiences, from the government to consumers, demand to know how China as a country, as a society, and as a people, will benefit from that company's presence.

It's little wonder why China looks like the new gold rush to so many companies, particularly technology ones. But it's not just "seeing China as both a source of lower-cost production and an enormous, untapped market for products and services," writes Forrester Research senior analyst Simon Yates in a recent report. "With China joining the World Trade Organization [WTO] and hosting the 2008 Olympics, CEOs of every foreign business see tremendous opportunities in China in coming years. However, foreign firms trying to reach the 1.3 billion Chinese consumers face serious challenges that could hurt their prospects."

Yates doesn't mention PR as one of those challenges, but he should, because companies that bring a Western PR approach to the East will find hurdles higher than the Great Wall of China.

Many of the tech industry's hopes are reflected in the insatiable Chinese appetite for technology. They embrace technology, particularly consumer electronics, much faster than US audiences because "the reality is, for a long time you didn't have your own home, you had government housing," explains Faith Brewitt, SVP and Asia tech practice director for Fleishman-Hillard. "The bathroom and kitchen were shared. There was this great sense of community. ... We all have our own car in the US. They take public transportation.

Everything is a shared experience in China. So technology allows them to find their personal space. ... Everybody has their own cell phone with Bluetooth and laptops.

But one of the key challenges is the up-front investment, notes Forrester. Companies typically have "had to make hefty up-front capital investments, endure laborious licensing processes, and share profits with the Chinese government through joint ventures with government-owned local companies," Yates writes. China's entry into the WTO has eased some of those restrictions. But often a company's first stop is with the government.

"Government relations is vital because you want to get on the approved supplier lists," explains Eric Brown, director of worldwide PR for Network Appliance (NetApp). "So if you can get on that list for the Ministry of Finance, you can work with every bank in China. That is what becomes important."

And much like any other audience in China - though more so - the government wants to know what a foreign company will bring, other than a desire to increase that company's bottom line.

"PR has to bleed into philanthropy," adds Brown. He points to NetApp's donation of $3 million in storage technology to Tsinghua University, one of China's largest and most prestigious schools.

Likewise, IBM donated 10,000 sets of software to the Ministry of Education. Donated on the eve of International Children's Day, IBM talked about how the software would help children learn traditional Chinese poems in a fun and interactive way that would promote China's culture.

Foreign companies need to have a deep understanding of government agendas on issues that pertain to their industry before developing communications strategies, advises Belina Tan, director of Burson-Marsteller's technology practice in Beijing. Balancing the government's agenda with corporate goals allows foreign companies to be seen as good corporate citizens, something many Chinese audiences hold in higher esteem than any product or service the company has to sell.

"If you come in with corporate talking points, your audiences will just go blank on you," adds Computer Associates' (CA) Raj Seth, VP of communications in Asia-Pacific. "If you don't talk about the greater good of the community, the Chinese will defer to Chinese brands. You need to show why your presence is relevant."

And the best channel for making sure those audiences know about their presence is the media. And in China, it's vast. A relatively young industry, the media in China range from the hundreds to the thousands, depending on whom you ask.

Tan points to China's "media reform" leading to hundreds, if not thousands of publications and media outlets with reduced government backing, spurring increased competition and perceived "freedom" in the media.

"Companies today not only have to deal with a highly competitive media landscape that spans across different territories and regions, they also need to understand the nuances of editorial freedom and control," says Tan. "New online media is also becoming a powerful and sometimes sensational channel of information and influence in China. News portals capture international and local news 24/7, and thousands of blogs have emerged with commentaries on a wide variety of topics and issues."

Online media are particularly key, as there is less government control and, thus, they are seen as trustworthy, says Walter Hueber, VP and strategic director for Weber Shandwick in Beijing.

Because the media are still relatively in their infancy, tech companies must constantly educate journalists, says Jean Liu, VP of corporate development for EDS. But most journalists, just like the media industry, are quite young, and have a voracious hunger for information - which PR pros can satisfy.

Reporters also seek safety in numbers, says Liu. They don't demand exclusives and can often be found comparing notes after a press conference to make sure they got all their information correct and that they understand the issues.

That hunger for information also leads to incredibly long press releases. Where press releases are a page or two tops in the US, they can go as long as five or seven pages in China because of two factors, says Brewitt: The first is that desire for information and lots of background. The second is in the translation from English to Chinese. Chinese is more poetic and prone to analogies and storytelling than the language one would typically find in a press release.

But there's much more to media relations than poetic press releases. The Chinese are very much into pomp and ceremony, adds Brewitt, and she has helped prepare many American executives for press conferences with flowers and fireworks and larger-than-life switches that when flicked release showers of balloons and confetti.

"It's the Wild, Wild East," says Seth. "You need to have the bling."

The media are typically quite excited to see and hear CEOs and other executives at such events, and even engineers get mobbed. When Juniper Networks used a senior engineer as a spokesman on several media briefings throughout China, several reporters often waited until the end of the briefing to have their pictures taken with the engineer.

And during Sun Microsystems' first Java developer conference in China last year, James Gosling, the "father of Java," was mobbed by Chinese engineers and media who wanted his autograph and picture, says Rebecca Lui, Asia-Pacific PR manager.

But these events are coupled with a pragmatism that now inhabits US tech journalism. "You're na•ve if you think having a flashy event is good enough," says CA's Seth.
Brewitt agrees. While PR pros will tell you it's all about relationships wherever you are, it's even more so in China. While PR people can develop strong relationships with journalists in the US and talk over the phone, e-mail, and IM, no such luck in China.

The power of relationships

That is the most commonly cited cultural difference between China and the West: the importance of relationships, or "guanxi," says Gill Zhou, director of communications for IBM's Greater China group.

"One of the most basic and crucial impacts it has on communicators is that it creates stress on having and successfully managing a network of personal relationships to achieve business results," adds Zhou. "In China, this is truly an art. Entire books are written about it."

The media are inclined to attend companies' annual media get-togethers and workshops, which WS' Hueber says go a long way toward that face-to-face interaction so vital to developing personal relationships.

NetApp's Brown says he can go on a European press tour and be in and out of the country in a day. In China, hours are spent socializing with journalists - one hour at a press conference, followed by another hour or two at a cocktail reception or dinner.

"And that's when they test you on Chinese history," says Brown. "They test your beliefs in a polite way. They are the only country not asking about US films and music. They ask about their pop stars and movies. They are proud of what they create and don't want to lose face."

Marketing the greater good

While tech companies have launched branding campaigns focusing on their brand promises and value propositions, messaging in China isn't so much about how the individual customer benefits, but the greater good.

And that often means bringing the right Chinese partners and customers to the table. Yahoo recently announced a partnership with Alibaba.com, one of China's largest e-commerce companies, to help Yahoo build its presence there.

Motorola has shown its commitment by establishing research and development, and manufacturing facilities, as well as good corporate citizenship initiatives, such as Project Hope, its support and funding of schools in underprivileged regions of China, says Valerie Di Maria, corporate VP of communications and public affairs.

"Global brands are powerful, but they must be willing to prove their commitment to the local market and create products and services [that] are meaningful for that market," adds Di Maria.

"The Chinese press love to hear about US companies who are investing, working with local talent, and sharing information," says David Ko, MD for Waggener Edstrom in Asia. Wag Ed took client Raza Microelectronics on a recent product road show through Beijing and Shenzhen, where publicizing its product portfolio came second; building long-term relationships with key editors was the main objective.

"Just about every major technology brand you can think of is now active in China," adds Inglis. "You need to have that locally based R&D investment and local partnerships. A me-too story usually isn't enough to attract attention."

Chinese audiences look for that endorsement from local partners and customers, adds CA's Seth. With a country as large as China, with so many different provinces and dialects, PR often needs to be specialized to different regions within the same country. Chinese PR in Beijing can't be the same as PR in the more rural parts of the country.

Reaching out to and involving local professors, engineers, government officials, and entrepreneurs; and working together on mutually beneficial projects are other ways to show commitment to China, says IBM's Zhou.

That's why companies shy away from marketing, such as advertising or sponsorships, which promote a brand more easily, but not the commitment to China, says EDS' Liu. Partnerships with China's ministries or universities say more than any ad could. And ultimately that earns PR a higher place in the mix than it occupies in many countries.

While messaging is principally about promoting and distinguishing yourself from the competition, there are basic messages that any foreign company doing business in China must embrace, says Hueber. Those messages can take many forms, but all end up pointing to a long-term commitment to and partnership with China. Companies are likely to highlight how long they've been doing business in China, their level of investment, and their hiring of citizens.

But brand does count for something, as many Chinese customers prefer to "pick a winner" and can be highly brand-driven, says IBM's Zhou.

IBM's most recent customer event in China centered on the slogan "The Road to be Great," which took into account that with the fast development of China's economy comes the even faster development of Chinese companies. The event positioned the company as the trusted partner to help Chinese companies, and China, become great in the global economy.

Most companies know they have to demonstrate a commitment and that they are making an investment in China, not just themselves, says Will Ludlum, regional MD for Porter Novelli's Asia-Pacific region. He says that, despite the need to reach out to the Chinese government at the outset, it has allowed more of a free market for technology to flourish than in other industries, such as pharmaceuticals, which is still heavily controlled by the government.

The government saw the growth potential for technology, and the money that would bring to China. Hence, the industry functions closest to the US technology industry than do other industries, Ludlum adds.

But that doesn't mean tech companies have free rein. Yahoo has come under fire for censoring on its website news stories critical of the Chinese government. Yahoo also turned over user information to the government for an investigation into a Chinese journalist, who was jailed. CEO Terry Semel has said that, no matter how much Yahoo disagrees with China's laws, it must follow them in order to do business there. Microsoft and Google have been similarly criticized for blocking various websites critical of the government.

Managing talent

But with so many Western agencies and technology companies descending on China, it's hard to find the right talent, adds Ko. There's a huge demand on the local talent pool, and right now that pool isn't deep or wide enough.

The PR industry has been evolving over the past two decades, explains Julie Peedom, a recruitment consultant with staffing firm Aquent. But as foreign investment in China has risen in recent years, so has the number of global firms seeking PR talent.

"It is difficult to find communications professionals in China," says Peedom. "Our clients' businesses are rapidly growing in China, in particular the tech practices, and the supply is not keeping up with the demand."

The business opportunities are significant if agencies adopt a focused approach to cultivating and marketing their expertise in China, says Tan. Gone are the days of full-service agencies. Clients in China are increasingly looking for experts in a particular field or sector, be it government relations, technology, consumer marketing, or investor relations.

"We have all heard and read about bullish business forecasts and the long-term business potential in tech sectors, including telecommunications, business software, internet services, and consumer electronics, says Tan. "The key from a communications perspective is for foreign companies to understand the short-term risks and challenges, influence key stakeholder perceptions, and execute on a strategy. Positioning that brings business growth not just for the company but for the local industry.

To fill the staffing void caused by this new gold rush, Peedom sees an influx of mid-level and senior talent moving from Taiwan and Singapore, who come with the necessarily cultural understanding and language skills.

But it's still not enough.

"The biggest frustration for my clients now is that every other agency in China is headhunting each other's staff," says Peedom. "Experienced talent are being offered higher salaries and incentives to join the competitors. Because of the shortage of good talent in China, experienced talent usually have at least two or three other offers from agencies."

And that leads to high turnover on account teams, says Ross Inglis, corporate communications manager for Juniper Networks in Asia-Pacific. While there is no shortage of agencies to help companies bolster their in-house teams, those firms need to do a better job of holding on to their account teams.

Peedom also chastises agencies for not doing enough to retain their staffs and says the smarter firms are helping them define career goals and paths.

But with the PR industry relatively young in China, great - and even good - people are hard to come by. PR has become a desirable field for young people, and universities are starting to teach it, says Seth. But that creates a lot of hungry junior people and few seasoned senior counselors.

Which is why firms find China to be a ripe business market. Wag Ed made its foray into Asia-Pacific earlier this year by acquiring Ko's agency, Shout Communications. Because the new business pipeline is so strong, with both Western companies in China and Chinese companies, he has seen an influx of Western agencies opening offices in Beijing with American GMs to merely add another pin on their global maps.

"It's na•ve, and I see that attitude a lot," says Ko. "While the Chinese want to see the executives and engineers, when it comes to PR, they don't want to talk to a foreigner. And that is vital in a place where relationships are so important."

And that is the key to IBM's success in China, says Craig Lowder, VP of communications for Asia-Pacific.

"Local managers and employees who live the local culture; speak the local language; and know the local media, analysts, and influencers in government, industry, and academia, they all operate as part of a globally integrated enterprise," he says. "IBM's success in China and elsewhere around the world can be summed up with the familiar phrase, 'think global, act local.'"

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