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Foreign Business In China: Know Thine Internet Buzz

Posted in China Business

Imagethief is such a good blog I would read it even if it were not about China.  It is a great example of what a blog should be.  It is consistently interesting, with a clear, distinct voice, and often very funny.  As a bonus, it provides great insight into China, particularly its media and its consumers. It is without a doubt, one of the best China blogs on the net.

Its recent post, entitled Chinese Bloggers Smack Dell, [link no longer exists] gives a telling lesson on how foreign companies must deal with Chinese consumers and the role of the Internet in that equation.  The post describes a class action lawsuit against Dell in Chin, involving allegations that Dell’s computer speeds did not match promised specifications and on how Chinese consumers used the Internet to band together against Dell.

The reason to read this post, as well as its comments section, is to see how Chinese nationalistic fervor is so often just beneath the surface for foreign companies doing business in China.  Note this key paragraph, and remember it is written by a veteran of PR in China:

Bluster? Probably. But it reveals a sentiment that often runs just below the surface in China: that foreign companies don’t treat Chinese consumers the way they would treat consumers in their home countries.  Jeff Jarvis might not entirely agree with that conclusion, but it is something that those of us who do PR for foreign companies encounter regularly in China. Often one of the first accusations leveled at a foreign company in a crisis is that it is giving Chinese consumers second-rate treatment. In effect, it’s a charge of racism that seems to have its origins both in the nationalism that has been cultivated as a unifying ideology and in a post-colonial insecurity complex that invites quick suspicion of the motives of foreigners.

This is valuable insight and foreign companies (especially consumer companies) doing business in China must think about and prepare for this type of situation.

Business Week magazine elaborates on how Chinese bloggers influence Chinese consumerism in “Mad as Hell in China’s Blogosphere” and Sam Flemming nicely describes Dell’s China problem in a post entitled “China Dell Hell (aka Processor Gate).”  In ”Is China Going Green, Part VIII? — Well The Wall Street Journal Says It Is So You’d Better Believe It,” we wrote about how foreign companies in China are held to higher standards in the environmental arena as well.

I do not for a minute think this sort of thing is confined to China.  I just finished a long layover in Seoul, Korea, and while there read of a similar incident in one of Seoul’s English language dailies.  I also saw this same sort of thing happen with surprising regularity when I lived in Istanbul, Turkey.

So what’s a company doing business in China to do?  I advocate the following:

  • Take your consumer relations as seriously in China as you do in your home country.  If you are not prepared to do this, do not go in.  As a lawyer, I am always advocating companies protecting their brand in the Chinese legal arena but companies must protect it in the public arena as well.
  • Monitor what is being said about your company on the Chinese net and be prepared to react.  Realize that bulletin boards are still a very big thing in China so be sure to monitor those as well.
  • Contact CIC Data in Shanghai and see how it can help.  Near as I can tell, this is the only company in China that monitors the Internet for foreign companies doing business in China.  Or, as CIC Data puts it:

We have self-developed search, harvesting, text mining, and trend analysis tools that have been customized for Chinese language and Chinese social media including BBS message boards and blogs. Every month, we collect tens of millions of consumer messages. Depending on the client, we use our Natural Language Processing tools to categorize millions of messages thousands of different ways to provide fine level analysis of buzz volume and sentiment. This allows for a a detailed understanding of consumer perception and experience regarding our clients, their competitors and their industry as a whole.

  • Retain a good PR person who truly knows China.

Bottom Line. If you value China as a market, act with due care.

  • http://www.researchcmr.com Shaun Rein, China Market Research Group (CMR)

    Good article. Chinese bloggers often parlay anger with a company’s product or service and launch criticisms of it based on nationalistic reasons.
    I wrote an article for BusinessWeek that covers the problems the Carlyle Group has had in closing a purchase for Xugong, in part because bloggers have rallied behind nationalistic reasons to stop the sale. MNCs need to harness the power of the blogosphere carefully to ensure that they do not get hurt by bloggers.

  • http://www.journeysthroughchina.blog.com MAJ

    For those of you who are interested in debating the nature of China’s governance and society, I’d like to invite you all to participate in the MAJ-Sojourner Debate, which can be viewed at:
    http://www.journeysthroughchina.blog.com
    This site has been mentioned a few times, as a highly recommended source of information. Both Sojourner and I would be delighted to know the views of China Law Blog and its readers on the issues we discuss, particularly in regards to the issue of China’s devloping “rule of law”.

  • Hubert Shea

    We are now living in the era of reverse economy in which consumers are armed with a multitiude of market information about different products and services. Internet is also a common communication platform for consumers to ventilate their grievances.
    Before undertaking international business in China, it is essential for multinationals to understand that some of the local consumers would like to ‘squeeze something extra’ from them because local consumers believes that multinationals have weak bargaining power in this host market.
    Locating a PR expert or lawyer with wider local networks can help multinationals to resolve such problem in an effective manner.

  • http://www.chinalawblog.com China Law Blog

    Mr. Rein -
    Thanks for checking in. You are right to bring up the Carlyle Group’s attempted buyout as another good example of Chinese nationalism interefering with business. Of course, we here in the U.S. need only look at the CNOC’s attempted purchase of Unocal to realize it can run both ways.
    I absolutely love the quote on your site regarding what you know versus who you know and I am going to run a post on it right away.

  • http://www.chinalawblog.com China Law Blog

    I am truly honored that you have asked me to step in, but I fear I am out of my league. Both of you are so knowledgeable and impassioned, I could never keep up. Your discussion is definitely good stuff. So good, in fact, that I am going to devote a post to it. At that point I will way in with my own simplistic views on these big issues.
    I am not even sure there is anything left to be said as you two have both done such a good job in covering it. I actually just had a similar (though much shorter) discussion of “democracy in Asia.” The person with whom I had this discussion is a Hong Kong licensed lawyer from Sri Lanka. We had our talk in Ho Chi Minh city, in the offices of the Singapore law firm in which he works. Is this international or what?

  • http://www.chinalawblog.com China Law Blog

    Mr. Shea –
    Thanks for checking in. And, of course, thanks for recommending everyone get their own lawyer. Hell (and as Ernie Banks would have said), why not two?
    One of the things I find interesting/frustrating about being an international lawyer is that clients oftentimes assume that because we do China law, we know everything about China and should be their operational manager, PR person, advertising agency, leasing agent, etc., as well. To a certain extent, this is just a somewhat more sophisticated version of the “I had my sister-in-law draft the contract because she’s from China”: syndrome. (To which I always am tempted to say, “Gee, I had no idea China had more than 1.3 million lawyers.”) This is my long handed way of saying that China is really no different from the U.S. or the EU or Japan or Korea in that it makes sense to use the right person for the right job. China is now so developed that there is are good people in the necessary areas.

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  • elaine

    I agree with this statement: “Take your consumer relations as seriously in China as you do in your home country.” This is a great advice because sometimes, their approach in China is different from the way they deal with their homeland.

  • http://www.chinalawblog.com China Law Blog

    Elaine –
    I agree with you that sometimes companies go into China thinking that they will be able to provide “Chinese quality” and get away with it. Big mistake. The Chinese expect “Western quality” from foreign companies.

  • http://www.chinalawblog.com/2006/11/china_blogging_and_your_brand.html China Law Blog

    China Blogging And Your Brand

    Sam Flemming over at the China Word of Mouth Blog just began a highly detailed series of posts on how the auto industry can benefit by monitoring the internet buzz/word of mouth on cars. The first post is entitled, Chinese

  • http://news.imagethief.com/blogs/china/archive/2007/05/11/imagethief-s-secret-identity-in-eurobiz.aspx Imagethief

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    Eurobiz , the magazine of the European Union Chamber of Commerce in China, interviewed Sam Flemming ,

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    Those of you in China or thinking of going there, I have two words for you:  lawyer up. These are the words every lawyer loves to hear (come on, admit it), particularly when spoken by a very knowledgeable non-lawyer.  And when that non-lawyer…