Silicon Hutong

Full Disclosure

Futong East Road, Wangjing

Dodging oncoming traffic

1547 hrs.

As someone with business interests in many (but not all) of the industries I cover, I have occasionally struggled with the issue of disclosure. Having never taken a journalism course or done much research on the topic, I've been a bit oblivious about the rules. As I've become more regular about posting and my readership has begun to rise, I felt it was time to come clean. But I haven't known how.

Recently, however, I stumbled upon a site called DisclosurePolicy.org. The site uses a simple tool to help you design a disclosure policy that is appropriate for you and your blog. Check it out. In the meantime, here is ours, which will be posted as a separate page attached to the blog:

This policy is valid from 17 July 2008

This blog is a personal blog written and edited by me. For questions about this blog, please contact David Wolf (siliconhotong at mac dot com).

This blog does not accept any form of advertising, sponsorship, or paid insertions. We write for our own purposes. However, we may be influenced by our background, occupation, religion, political affiliation or experience.

This blog abides by word of mouth marketing standards. We believe in honesty of relationship, opinion and identity. The compensation received may influence the advertising content, topics or posts made in this blog. That content, advertising space or post will be clearly identified as paid or sponsored content.

The owner(s) of this blog is compensated to provide opinion on products, services, websites and various other topics. Even though the owner(s) of this blog receives compensation for our posts or advertisements, we always give our honest opinions, findings, beliefs, or experiences on those topics or products. The views and opinions expressed on this blog are purely the bloggers' own. Any product claim, statistic, quote or other representation about a product or service should be verified with the manufacturer, provider or party in question.

This blog does contain content which might present a conflict of interest. This content will always be identified.

To get your own policy, go to http://www.disclosurepolicy.org

Quoted: The sign of the times is no signs

In the Hutong

Wondering how gross the weather can get

1724 hrs.

In part to prevent ambush advertising around the Olympics, and in part to tone down the level of in-your-face advertising in Beijing before the Games, the city's government has taken down over 30,000 outdoor advertisements in Beijing, including some of the most high-value billboards in the country. Normandy Madden gives a good rundown in the July 7 AdvertisingAge.

George Gallate, the Asia-Pacific CEO of Euro RSCG, is not happy.

"I'm quite surprised by the amount of control they are able to do [sic]. But this degree of control is one step too far in one of the most important aspects of an open economy, the right to advertise."

Leaving aside the fact that my most recent check of political science texts fails to turn up a mention of a "right to advertise," Mr. Gallate and his fellows in the ad business are understandably tweaked: some of those billboards list out at over US$50,000 a month, which would mean just under $9,000 in agency commissions at standard rates for a single billboard.

The ban doesn't stop at billboards - it includes the light-boxes along Beijing's main thoroughfares, bus shelters, and even the ads on buses and subways. Either the ads are being sold to Olympic sponsors at highly preferential rates, or they're being held back.

Chinese whispers and the art of corporate philanthropy

In the Hutong

Starbucks lemon tea is a diuretic

1752 hrs.

Moments of national emotional outpouring can be times of great peril for foreign companies in China. Foreign companies are easy targets (just ask Carrefour), and the high profile that served you so well yesterday becomes an instant liability. The best response in these situations is often to lay low and ride out the storm. 

But there are moments when standing to one side in the face of national tragedy is unconscionable. One of those moments came in the wake of the Great Sichuan Earthquake of May 12, 2008. 

J’accuse!

To their credit, the foreigners stepped up.

In rapid succession, one foreign company after another stepped forward to offer assistance, giving in kind if what they produced could help, giving in cash if in-kind was inappropriate, and in many cases doing both. Some companies dug into their corporate treasuries, others also organized employee donations. Many gave something, some gave a lot. 

But it was not long after the news began reporting episodes of selfless corporate gift-giving that SMS messages and blog posts began to circulate, criticizing a host of companies - many of which had in fact given quite a lot, but had refrained from publicizing their gifts - for stinginess in the face of human tragedy, accusing them of either giving nothing or not enough.

Dance of the eThugs

Many here in the Hutong, including the Party Secretary, expressed their disgust at these lynch-mob tactics. At best, these were righteous outbursts of people hurt by what they believed to be the failure of foreign companies to live up to their end of China’s implicit social contract.

At worst, though, there was some less-than-charitable activity taking place. As I mentioned in a recent post on Internet-word-of-mouth in China, there are companies and agencies who are not above hiding behind false identities or anonymity and spreading disinformation about rivals.  

It would be foolish for anyone to levy a blanket indictment on China’s netizens for this eruption of ill-founded bile. At the same time, it would be foolish to ignore what it implies. 

Charitable values and the value of charity 

The Judeo-Christian-Islamic (JCI) tradition is quite specific about the ways charity should be given. Rabbi Sir Jonathan Sacks, in his thought-provoking ethical treatise To Heal a Fractured World, notes that the Jewish sages identified eight different levels of charitable giving. One relevant passage:

"What matters is not how much you give, but how you do so. Anonymity in the giving of aid is essential to dignity. The poor must not be embarrassed. The rich must not be allowed to feel superior."

Even though frequently observed in the breech, the importance of giving anonymously is hard-coded into JCI tradition. The greater the earthly reward the giver takes for his gift, the lesser its ultimate value as a genuine act of giving. (Even the U.S. Internal Revenue Service has addressed this concept in the way it values donations to philanthropic causes.)

In China, the reality is quite different. While there are many people in China whose views accord more closely to the JCI approach, There is among many Chinese almost an expectation that a giver would take credit for a gift. Why ever not? After all, wasn’t the credit the main point of the gift in the first place?

From you much is expected

It is this implicit expectation among parts of the audience that makes philanthropy in China so complex. In the U.S., a company or individual may choose to give openly or anonymously. Nobody asks. In China, however, while many people approve of anonymous giving, many people will assume that if you don’t talk about it, you haven’t given.

There is an unspoken rule for companies doing business in China. If you come here to make money, the rule goes, you are expected to give something back. The rule applies to both foreign and local firms, but the implicit belief is that somehow the foreigners owe more. 

As a rule, corporate giving during “normal” times does not fall under much scrutiny (although this will  change in the not-too-distant future.) In moments of national crisis, however, there are people keeping score. Some of them are impartial. But some of them are working for the other team.

No modesty please. We’re Chinese

Put simply, companies and prominent individuals need to be prepared to give in times of disaster, and they need to be prepared to talk about it.

The complex audience in China - some preferring anonymous giving, some keeping score, and lots of people in the middle - changes the way you will need to give. Transparency demands that not only will you need to err on the generous side of caution, you must be prepared to up the gift soon afterward. 

Communicating about it, however, is more of an art form than a science. What you say about your gift, how you say it, and how you pass the word are situational. What comes across as discreet communications in one situation may come across as crass and uncaring in another. 

When I suggested the importance of talking about your giving on Twitter, somebody actually asked the question - at what point does all of this talk devolve into disgusting self-promotion? (I think he was being rhetorical, but I digress.)

My answer was that there is no clear line between discreetly publicizing the good works you have done and sounding like you are turning disaster into corporate opportunity. It comes down to good instincts.  

The Imagethief gave an even better answer - it is like the line between pornography and erotica: I cannot define the former, but I know it when I see it. 

Talk, but listen first

This is another one of those places where having a really good gut feel for the the market and your audiences is critical. 

Even more important, especially for those of us not born and raised in China, is having smart people around you who can instinctively tell where the winds of zeitgeist are blowing. Take their counsel and listen to what they have to say. 

Not only will you protect your reputation, you will also set in motion a constructive cycle in your company where everybody sees the value of corporate and personal giving, and where you will be more likely to give (and give well) the next time. 

And that’s a very good thing. 

China's war for the soul of online corporate communications

In the Hutong

It's a wet wet wet wet wet wet world

1913 hrs.

Last week BusinessWeek ran an article on the way some companies and their agencies try to deal with bloggers and BBS posters in China, a piece that was unfortunately titled "Inside the War Against China's Blogs."

This is not a war

The article itself, and specifically the way it associates by proximity the thoughtful and highly ethical work of Sam Flemming's CIC with the rather seedier efforts at online manipulation practiced by some other agencies, underscores how complex the topic is. It can be quite difficult for even the most intelligent and dedicated business journalists to miss the critical nuances separating different tactics and techniques that are emerging to help companies conduct marketing and communications on the Wild, Wild Web, all the more so for company executives who spend far less time looking at the matter.

For his part, Sam has written an intelligent, measured clarification in his blog. In addition to a reasoned defense of the more wholesome parts of the online word-of-mouth business, he takes powerful exception to the use of the "war" metaphor in the title (likely the work of some hard-pressed editor.)

Failing the smell test

Paul Delinger on his excellent The China Vortex explores the particulars of one company mentioned in the article, and notes in his conclusion:

"I find the whole practice of hiring Chinese and paying them to post favorable comments on a per-posting basis to be an unethical PR practice. According to the BW article, this is common practice."

Imagethief notes in his post about the article that:

"Imagethief has been doing PR in China long enough to know that the ethics of Chinese media, including online media and therefore of the PR industry that surrounds it are still pretty grey. But that's not the whole picture..."

There are some morally questionable things happening out there, to be sure. But not everyone does them.

What concerns me is that well-intentioned executives of respectable companies, desperate to address some of the unsavory (and therefore viral) things that are being said about them online, may fall prey to the contention of their agencies that "hey, everybody does this in China, and if you don't, you are going to have real problems here."

A warning to corporate executives of all flavors. When your agency says that, begin questioning immediately.

Often, such contentions are born of a lack of sophistication that can rear its head in an agency populated by account managers with less experience than time in a classroom. Possibly they are born of institutional laziness, a desire to do things in a certain way because that is the kind of service they are set up to deliver. At worst, such bold statements come from agencies who have a vested interest in getting the client to think that way.

Trust your instincts. If something sounds like it is wrong and feels like it is wrong, it probably is. Ask hard questions, and do not settle for pat answers.

Zubin Mehta, meet Charlie Parker

Next to newspaper editors, there is probably no group of people on the planet more confounded by the explosion of blogs, social networks, and (in China) bulletin-board systems (BBSs) that public relations folks.

Clients come to us desperate for answers. Some of us counsel patience, principles, and parley. Not all clients are happy with those answers - they are type-A, take charge folks who demand "solutions." This opens the door for agencies who feel the need (or see the opportunity) to respond with something that looks like a concrete solution, even though it is really meringue.

But the ugly truth is that we as marketing communicators are all still figuring this out.

We don't have a toolkit of time-honored techniques and practices to address what is going on in the way we do for advertising, direct marketing, media relations, crisis management, government affairs, or any of the dozen or more sub-crafts in the industry. All of this is as new to us as it is to everyone else, and while some agencies are further along in finding answers than others, it is all still experimentation right now.

Agency folks don't want to admit that - they are used to selling something clear, definable, and proven. It is kind of like getting a great symphony conductor comfortable with the improvisation of jazz. It is hard. It demands rewiring the very way you think.

So the best agencies, the really smart ones, start with a set of principles that guide them in the process. (The World of Mouth Marketing Association - WOMMA - has come up with some good ones.) They look at the specific challenges a client faces, they listen to the audience and start improvising. And that is what happens. Great online PR - indeed any great PR in an age where participation increasingly trumps Big Media - is like jazz, not a symphony.

Beyond just wrong

Unfortunately, not everybody gets this. As the BusinessWeek article points out, there are agencies who are far more, um, utilitarian in their approach. Principles are for suckers, they think. The client wants solutions, we have got a solution here that will make their problem go away, and they are willing to pay for it. What is wrong with that?

What is wrong, they ask, with a company paying an agency not only to pose online as fictitious people who love the client and their products, or pose as someone who hates their competition and their product, but also to arrange to delete negative comments already posted?

(And how dare anyone attempt to impose their foreign/western/judeo-christian-islamic values on the people of China!)

If the contention that such behavior is evil, wrong, and contrary to the unwritten rules that govern the Internet is not convincing, here is why, in enlightened self-interest, you should perhaps consider that it is in your enlightened self interest to steer clear.

First, and most important, the audiences companies are trying to reach in China via online word-of-mouth value one thing above all else: credibility. If a company wants to build credibility and support among China's netizens, it is essential to come across as a company that understands - and lives by - their values. Creating fictitious personas or paying to delete their comments betrays their values and runs the risk of undermining if not permanently damaging a company's reputation with this valuable audience.

Second, engaging in such tactics suggests to China's online population that the only way anyone is going to say something positive about the company in question is to pay them to say it. That is hardly the way to build confidence in a brand.

Third, if a company gets caught doing this in China, anyone who does say positive things online about that company will be instantly suspected of doing so only for the payola. In short, a company impugns by association the credibility of its best evangelists, and betrays their trust, ultimately eroding their support.

Fourth, as the BusinessWeek article demonstrates, there is global interest in this topic. If a company's actions on this score were to be made public, there is the risk of global online backlash against the company.

Fifth, as proven by codes like those promulgated by WOMMA, the International Public Relations Association, and the International Association of Business Communicators, engaging in this type of deceptive behavior defies public and government expectations that companies abide by generally accepted industry standards. At worst, this leaves you open for investigation. At best, it gives your competition an opportunity to look cleaner than you.

If the above is not enough reason for you to avoid this kind of behavior, good luck and zai gezunt.

No excuse

There will be those who protest that I know not of what I speak.

Some will say "you don't understand. You are a foreigner. This is China, and China is different."

Even granting everything else suggested in those remarks, China is different, but it is not so different that company behavior that does not hold up under the light of exposure somehow becomes right. If the public, or even a large part of it, would be outraged at a corporate practice, it is unsafe (if not pernicious, dangerous, or downright evil) to continue or countenance, . As such, it is our ethical duty as advisors to our clients - or as corporate executives - to steer clear of such practices.

Others will suggest that "everybody else is doing it," so they have to as well.

With respect, that line hasn't held water with the public since the Nuremberg trials. All it does is prove that those following the herd lack the imagination and creativity to come up with a better way to defend a company's reputation.

So often in China I am reminded of H.L. Mencken's words: "For every problem there is a solution that is simple, workable, and wrong."

Doing the right thing here is often difficult and fraught with complexity. But as experience continues to prove, it is the only course that truly pays off.

New Word-of-Mouth manual...for free

In the Hutong

Prepping for a photo shoot

0928 hrs.

Dave Balter, creator of Boston-based marketing firm BzzAgent, co-founder of the Word of Mouth Marketing Association, and author of The Grapevine, has just released a new book called The Word of Mouth Manual: Volume II. 

For those of us in the business of actually getting people to notice, desire, buy, and talk about cool products, or even those of us who want to figure out how to build our own brands - especially in Asian cultures where word-of-mouth is so intrinsically powerful - this book is a must read.

What makes it better is that the book is a quick, easy read.

What makes it a no-brainer is that Dave is giving away PDF copies of the book to anyone inclined to click here.

Download it and give it a read - for those of us in China it is a heck of a lot easier than ordering from Amazon, paying the freight, and waiting two weeks. 

America's latest tool of public diplomacy

In the Hutong

I feel an iTunes jag coming on

1908 hrs.

In the global battle for hearts and minds, countries employ a growing arsenal of weapons in their efforts to build support among citizens of other countries. Leaflets, airborne radio stations, satellite news channels, and even celebrities contribute to the efforts of their home countries to build influence and soft power.

The ever-innovative U.S. Navy has decided to employ a culturally appropriate device in its effort to head off potential protests as it plans to base its first nuclear aircraft carrier in Japan:

Manga.

That's right, America's latest tool of public diplomacy is the graphic novel, targeted at Japanese adults and delivered in your choice of English or Japanese. 

Whenever I think my job as a business communicator is tough, I think about the men and women engaged in the thankless task of making their countries more attractive to people around the world. Most of them are poorly paid (relative to their skills), put up with a ton of bureaucracy, and have to fight to get any remotely creative idea approved. 

Whoever got this little device approved deserves an industry award for excellence public affairs.

Check it out - unfortunately, I can't, given the U.S. Department of Defense is a little prickly about allowing access to their sites from URLs in China. Wonder why?

McDonald's Mary Dillon on Olympic Sponsorship

In the Hutong
Stressing about my physical
2119 hrs.

AdAge interviews McDonald's Chief Marketing Officer Mary Dillon on Mickey D's plans for the big event this summer, including bringing 200 kids from around the world to Beijing.

The Darfur question comes up of course, and it's pretty clear that McD's is not going to be walking away from the Olympics.

Pretty clear though, that nobody is yet asking the big question: does Olympics sponsorship deliver return-on-investment?

McDonald's Mary Dillon on Olympic Sponsorship

In the Hutong
Stressing about my physical
2119 hrs.

AdAge interviews McDonald's Chief Marketing Officer Mary Dillon on Mickey D's plans for the big event this summer, including bringing 200 kids from around the world to Beijing.

The Darfur question comes up of course, and it's pretty clear that McD's is not going to be walking away from the Olympics.

Pretty clear though, that nobody is yet asking the big question: does Olympics sponsorship deliver return-on-investment?

Cross-post: Down and Dirty Marketing - don't go there

In the Hutong 
Enjoying the quiet 
1753 hrs.

One of the reasons I like reading Shaun Rein's stuff is that he does his homework. I don't always agree with his conclusions, but I respect him deeply for going and getting the data first. You don't get a lot of that in China, and you especially don't get it often from people who know what they are talking about.

Shaun did a piece for Forbes where he rebutted a Harvard Business Review article by a leading U.S. management consultancy. Said consultants urged multi-national corporations operating in China to go for the low-end of the market in order to compete with domestic companies. Shaun's point is that competing on price in the short term burns your brand in the long term.

Anyone who has followed the long, painful saga of a phenomenon known as "The China Price" knows that while engaging mostly state-owned Chinese companies in a game of price-chicken may bump the sales in the near term, in the long term all it does is wipe out profits, erase the stature of your brand, and eliminate any hope for rebuilding that brand in the future when the market goes upscale.

Ask the guys at Volkswagen (if they will level with you) about how difficult a time they are having in their home city of Shanghai trying to get people to see them as anything but a low-end auto brand.

Ask the guys at Dell whether diving down into the battle for the low-end of the computer market was a good idea.

On the other side of the equation, ask the guys at Li-Ning what they would give to swap their "brand of the people" image for a market position that would put them on a par with Nike or Adidas.

IF, on the other hand, you MUST dive into the low-end of the market, do it with a better experience, better customer value, AND halo products that will keep you firmly entrenched at the high end.

None of this is rocket science - it is Al Reis/Jack Trout Positioning 101 stuff.

Unfortunately, there is a crop of people out there who are still touting the idea that China is so different that the basic rules don't apply. They're wrong, and take with a healthy dose of skepticism anyone suggesting that the rules in China are any more than about 5% different from anywhere else.