Alibaba, Weibo and the Chinese Corporate Reputation Challenge

by Peter Prodromou

News broke recently on Chinese web retail giant Alibaba’s decision to IPO on American markets.  The company, which is owned in part by Yahoo, will likely be one of the markets largest and most successful offerings.  And its action precedes the increasingly likely decision by Weibo to also list on US markets.

Why the decision to pass up Hong Kong in favor of New York?  The obvious answers are that despite its problems of the past decade, US markets are still seen as the gold standard – highly liquid, largely transparent and the envy of the world.

But these decisions come with a challenge for China’s large, successful companies – the need for transparency and the willingness to accept scrutiny.  While China is fostering tremendously successful new business development, it is doing so in the context of an inward facing market with little apparent appetite for the kind of branding that western companies assume as table stakes.

Alibaba and Weibo can both serve as models for Chinese giants as they seek to penetrate western markets and access capital. Large Chinese companies including telecom equipment maker Huawei have already entered western markets with success, but they are also eyed with suspicion.  Huawei executives admit to being frustrated by the level of scrutiny that western giant Cisco does not face.

Much of this can be solved through adoption of western branding, marketing and communications practices.  Western brands, many with mediocre products, are able to thrive by making themselves visible with great aggressiveness.  Western market laws require them to adhere to a level of public scrutiny, but the successful ones go much farther, adopting branding campaigns, disseminating news and encouraging formation of social communities where they are both praised and criticized.  These companies, from darlings like Apple to the less loved, like Microsoft, are willing to risk slings and arrows for the payoff that comes from publicity.  Bred in a media environment where criticism is the norm, they are built to engage, withstand and leverage the vagaries of the communications apparatus to their advantage.

Alibaba and Weibo both must realize the price that comes with accessing America’s capital markets: the all invasive road show, the hours in front of western press, the criticism of industry and financial analysts and the scrutiny of the investing and general public.  They likely are ready to accept this for the promise of being listed in the world’s most liquid market and with a chance, over time, to penetrate its public.

I frequently offer advice to my clients to break the box on how communications is conducted.  For example, rather than implementing run of the mill CSR programming, I have challenged tech and security clients to be the first to run a public service campaign for children on how not to disclose too much of their private information on the web.  I have yet to have one of my clients adopt this strategy; many organizations are linear thinkers and the dirty secret of CSR is that linear thinkers are generally looking for the obvious payoff rather than the subtle benefit of actually doing good.

As these highly private Chinese corporate giants seek to penetrate American markets, I’ll offer them the same kind of advice – follow an out-of-the-box approach and embrace a public image in the most non-routine fashion.  Leveraging communications programs that make them look different and willing to do good for the sake of doing good will generate the kind of goodwill that not only establishes brand recognition and garners praise, but also builds a protective reservoir that helps insulate them from the criticism that every outward facing, public company in America eventually encounters.

Huawei has battled scurrilous criticism about the integrity of its equipment including negative aspersions in congressional reports.  No amount of public relations and image making can totally undo this.  But an ongoing programmatic approach to image building that begins early and includes CSR that focuses on doing good for goodness sake is a major way to hit the stage in a positive way.  I hope to see Alibaba and Weibo act this way as they make their debuts in the US markets.

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