Depending on your point of view, the recent earthquake in China has seen multinationals doing the right thing, or revealing the price they place on reputation protection, says Paul French
In April a magnitude 6.6 earthquake hit Ya’an, in Sichuan province, southwest China. The devastation left at least 205 people dead and more than 11,500 injured. The earthquake was the worst in the region since the 2008 quake just before the Beijing Olympics.
That 2008 disaster had several profound effects on China. While it spurred an unprecedented outpouring of individual and corporate donations to the relief and rebuilding effort, it also raised politically sensitive questions about the quality of building in the region (the so-called “tofu schools” that collapsed, killing many children) and corruption.
In the months and years after the 2008 quake various scandals have also arisen around the use of donations and the accountability and auditability of the people and organisations in charge of disbursing the monies. For many ordinary Chinese, initially shocked at the suffering of their fellow citizens, these scandals left a bitter taste that has adversely affected charitable donations ever since.
However, the Ya’an quake has reactivated many ordinary people’s charitable instincts and donations have poured in again.
Interesting too, an analysis of the corporate donations being sent in by foreign companies indicates that those who have been receiving bad press in China at the moment are among the largest donors.
For instance, tech giant Apple donated 50m yuan ($8m) while Korean technology giant Samsung, now ahead of Apple in China’s huge smartphone market, topped this with a 60m yuan donation. Other big foreign corporate donors to the quake relief fund included HTC, Taiwan’s leading smartphone maker, with 5m yuan, Nokia with 1m yuan and software giant Microsoft with a similar 1m yuan. All made their donations within days of the quake.
Subsequently, this time around there has been less criticism of foreign brands and their donations than previously.
Jeremy Goldkorn of Danwei, a service that monitors PR and media for foreign companies in China, says: “In the wake of the 2008 Wenchuan earthquake a spurious list of the top ten ‘international iron roosters’ accused global brands such as Samsung, Nokia and Coca-Cola of donating nothing to the earthquake relief effort despite reaping in millions in profits in China. This time round, companies have been swift and public about their donations.”
Of course, a number of factors are at play – and compassion for the victims of Ya’an is only one of them.
The Chinese smartphone and technology market is a hard fought battleground and so anything that assuages accusations of taking the money and running can help long-term performance. It is noteworthy that the Chinese computer firm Lenovo, which has the second-largest market share in smartphones after Samsung, pledged 4,000 mobile phones and sim cards to quake relief efforts while China’s up-and-coming smartphone maker Xiaomi pledged 1m yuan.
While a good image is one thing, attempting to recover from a major PR disaster costs a lot more.
Apple was the company most specifically targeted on China’s “Consumer Day” (March 15) and received volumes of negative publicity about its warranty agreements and after-sales service practices.
Various comments from Apple’s California HQ that appeared to be gloating about how much money the company was making in China did not go down well with the more active Netizens. Apple, under pressure from the Beijing government, the Chinese blogosphere and the competition from Samsung’s Galaxy phone, has needed to get back into a lot of people’s good books.
One way to do that, it appears, is to donate the vast sum of $8m. Apple also pledged to provide computer equipment and training to some schools in the disaster zone.
But $8m may still not be enough. Busy Chinese web commentary sites, such as China’s equivalent of Twitter, Weibo, were full of remarks noting not the size of Apple’s donation but that it came after Samsung’s and implying that Apple cared exactly 10m yuan (or $1.6m) less about China than Samsung.
Meanwhile Samsung has obviously learnt from Apple’s missteps and understands that both humility and support for China are essential brand attributes and smart business in China. Samsung China president Zhang Yuanji told the local media: “Samsung China is always with the Chinese people through thick and thin, to tide over the difficulties.”
Paul French has been based in China for more than 20 years and is a partner in the research publisher Access Asia-Mintel.China column China expansion China globalisation Huawei Paul French