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A comparison of corporate PR practices in U.S. and China: a case study approach

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A comparison of corporate PR practices in U.S. and China: a case study approach

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Content 1 A COMPARISON OF CORPORATE PR PRACTICES IN U.S. AND CHINA: A CASE STUDY APPROACH By Tiantian Xiang A Thesis Presented to the FACULTY OF THE USC GRADUATE SCHOOL UNIVERSITY OF SOUTHERN CALIFORNIA In Partial Fulfillment of the Requirements for the Degree MASTER OF ARTS (STRATEGIC PUBLIC RELATIONS) May 2014 2 Dedication This thesis would not have been possible without the unswerving support from my family. Thank you for your unconditional support and encouragement throughout this thesis process and my graduate studies at USC. Thank you for your trust and your support of every decision I made with all your forces. I would not have been who I am without your support, and I hope I have made you proud. My accomplishments are all yours. 3 Acknowledgements I would like to thank my thesis committee chair, Jerry Swerling, for helping me choose and narrow down the topic. His insights and encouragements were great inspiration to me. I would also like to thank my committee members Laura Min Jackson and Aimei Yang, their much appreciated patience and insights helped me adjust directions and finalize this thesis. In addition, I would like to thank Ying Dai, my director and mentor during my internship in China Life, for her insights during the interview that provided me a wealth of knowledge on the case study part of my thesis. 4 Table of Contents Dedication 2 Acknowledgement 3 List of Tables 6 Abstract 7 Introduction 8 Chapter 1: Defining Corporate Public Relations 9 Chapter 2: The History of Corporate Public Relations 14 1. The History of Corporate Public Relations in the U.S. 14 2. The History of Corporate Public Relations in China 18 3. A Comparison from a Historical Perspective 23 Chapter 3: Case Studies 28 1. Excellent Practices in PR: A Methodology 28 2. UnitedHealth Group 31 3. China Life 36 4. Starbucks 44 5. Haidilao Hotpot 53 6. Amazon 61 7. Alibaba 70 Chapter 4: Conclusion 80 1. Similarities Across Countries and Industries 80 5 2. Different Practices in Two Countries 83 3. Differences Across Industries in Two Countries 88 4. Looking Forward: Advice for Corporate PR Practitioners 92 Appendix 1 94 Bibliography 97 6 List of Tables Table 1: Functions Included in Corporate Communication Budgets 10 7 Abstract This thesis discusses the similarities and differences on excellent corporate PR practices in the U.S. and China. To be more specific, it examines practices of corporate social responsibilities (CSR), employee engagement, crisis management and social media management in these two countries. The comparison started with histories, and then it came down to case studies of six most prominent American and Chinese companies in three industries. This thesis has three dimensions in comparing the practices of PR:  History: the thesis discusses how time changes corporate PR, Especially when social media becomes a crucial part in building and protecting a company’s brand image.  Countries: although the practices of corporate PR in China is derived from that in the United States, there are a lot of differences in these two countries because of the different political and economic systems.  Industries: there are similarities and differences across industries when it comes to the practice of corporate PR. The author chooses three different industries, and examines companies within those industries, no matter they are state owned, public or private ones, to discuss corporate PR practices in different industries, and with different corporate attributes. 8 Introduction Arthur W. Page, one of the first in-house public relations experts who was also known as one of the founders of the modern practice of corporate public relations, described many important concepts of corporate PR that remain true today. One of the concepts deserves particular mention not only for its insight but also for its usefulness in today’s PR practices: “All business in a democratic country begins with the public’s permission and exists by public approval” (Griswold, 7-16). Page also believed that businesses should have public relations departments that command real influence with the top management. The great strength of Page’s concept is that it is both timeless and applicable across countries and cultures, especially in the two largest economies in the world. Although the U.S. and China have different political and economic systems, it’s true in both countries that business begins with public permission and exists by public approval. However, with different histories, cultural backgrounds, and company attributes, the practice of corporate public relations in China is quite different than in the United States. Starting with the history of corporate PR, this thesis will compare and contrast similarities and differences in the practice of corporate PR in the U.S. and China. These two countries represent the biggest and fastest growing economies in the world respectively; they also have the most representative Western and Eastern cultures; plus totally different political and economic systems; it is the author’s hope that the examination of PR in these two countries may lead to the identification of some universal rules for the practice of PR. 9 Chapter 1: Defining Corporate Public Relations 1. Definition of Corporate Public Relations Corporate public relations is a branch of public relations that focuses on enhancing and protecting the overall image of a corporation. A corporate image, as well as its perception by stakeholders, is essential for every company. According to the global PR agency Edelman, a corporation’s image “reflects not only its reputation and standing, but also – indirectly – influences its financial results, exchange rates/quotations on the Stock Exchange or the attitude of investors and decision-makers” (Edelman Poland). Leading American business investor Warren Buffet also has admonished that losing reputation is a far greater sin for an organization than losing money (Hutton, Goodman, Alexander and Genest, 247-261). A corporation needs to effectively manage both internal and external communications in order to protect and enhance its image. To be more specific, corporate PR may be divided into functions such as corporate social responsibility (CSR), investor relations, crisis management, and employee engagement, which will be explained in following chapters. 2. Subfields of Corporate Public Relations In 2001, a study conducted by James G. Hutton, Michael B. Goodman, Jill B. Alexander and Christina M. Genestatthe at Silberman College of Business, Fairleigh Dickinson University, identified 25 subfields of corporate PR that Fortune 500 corporations were investing in, in order to protect and enhance their public image (see Table 1). 10 Table 1 Functions included in corporate communication budgets (percentage of companies) Media Relations 96% Crisis Communications 89% PR Agency 85% Annual/Interim Reports 85% Employee Communications 83% Speeches 82% Newsletters 79% Corporate Identity 64% Internet 63% Community Relations 58% Issues Management 58% Editorial Services 56% Intranet 56% Corporate Advertising 51% Marketing Communications 45% Corporate Sponsorships 44% Corporate Philanthropy 43% Ad Agency 42% Foundation Funding 35% Government Relations 33% Brand Management 32% Investor Relations 29% Industry Relations 24% Training 13% Labor Relations 3% Source:James G. Hutton, Michael B. Goodman, Jill B. Alexander, and Christina M. Genest. “Reputation management: the new face of corporate public relations?” Public Relations Review 27 (2001), pp. 247–261. Because the research was published in 2001, only 63 percent of the companies had “Internet” communications in their budgets. For today’s companies, however, the number is likely 100 percent. Facebook did not exist until 2004; Twitter came along even later, in 2006, so there was no budget for social media spending in 2001, but it would take a big proportion of today’s Internet spending. According to the Seventh Communication and Public Relations Generally 11 Accepted Practices Study (GAP VII) published by USC Annenberg School for Communication and Journalism in Year 2011, “social media monitoring and participation have significantly increased and can now be considered a mainstream responsibility of PR/Communications” (Swerling, Thorson, and Tenderich 21). According to the GAP VII research, 70 percent of responded companies reported to have budget in social media monitoring, 66 percent spent money on social media participation in 2011, while the percentage was 53 percent for both categories in 2009 (Swerling, Thorson, and Tenderich 21). The reputation management research from Hutton et al did not mention corporate social responsibility. However, categories such as “foundation funding,” “corporate sponsorships,” and “corporate philanthropy” are all considered parts of CSR practice. This research also indicated that crisis communications was important in 2001, and its importance remains similarly important today. “Employee communications,” “intranet,” “training” and “labor relations” also may be included in the subfield of employee engagement. Other categories listed were general and routine practices that protect and enhance companies’ public images. With those data serving as the contextual foundation, the author explores the results of research she conducted into PR practices in the U.S. and China, which highlight the following four categories in chapter 3:  Corporate Social Responsibility According to The World Business Council for Sustainable Development (WBCSD): “Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the 12 workforce and their families as well as of the local community and society at large” (Hopkins). Nowadays, almost every aspect of corporate operations is subject to scrutiny by consumers. If managed well, CSR programs can provide opportunities for companies to build their reputation.  Crisis Management Crisis management is crucial in today’s business practices. Plant closings, mergers and acquisitions, unemployment, strikes, labor negotiations, company expansions, construction-related accidents and environmental catastrophes are often the hottest topics covered by both traditional media and social media. A lack of preparedness for crises can lead to many negative and undesirable results for companies, employees, clients and customers, and other stakeholders. On the other hand, a company could turn its public image around if it deals with crises perfectly. According to the GAP VII study, 72 percent of respondent companies had budgets in crisis management to both prepare for and deal with crises (Swerling, Thorson, and Tenderich 20).  Employee Engagement In an ever-increasing digital age, keeping employees attentive and motivated is more challenging and important than ever. According to The State of the Global Workplace: Employee Engagement Insights for Business Leaders Worldwide report published by Gallup, “Engaged employees are more inspired, creative, and dedicated to producing innovative work, and more likely to stay with a company whom they feel appreciates them as an individual” (Gallup). More importantly, as the most trusted ambassadors of the companies, 13 employees may not only talk to their relatives and neighbors about their companies’ great products and services, but may convert customers into loyal advocates through their routine work. According to the GAP VII study, 80 percent of respondent companies invested in internal communications, which aims at engaging employees at all levels (Swerling, Thorson, and Tenderich 20).  Social Media Social media has taken over the Internet like wildfire. Companies that are not capable of promoting themselves online suffer from the pressure from competing companies. Social media platforms such as Facebook, Twitter, Instagram, LinkedIn and Pinterest have all grown in popularity as a means to promote businesses. Social media is not only a channel to share information and attract customers; it is also a way to engage customers. As indicated in GAP VII, 70 percent of respondent companies reported having budgets for social media monitoring, and two-thirds spent money on social media participation in 2011, while the percentage was only 53 percent for both categories in 2009 (Swerling, Thorson, and Tenderich 20). There is reason to believe that with the emergence of more social media websites, and with the development of big data, companies will learn more on social media to promote themselves. 14 Chapter 2: The History of Corporate Public Relations 1. The History of Corporate Public Relations in the U.S. While the first appearance of the term “Public Relations” was documented in 1882, the practice of PR can be traced back to before the American Revolutionary War. Around that time, John Adams, one of America’s Founding Fathers, was to the communications dimension of the Revolutionary War what George Washington was to its military dimension. Adams’s speeches were inspiring, and he recognized the value of using symbols, such as the Liberty Tree, that were easily identifiable and aroused people’s emotions during the war (Davidson, 3). As PR practices, or publicity, won momentum in the fields of revolution and government relations, business leaders became aware of the virtues of PR as well. When Burlington Railroad initiated its 1858 publicity campaign, the railroad executive Charles Russell Lowell stated, “We must blow as loud a trumpet as the merits of our position warrants” (Overton, 158-159). During that same period of time, public figures such as P. T. Barnum promoted the dwarf General Tom Thumb, the elephant Jumbo, and Joice Heth, a 161-year-old-woman whom Barnum said had breastfed George Washington, the first President of the United States. The London Times called P. T. Barnum a “harmless deceiver,” although in the present day, this kind of intentionally misleading PR practice is generally seen as outrageous, exploitive, and manipulative, especially when utilized in business and politics. During the last quarter of the 19 th century, the Industrial Revolution totally changed the practice of public relations. During this period, businesses were racking up enormous profits but losing public support. Workers began to organize themselves into unions, and they perceived 15 their interests, in many cases, to be directly opposed to those of business owners. Business was at once highly successful and increasingly besieged (Curti 634). Companies were forced to submit to more governmental regulations and encountered increasingly hostile criticism from the media. Corporations realized that deception, manipulation, and self-serving half-truths were inappropriate responses to the challenges raised by the media and government (Curti 634). Public relations expertise was highly desired during this time in order to counter the hostility. Corporate leaders also began to recognize that well-informed employees could serve as ambassadors of their corporations. George Michael, who founded the Publicity Bureau in Boston, advised George Westinghouse in 1914 to pay more attention to internal “human relations” (The History of Public Relations). From that time on, employees were increasingly recognized as both an important audience as well as disseminators of public relations efforts. By 1925, more than half of all manufacturing companies were publishing employee magazines (The History of Public Relations). One of the best instances of corporate PR during the late 19 th and early 20 th century was conducted by AT&T. In 1883, AT&T leader Theodore Vail expressed concern about the company’s relationship with the public. He determined that AT&T’s target market was middle-class Americans, so he built support from this group by implementing cut-rate phone bills, encouraging friendly greetings from telephone operators, creating employee morale programs, and launching paid advertising campaigns (Griswold 7-16). In 1927, Arthur W. Page joined AT&T as a vice president. Page insisted that the publicity department act as an interpreter of the public to the company, drawing on systematic and 16 accurate diagnoses of public opinion (Raucher 80-81). Page emphasized the importance of data and did not make decisions based on hunches. Under his direction, the AT&T Publicity Department kept close checks on company policies, assessing their impact on the public. Thus, Page caused the company “to act all the time from the public point of view, even when that seems in conflict with the operating point of view” (Raucher 80-81). AT&T even paid fees for employees to join outside organizations so that, through their presence, the company would be represented in many forums. At the same time, the employees could bring back valuable data for the company. The Ford Company’s PR practices were also considered some of the best during that time. The employee periodical Ford Times was first published in 1908 and continues today. In 1914, a Corporate Film Department was established. Ford also surveyed 1,000 customers to gain insights into their attitudes and concerns at the beginning of the 1900s (The History of Public Relations). Corporate public relations in the U.S. entered another new phase after World War II. Practitioners began to understand the importance of two-way communication to build long-term relationships with important stakeholders. Programs were geared not toward persuasion but rather toward mutual understanding, compromise, and creating win-win situations for organizations and their affected publics and other stakeholders (The History of Public Relations). The emergence of the Internet and social media in the 21 st century brought about another major change for public relations practitioners. However, the importance of two-way communication remains equally, if not more, important. Before the internet, PR practitioners worked hard to push information from corporate headquarters through mass media resources to 17 their ultimate target audiences. Today, the internet allows those audiences to obtain their information directly from the organization, completely bypassing journalists who themselves are able to search for news online and to get to know people’s reactions and comments immediately through social media. Arthur W. Page encouraged corporations to communicate directly with their stakeholders. Social media, for the first time in human history, has made it possible for corporations to reach out to their target audiences, sometimes at almost zero cost. At the same time, corporations must be more careful than ever before, because stakeholders’ reactions are fast and direct. No corporation can likely afford the cost of misbehaving on social media. “Big data,” meaning analyzing the exploding amount of data, thus to underpin new waves of productivity growth, innovation, and consumer surplus (Manyika, Chui, Brown, and Bughin), represents another significant shift for the profession, as for the first time in human history, corporate PR practitioners can get information about target audiences’ behaviors through the information they put online. This allows companies to send even more targeted information to their audiences. 18 2. The History of Corporate Public Relations in China Public relations scholars in China agree that the modern practice of corporate public relations started in the 1980s. Most of the rules of practice were brought over from the U.S. at that time (A Brief History of PR in China). In 1984, Hill & Knowlton opened its office in Beijing, becoming the first real PR agency in China. Burson-Marsteller cooperated with the Xinhua News Agency, the largest news agency in China, to open the nation’s second PR agency, in Beijing, in August 1985. At first, these agencies’ clients were all international corporations that had branches in China. Chinese corporations at that time did not really utilize PR as an important tool of image building and protection. Business was not regarded as a decent profession in China until the 1980s. During the Feudal period from 221 B.C. to 1912 A.D., the economy was controlled by the Emperors, and businessmen, i.e. the peddlers who hawked their wares in the street, were considered among people who had the lowest social status in society. They did advertise for themselves, but posters and peddling cannot truly be regarded as practices of contemporary public relations. From the People’s Republic of China’s founding in 1949 to the early 1980s, the economy was still controlled by the government. People who worked in state-owned factories were much more highly paid than others; they were quite satisfied with their status. Because striking, or even gathering without permission, is illegal in China, there were no strikes against companies during that period of time. The government implemented a planned economy, meaning the factories produced a certain amount of products according to the government’s order, not the needs of the market. Private businesses were illegal, and there was a shortage of supply, so the 19 factories and companies did not have to promote themselves at all. In 1978, when the Reform and Opening Up Policy was implemented, private businesses were allowed. China Central Television (CCTV) broadcast its first commercial in 1979. This could not be regarded as the true origin of PR in China, but it was a start. State-owned companies still dominated, people were proud of working in state-owned factories, and there were not plenty of consumer goods; public relations could not thrive in this environment. In the beginning of the 1990s, the state-owned factories were found to be less efficient and could no longer compete with privately-owned companies. Therefore, the government decided to shut down many state-owned factories and lay off the workers. This was when private business began to thrive, but PR practices focused primarily on pure publicity, just as U.S. PR had before that nation’s industrialization. Since 1991, CCTV has hosted an anti-fraud program each year on March 15, World Consumer Rights Day. The corporations or companies exposed in that program are condemned by everyone in the country, and their products are usually not purchased anymore. Not until the beginning of this program did the corporations realize the importance of crisis management. However, their ways of dealing with crises in the 1990s were to go to CCTV and beg the producers not to expose their products. Another way of dealing with the problem was to put advertisements on CCTV since they quickly found that CCTV did not expose their advertisers. This was the most common way of doing PR during the 1990s: controlling the source of bad news. Corporations also sought personal relationships with government officials so that they could get more favorable treatment in business policy, such as easier market admittance and 20 cheaper land and utility costs. As evidenced elsewhere in Chinese history, personal relationship, or guan xi, was the most important thing in public relations. The successes of the Beijing Olympic bid in 2001 and the Shanghai Expo bid in 2002 were marked as milestones in Chinese PR history. With the help of Hill & Knowlton, one of the most successful PR agencies in the world, Chinese people witnessed how modern public relations tactics could be applied in helping the country win the chance to host the most exciting sports event in the world. After these two victories, more corporations sought assistance from PR agencies to help them with building and protecting their images. Most Chinese corporations likely did not know the benefits of practicing CSR. Some entrepreneurs gave away money under their own names but never connected it with their business practices. In 2008, there was a 7.8-magnitude earthquake in Sichuan, China that caused 69,227 deaths. A soft drink brand called Wang Lao Ji made the decision to donate 100 million RMB ($16 million US dollars) to people who lost their homes during the earthquake. Wang Lao Ji was not even a well-known company at that time, but the amount of money it donated was much higher than that of some of the better-known state-owned companies. People were so moved that someone initiated a “Let’s make Wang Lao Ji disappear from the shelves” campaign that called upon people to buy Wang Lao Ji until the last bottle had gone from store shelves. Not until this incident did corporations see the potential of strategic philanthropy to actually benefit the practice of business. A lot of charities were then set up under the names of corporations. However, very few companies really applied true CSR principles in their business 21 strategies. Employee engagement was not very important for most corporations during the 1990s. Labor unions existed at most Chinese corporations, but their functions were very different from unions in the U.S. Most Chinese labor unions were responsible for giving out movie tickets, organizing annual parties, and other similar activities. The leaders of the labor unions reported directly to CEOs so there was no possibility of organizing strikes. The situation remains the same today. Most employees don’t know how to protect their rights. Since striking remains illegal, people who strike would be fired immediately and more laborers with lower salary demands continue flooding into the factories. In 2010, 12 workers at Foxconn, the world’s largest original equipment manufacturer, committed suicide because of their high work burden and low salaries. The series of suicides not only garnered attention from the media but also affected the reputations of Apple, Panasonic, and other companies that had contracts with Foxconn. Only then did corporations in China likely realize that employee relations were a significant part of public relations and that employees’ behavior could be directly related to corporate image. Thanks to the development of the Internet and social media, corporate PR practitioners in China, for the first time, realized a trend at the same time as U.S. practitioners. According to the State Internet Information Office of China, the country has the largest number of netizens in the world (Chinese Online Population), which is why doing PR on the Internet, especially social media, is very important. The development of Renren (the Chinese equivalent of Facebook), Weibo (the Chinese equivalent of Twitter), and Wechat (the Chinese equivalent of Whatsapp), 22 gave corporate PR practitioners great platforms on which to showcase their talents. Many tools have been developed to generate customer data in China. Today, almost every social media tool developed in the U.S. has an equivalent in China. However, practices in each country are still different because of the different cultures and their internet policies and restrictions. 23 3. A Comparison from a Historical Perspective From a study of the histories of corporate PR practices in the two countries, the author found that, although most parts of corporate PR in China were derived from that of the U.S., Chinese PR practitioners did not copy everything from U.S. practitioners. In this section, the author will compare and contrast the similarities and differences in four sub-functions from the perspective of history and will try to discover their implications for today’s practices. a. Corporate Social Responsibility Corporate PR practitioners in the U.S. became increasingly aware of the importance of CSR as industrialization was carried forward. Through the hostility experienced between corporations and employees, consumers, and society generally, corporations quickly learned that in order to make a profit, they had to align their sensibilities and policies with the public interest. Ivy Ledbetter Lee, considered to be one of the originators of the public relations profession, realized that a corporation could not hope to influence the public unless its publicity was supported by good works. Lee insisted that performance determines publicity and that to achieve “necessary and positive consistency between words and actions, business and industry have to align their senses and their policies with the public interest” (Morse 406) Lee’s perceptions and practices can be regarded as catalyzing among the earliest implementation of CSR principles in the U.S. Edward Bernays, the Austrian-American pioneer in the field of public relations and propaganda, also pointed out in 1980 that “public relations is the practice of social responsibility” (Stone 31). In contrast, Chinese companies did not see the importance of doing CSR at an early stage, 24 likely for two reasons:  There was little hostility toward corporations until recently. There was shortage of supply of goods for 30 years after the country was founded. Under the principle of Communism, state-owned corporations did not receive money directly from consumers, so the corporations did not really care about customers. Plus the fact that people were proud of working in factories, there was no possibility that people would rally against factories or corporations. Nowadays, there is a shortage of open job positions because of the huge labor force. If some workers chose to strike, more laborers with lower salary requests and higher time commitments would pour into the factories and corporations, thereby negating the strikers’ efforts. There might, however, be complaints from the consumer side of business, and more and more powerful consumers are now regarded as a major reason that corporations might practice CSR.  Businesses in China don’t see themselves as the right entities to support charities, much less CSR work. For centuries, all economic power was in the hands of the empire or the government. Corporations’ profits had to be turned over to the government; they did not really have the funding or the rights to do CSR. They did not even need to think about it, since the government had already planned spending and revenue for the year. But now, as companies are responsible for their own profits, they must think of ways to be endorsed by customers. And CSR is regarded as an effective way to achieve that goal. b. Crisis Management Historically, corporations in the U.S. and China had totally different ways of dealing with 25 crises, mostly because they had different understandings of crises. In the U.S., crises could be anything from product recalls to high-ranking officials’ scandals, to insider trading. Crises were anything that left stakeholders and the public with a bad impression of the company, and their target audiences were all of the stakeholders. However, in China, a crisis meant anything that stopped a corporation’s business, and the only organization that could stop a corporation’s business was the government. So in China, crisis management was more like government relations; the target audience was the government and whoever could influence government officials. Operating under such different definitions, each country had different ways of managing crises. U.S. practitioners would apologize to stakeholders, promise that the problems would be solved as soon as possible, and make amends with real actions. In other words, they would try to rebuild their images with the public, although they may not have always succeeded. By contrast, most Chinese corporations would try to cover scandals up, possibly through bribery or personal relationship appeals. If a cover-up did not work out, corporations would try their best to lobby to the government to make sure their businesses would not be shut down. However, since the establishment of the free market system in the 1990s, Chinese corporations have become more aware of public opinion, and their crisis management practices are now much more like those in the U.S. c. Employee Engagement Corporate PR practices in the U.S. have prospered most in times of extreme pressure or crisis. Through negotiating and working with workers and labor unions, corporate PR 26 practitioners found that well-informed employees could serve as ambassadors of corporate goodwill. And it turned out that good internal communications could not only reduce the chances of striking, but also help boost morale and productivity. By 1925, more than half of all U.S. manufacturing companies were reportedly publishing employee magazines (The History of Public Relations). However, “employee engagement” in most Chinese corporations was limited to giving employees holiday gifts. There was no real employee engagement, and the “holiday gifts” system just reflected the Chinese tradition that the powerful and rich should send out holiday gifts or money for good fortune. For the most part, Chinese employees judged whether their companies practiced good “employee engagement” by the value of the gifts they received. Some Chinese companies did well with employee engagement. However, the best practices did not come from an awareness of PR; most of them were due to the personal charisma of the companies’ leaders. And because different leaders had different styles of personal charisma, these practices were not really replicable. d. The Use of Social Media Since Facebook came into the public eye in 2004, social media has developed at an unexpected pace. Although more social media tools such as Vine, Instagram, and Snapchat have popped up, Facebook has retained its status as the dominant channel. According to eMarket Forecast, Facebook accounted for 7.4 percent of U.S. digital ad spending in 2013, making it second only to Google in market share (Walsh). Having relatively stable dominant social media websites enables corporate PR practitioners in the U.S. to focus on using big data to study 27 consumers’ behaviors and thus come up with more targeted messages to certain types of audiences. Renren, the Chinese equivalent of Facebook, was founded in December 2005 and was the most popular social media platform for nearly three consecutive years. In August 2009, Weibo, the Chinese equivalent of Twitter, was released, and within months replaced Renren as the most-used social media platform in China. In January 2011, Wechat, a mobile text and voice messaging service, came out, and is now the most popular social media platform. Fewer and fewer people are interested in Renren and Weibo. With people’s increasingly short attention spans, corporate PR practitioners’ primary challenge has become how to predict which social media platform will prosper and how to capture people’s attention on those platforms before competitors do. In China, the Internet “water army,” or people who get paid to follow, retweet, and comment, has become a problem of social media as well. Although corporations’ social media pages may “look good” thanks to the help of the Internet water army, it does not provide real data, and corporations cannot gain authentic insights into their social media followers from the Internet water army’s activities. Government restriction is another thing that corporate PR practitioners must deal with. 28 Chapter 3: Case Studies 1. Excellent Practices in PR: A Methodology Drawing from history, the author will examine practices at the most admired companies in both the U.S. and China. However, discovering excellence in public relations is a subjective exercise. What is deemed “excellent” in one context may be perceived as “average” in others. With this concern in mind, the author has chosen three U.S. companies that are listed in Fortune magazine’s “most admired companies” list as benchmarks for comparison, since this list is among the most trusted in regard to companies’ reputations. The author has then chosen three Chinese companies that are considered equivalent to the U.S. companies, and looked at how they practice PR differently. The company choices were made according to the following criteria: a. At least one state-owned company, one public company, and one private company should be included, since the author also will compare companies with different attributes. But since almost all of the U.S. companies listed on Fortune’s most admired list were public, the author will analyze only public companies in the U.S. samples. b. The three U.S. companies should come from totally different industries. Identically, the three Chinese companies also should come from different industries, so that the author can compare and contrast similar or different rules across industries. c. All of the companies should excel in at least one of the four areas that was previous discussed (CSR, crisis management, employee engagement, or the use of social media), so that the best practices may be determined. With these criteria, the author chose the following six companies as samples for study: 29 a. The Insurance industry: this industry is needed yet hated by almost everyone. With the entire sector having such a bad reputation, it is important for its leading companies to rebuild and protect their images, not only for their own companies, but also for the industry as a whole. UnitedHealth Group  Public company, ranks No. 51 on the Fortune Global 500 list (Fortune Global 500)  Ranks No. 1 in the insurance and managed care sector for Fortune’ s 2013 “World’s Most Admired Companies” list (Fortune World’s Most Admired Companies)  The largest medical insurer in the U.S. China Life  State-owned public company  Ranks No. 111 on the Fortune Global 500 list (Fortune Global 500)  The largest insurance company in China b. The Food Service industry: people’s appetites are hard to cater to, which is why corporate reputation is extremely important for restaurants. With the development of social media, more and more people have begun to share their dining experiences online, and that requires restaurants to be more social media-savvy and to earn more word-of-mouth credit. Starbucks  Public company  Ranks No. 5 on Fortune’s “World’s Most Admired Companies” list  Ranks No.1 in the food service industry Haidilao Hotpot  Private company  One of the most admired restaurant chains in China 30 (Fortune World’s Most Admired Companies) c. Internet Services and Retail: a rising industry with more retailers and consumers rushing in. The industry needs to compete with traditional retailers as well as gaining the advantage in new situations, such as big data. Amazon  Public company  Ranks No.3 on Fortune’ s “World’s Most Admired Companies” list  Ranks No.2 in the Internet Services and Retailing industry (Fortune World’s Most Admired Companies) Alibaba.com  Private company; will start IPO in 2014  Chinese e-commerce giant 31 2. UnitedHealth Group UnitedHealth Group (NYSE: UNH) is a managed healthcare company founded in 1977. It ranks No. 17 on Fortune Magazine’ s list of the top 500 companies in the United States (UnitedHealth Group, Fortune 500). UnitedHealth operates in all 50 states in the U.S. and in 20 other countries worldwide, serving more than 85 million individuals with health benefits and services (About, UnitedHealth Group). Ranked as Fortune Magazine’ s “World’s Most Admired Company” in the insurance and managed care sector, UnitedHealth hasn’t been through a serious crisis, which may say a great deal about the quality of its management. However, it still has to build and maintain a strong positive reputation so that people will enter into or stay in contracts with it. a. Corporate Social Responsibility UnitedHealth Group leverages its own ideas, resources, and employees to help the communities in which they live and work. In 2012, for example, 81 percent of all employees and 96 percent of executives took part in volunteering and community service; the company also gave out $60.3 million in charitable contributions and community relations support, including an annual donation of $500,000 to the Annual Disaster Giving Program of the American Red Cross, and donations that assist individuals and communities facing emergencies (2012 Social Responsibility Report). In addition, UnitedHealth established the Diverse Scholars Initiative to support hundreds of low-income minority students who are pursuing degrees in the health field. UnitedHealth’s green business practices also saved more than 128,000 trees in 2012. 32 UnitedHealth has done a lot to demonstrate its social responsibility. The company donates money to disaster relief in many places in the U.S.; it encourages its employees to do volunteer work; it also strives to be an environmental-friendly company. These CSR programs are all positive things to do since they make the world a better place to live. However, people may not remember UnitedHealth as a company that contributes to disaster relief and environmental programs, since those programs are not quite related to its business. The takeaway here is that the company should integrate CSR programs more directly into its business strategies. Providing scholarships for low-income students to pursue their degrees in the health industry is a good fit since it is related to the company’s strategy. UnitedHealth also could do more community activities since a big part of its revenue is driven by its relationship with local communities. Meanwhile, the company should probably continue its efforts in disaster relief and environmental protection since stopping those programs might encourage some activists to go after the company, bringing a lot of trouble. b. Employee Engagement One of the great ways UnitedHealth engages its employees is through volunteerism. UnitedHealth Group released the Doing Good is Good for You: 2013 Health and Volunteering Study, which illustrated that employers benefit from employees who volunteer in terms of better employee health and professional-skills development that employees can use in the workplace (V olunteering is better for health). There are several company-supported volunteer councils in UnitedHealth Group. Employees are encouraged to participate in company-sponsored projects, in events coordinated by their local volunteer councils, or on their own. 33 According to the volunteer report on UnitedHealth Group’s official website:  Approximately 81 percent of UnitedHealth Group employees and 96 percent of executives volunteer their time to charitable and nonprofit programs, totaling more than 463,000 hours of volunteer service in 2012.  Employees who volunteer 30 or more hours per year get a boost from UnitedHealth Group: the company donates $200 on the employee’s behalf to a nonprofit organization.  UnitedHealth Group employees use the V olunteer Match database to find volunteer opportunities in their communities. In 2012, the employees logged their 1,000,000 th volunteer hour.  The value of employees’ volunteer efforts totals $26.7 million since tracking began in 2007 (V olunteering, UnitedHealth Group). Engaging employees in volunteer work benefits almost all stakeholders of the company. From the employees’ standpoint, volunteering can make them feel healthier physically, mentally, and emotionally. It also helps them to manage stress levels and to feel a deeper connection to their communities and coworkers. Employee health is very important to a company since good health reduces absenteeism. There may be fewer quarrels because of low stress rates, and employees will understand their policyholders more through the volunteer works. From the professional point of view, volunteering can teach employees about time management, help build stronger collegial relationships and teamwork skills, and help build professional skills such as marketing, management, and finance if specific tasks in those fields are given. According to the Health and Volunteering Study by UnitedHealth Group, 71 percent of employees agree that volunteering has provided them with job-related contacts and networking opportunities (UnitedHealth Group). These skills and opportunities not only help employees pursue higher levels in their professions, but could also help the company function more effectively in the long run. The communities are happy to have UnitedHealth Group employees serving as volunteers, 34 especially in healthcare-related events, since the employees are more informed about the healthcare industry and can potentially help in consumers’ decision-making processes. The employees also serve as ambassadors for the company through volunteering. They win trust and respect from community members, which again can help UnitedHealth Group grow its business in return. The volunteer work benefits everyone and especially UnitedHealth Group. By engaging its employees in charitable works, the company makes them feel better as individuals and more committed to the company. c. The Use of Social Media According to its official website, UnitedHealth Group has eight social media accounts. The company has two Facebook accounts, two Twitter accounts, one LinkedIn account, and three YouTube accounts. The good thing about UnitedHealth’s social media management strategy is that the accounts are very focused on specific topics. For example, among the eight social media accounts, three are about career building (LinkedIn, Facebook, and YouTube), two are about social responsibilities (Twitter and Facebook), one is about health services (YouTube), one is for members only (Twitter). And only one, a YouTube account, is responsible for overall company promotion, but it is worthless that this particular account has only nine posts from March 2013 to March 2014. To focus each channel on just one specific topic helps the accounts specialize in particular areas, and they can serve more as customer/potential employee service accounts, so that people are more willing to accept messages from these accounts. The content is still 35 promotional, but communications between the company and stakeholders may appear more like a service and not purely promotional. Among all of the company’s social media platforms, the most popular are those for career advices. People who seek careers at UnitedHealth Group should follow its LinkedIn and Facebook accounts. Since the company has a huge employee base, with more than 133,000 employees worldwide (Form 10-k UnitedHealth Group), the number of followers on LinkedIn (127,348) is considerable (UnitedHealth Group Linkedin Page), which suggests that UnitedHealth is likely to be well-respected as an employer. Compared with its huge number of followers on career-related accounts, the social responsibility pages look deserted: as of February 2014, there were only 255 likes on Facebook (UHG Gives) and 536 followers on Twitter (UHG Gives). The low number of followers on these channels may indicate that the company hasn’t really treated social media as an important platform to tell company stories, including the great charity and volunteering works the company’s employees have done. The content on UnitedHealth’s social media platforms is organized but as written, is unlikely to create buzz. Take the corporate social responsibility account “UHG Gives” on Facebook as an example: most of the content is about the company’s employee volunteer activities and recognition the company has won through its CSR programs. There are usually two to five likes under each post, and most posts have no comments, which indicate that the posts did not generate online conversation, thus the account’s ability in engaging customers is limited. 36 3. China Life China Life Insurance Company Limited (SEHK: 2628, NYSE: LFC, SSE: 601628) is a Beijing-based China-incorporated company that provides life insurance and annuity products. While the company is publicly traded over the Shanghai Stock Exchange, the Stock Exchange of Hong Kong, and the New York Stock Exchange at the same time, it is under the oversight of the China Insurance Regulatory Commission (CIRC), meaning that the company is still state-owned and that the Chinese government has the most influence on the company, even more so than its shareholders. Founded in 1949, China Life is the largest commercial insurance group in China. The company’s revenue was $73,671 billion in 2012 and its total assets were $370,219 billion (Fortune Global 500, China Life Insurance). China Life was ranked No. 111 on the Fortune Global 500 list in the year 2013 (Fortune Global 500, China Life Insurance), making it No.1 among all Chinese insurance companies and second globally, after UnitedHealth Group. Ordinary Chinese people are not familiar with the insurance industry. Even though China Life is the largest insurance company in China, most people do not likely regard it as reliable. Most people in China likely disregard insurance as a worthwhile investment; some may even regard brokers as liars who take their money and never return it. Therefore, the PR practices for China Life must not only build the company’s positive image, but also let people know more about the industry and build trust in the industry. a. Corporate Social Responsibility China Life believes that doing its own job well is the most important responsibility, and this 37 is the foundation of its CSR activities (Service and Customers). Whenever there is a natural disaster or misfortune that affects Chinese citizens, China Life’s branches all over the world make sure that the company is the first to respond and the first to start claim procedures for affected policyholders (Service and Customers). In addition, the company established the China Life Foundation on June 16, 2007. Its major responsibility is to do all kinds of charitable work in the name of China Life. Since then, the foundation has donated more than $50 million to schools in rural China, as well as to people who suffer from fatal diseases, and to families affected by natural disasters. As a state-owned company, China Life’s CSR efforts are always aligned with the government’s policies and proposals. For example, in 2013, Xi Jingping, the Chinese President, proposed a concept called the “Chinese Dream,” which could be considered quite similar to the “American Dream” of the 1930s. The concept of the “Chinese Dream” is to bring about a great rejuvenation of the nation through fulfilling every citizen’s dreams. In response to this proposal, China Life launched a campaign called “Building Dreams for Earthquake Orphans” (China Life Official Website). In this campaign, China Life found 1,083 orphans who had lost their parents during three severe earthquakes and debris flows since 2008, and promised that the company would subsidize them to get better educations until they are 18 years old. In addition, China Life asked the orphans to write down their dreams on pieces of paper and then asked them to hold the paper and take pictures. The pictures are put on China Life’s official website so that anyone who wants to help these orphans can contact China Life and discuss how to fulfill their dreams with company representatives. Once approved, the company starts the “building a dream” process. 38 For example, one child wants to be an astronaut in the future. The first Chinese female astronaut Liu Yang learned about his dream, so she invited him to visit the Chinese Aerospace Center and encouraged him to study hard in preparation for becoming an astronaut. Such a CSR program caters to varied audiences. First, as a state-owned company, China Life combined its CSR program with the most recent governmental policy, which definitely caters to the government and wins the government’s support in return. Secondly, the campaign helps a group of children that people all over China want to help. The company does not do the charity alone; it allows everyone to participate through its platform. The orphans can receive a better education because of China Life. They are China Life’s brand ambassadors for now, and when they grow up, they will likely become China Life’s loyal customers. The whole society is likely to trust China Life more because people see that it is a company that takes responsibility. The problem with China Life’s CSR programs is that the company knows how to do CSR, but it does not appear to know how to effectively inform people about its efforts. For example, the children’s photos were put only on the company’s official website, and it is extremely difficult for a visitor to find the campaign page from the site’s home page. What’s worse, the company only pitched the campaign to traditional media outlets such as newspapers and TV . They appear to have ignored social media, which is unfortunately when almost everyone uses those platforms. Compared with the company’s efforts being made, it seems very few people know about the campaign, let alone have taken part in it. Practitioners like Edward Bernays always stress that the only good way to do PR is to make companies do the right thing. However, if a company does good things but lacks the skills to 39 spread its messages, the goodwill impact of doing charity will likely be discounted. b. Employee Engagement According to Fortune, China Life had 141,932 employees as of 2013 (Fortune Global 500, China Life Insurance). These employees work in different positions all over China, and some of them work overseas. The most important thing in employee engagement is to keep everyone on the same page. At China Life, the intra-communications system does not appear to be well developed. From what has been written about the company on the internet, it appears that it may be easier for higher-level officers to communicate than ordinary employees. If employees want to express their opinions or are not satisfied with company policies, they may have to seek external resources to express themselves, which can escalate an internal problem into an external one. In the summer of 2013, a letter that accused China Life of compelling employees to buy its own insurance went viral on the Internet. In the letter, the writer stated that his salary was $500 per month, which is quite normal for employees in China’s smaller cities. He asserted that the branch he worked in compelled him to pay a $200 premium per month, which would make it hard to survive in the city. But if he did not pay, he risked losing his job. The man wrote in his letter that he had tried several ways to talk to senior officials at the headquarters, but received no reply (China Life Shanxi Company). He therefore had to turn his appeal to mass media and social media. In response, senior officials at the headquarters said they had never received the letter. After this letter went viral, more employees working in China Life’s other branches reported similar problems. 40 Had there been a better system that allowed employees to report things to their higher-ups, China Life could have contained this crisis as an internal one, and it would have been much easier to deal with. A more parallel system that allowed multi-directional communication, could dramatically reduce such crises, since managers in each branch would reconsider whether to make a rule like the one mentioned above. As with most companies in China, local employees tend to judge the quality of China Life’s employee engagement by how much they get paid and what bonuses they get for the Chinese New Year. Because employees’ expectations get higher each year, China Life has received more complaints about low bonus. This is where China Life should learn from UnitedHealth Group: employees do not feel honored just because of the material incentives they get. They may feel honored if they are a part of volunteer work or if their advices for the company are taken seriously. So, if China Life pays more attention to spiritual incentives as well as material ones, it may more effectively engage its employees. c. Crisis Management Including the employee-premium issue mentioned above, China Life encountered three major crises during 2013. In January, a website that claimed to have some cooperation with China Life released 800,000 policyholders’ confidential information, including their telephone numbers, ID numbers, and policy numbers. Although China Life denied having cooperated with the website, policyholders were scared enough that many of them transferred to other insurance companies (Sun). Another crisis happened in May 2013. A journalist from China Economic Weekly ranked the 41 entertainment budgets of all listed state-owned enterprises, based on each company’s annual financial statements. China Life, with a spending of $230 million, ranked No.1 on that list. By comparison, the No. 2-ranked company spent $130 million, which meant that China Life spent far more money on business entertainment than any other listed state-owned companies (Liu). This was not good news, especially when the Chinese president Xi Jingping was asking all government departments and state-owned companies to be frugal (Xi Jingping Asks Government Officials to be Frugal). If a citizen never paid attention to insurance news specifically, they might not have known about these three crises, because China Life appears to have suppressed news about these issues before they really went viral. The first organization China Life needs to notify when dealing with a crisis is the China Insurance Regulatory Commission (CIRC), whose major responsibility is to supervise all the insurance companies in the name of the government. When the CIRC accepts China Life’s explanations for the crises, the commission can use its influence over national news agencies and websites to ask them to remove the information about crises such as those experienced by China Life. Without information from authoritative sources, the impact of the news would be weakened. According to Ying Dai, the chief new media officer at China Life, the company also dispatched staff from its headquarters to the provinces that were exposed to the employee scandal, to make sure related information did not spread further (See appendix 1). Before social media, this approach may have been an effective way of preventing bad news from spreading, and it may still be a useful method today. However, as more people become 42 social media savvy, and more independent grassroots campaigns get their messages out on all kinds of social media platforms, China Life, as well as other companies facing crises, must learn that covering things up may lead to bigger crises. d. The Use of Social Media According to the author’s research, China Life had two social media accounts in 2013, one on Weibo and the other on Wechat. These are the two most popular social media platforms in China. Weibo could be considered the Chinese equivalent of Twitter, and is used by a lot of companies as a platform to announce new policies and to generate loyal customers. Wechat is a mobile text and voice messaging communication service which acts more like an online customer service platform for companies. China Life sent out its first Weibo in September 2012. As the biggest sponsor of the China Open tennis tournament, China Life promoted the tournament through an account called “China Life Open Carnival.” By distributing tickets to tennis fans, the Weibo account generated a lot of followers. The company later continue used the “China Life Open Carnival” account but changed the name to “China Life Salon.” During an interview with the author, Ying Dai, the chief new media officer at China Life, expressed that the company had some worries about setting up social media accounts, “We are aware that we are not the most beloved company in China. We are afraid that if we set up an official social media account, it would be a platform for customer complaints rather than sharing our company stories” (See Appendix 1). With that concern in mind, China Life has continued to use “China Life Salon” as the name of its Weibo account to this day, and it is still not registered 43 as an official company account. China Life employs an agency to manage its Weibo content. However, most of the content is not related to insurance. Random information about great books to read, places of interest worth visiting, and aphorisms make up more than 80 percent of all content on China Life’s Weibo account. Judging from Ying Dai’s comments, China Life’s high-level executives may still not be aware of the spirit of social media. They demonstrate a desire to embrace the highly developed platform, but, meanwhile, express concerns that the company will be buried under customer complaints. They may still need to learn to view social media as an opportunity rather than an obstacle. Even if the account is filled with customers’ complaints, the company will not lose. If social media is used properly, the company may experience many chances to turn customers’ opinions around. 44 4. Starbucks Starbuck (Nasdaq: SBUX) is a Seattle-based global coffee company and coffeehouse chain. Founded in 1971, the company has become the largest coffeehouse company in the world. As of March 22, 2013, the company has 20,891 stores in 62 countries (How many Starbucks are there). As a company with such global operations, Starbucks has to deal with different legislative, regulatory and ethical standards in different countries, which is a huge challenge. In order to deal with these international issues, the company must not only obey laws in different countries but also has to do CSR programs to win customers’ hearts around the world. Its 151,000 employees (2013) (Starbucks Company Statistics) also embody communications opportunities as well as challenges, since they are the representatives of the company who serve customers directly. Social media is also an opportunity since Starbucks can always use these channels to initiate campaigns such as “pay for the next person in line” (Mason). a. Corporate Social Responsibility Starbucks believes that the company “can – and should – have a positive impact on the communities it serves. One person, one cup and one neighborhood at a time” (Being a Responsible Company). According to its website, the company implements social responsibility throughout its producing process and the communities it serves. In 2012, Starbucks appointed renowned community advocate and entrepreneurial leader Blair Taylor as the company’s first Chief Community Officer, responsible for the company’s culture, community, government relations, diversity, and global responsibility efforts (Starbucks Newsroom). In short, Taylor’s position is responsible for all of the company’s CSR programs and 45 an indication of how Starbucks values its CSR efforts. As a food service company, Starbucks communicates how it imbeds the spirit of CSR into its entire production and service process, including the sourcing of coffee and teas, the material quality of its cups, the “greenness” of its stores, and its recycling process. For example, in the important area of product sourcing, Starbucks has been cooperating with Conservation International (CI) for a decade. The two organizations partnered to develop a comprehensive coffee-buying program that ensures coffee quality while promoting social, economic, and environmental standards: the Coffee and Farmer Equity (C.A.F.E.) Practices program (SCSGlobal Services). According to the company’s website, these practices specifically involve and benefit workers at local farms, as well as customers and the planet overall.  Local farmers: Starbucks ensures fair and non-discriminatory hiring and employment policies. C.A.F.E’s participating farms provided more than 2.9 million full-time, part-time, and temporary employment working opportunities for local farmers; over 89 percent of the workers get paid leave; and 100 percent of children living on farms got education opportunities during 2008–2010.  Environment: At least 99 percent of participating farms have not converted any natural forest habitat into coffee production fields since 2004; at least 99 percent of them use organic matter to maintain soil fertility; the farms have designated over 102,000 hectares as conservation areas; and at least 90 percent of stand-alone mills process waste in a way that ensures the local environment is not contaminated.  Products: In order to ensure that all coffee sold at Starbucks meets high quality 46 standards, Starbucks invented a unique tracking system from purchase to export; the company ensures all farms receive a receipt for their coffee harvests; in addition, one-time incentives are offered to suppliers who achieve the highest performance level and to those that demonstrate significant improvement over time with the aim of encouraging continuous improvement in the program (Starbucks and C.A.F.E.). Starbucks follows a similar process to CAFÉ in choosing sources of items such as tea leaves and cocoa. One of the great strengths of Starbucks’ social responsibility program is the extent to which it integrates CSR into its business strategies. While doing good for the community, Starbucks also benefits from the high quality ingredients and its reputation for going green. Arguably the company’s business is driven by good quality and reputation. Only in this way can Starbucks really keep its CSR programs rolling and continuously act as a socially responsible company. In addition to programs related to its producing and servicing processes, Starbucks also is involved in community development all over the world. In 1997, the Starbucks Foundation was founded as part of the company’s commitment to strengthening communities. For more than 15 years, the foundation has developed young global leader programs, supported coffee, tea, and cocoa communities, and launched the clean water program “Ethos Water,” which is aimed at providing people in developing countries with clean water (Ethos Water Fund). Another Starbucks program worth mentioning is its initiative to fostering education in China. Starbucks entered the Chinese market in 1999. The company found that China has a rich tradition of placing a high value on education, so in year 2005 the company established the 47 Starbucks China Education Project, a $5 million (approximately 40 million yuan) commitment to support educational programs in China (Starbucks Foundation). Such CSR programs also reflect Starbucks’ localization strategy. By analyzing local people’s needs and providing resources to solve their problems, Starbucks’ overseas CSR programs help spread the company’s values all over the world. b. Employee Engagement Like other successful companies, Starbucks see its employees as more than just workers; it also sees them as brand ambassadors. CEO Howard Schultz once said, “Give them (employees) reasons to believe in their work and that they're part of a larger mission, the theory goes, and they’ll in turn personally elevate the experience for each customer—something you can hardly accomplish with a billboard or a 30-second spot” (Cuccureddu). Among all of Starbucks’ employee engagement programs, the Leadership Lab may be of particular significance because of its initiative of bringing managers from all regions together, which allows the managers learn from each other. According to Starbucks’ website, “Starbucks’ Leadership Lab is part leadership training, with a station that walks store managers through a problem-solving framework. It’s also part trade show, with demonstrations of new products and signs with helpful sales suggestions, such as ‘tea has the highest profit margins.’ The majority of experiences are meant to be educational, including several that give store managers access to top managers of the company’s roasting process, blend development, and customer service” (Starbucks Official Webstie). By getting 9,600 store managers all over the world together and providing them with this training program, Starbucks not only shows that the company treats its managers as global employees who essentially run $1 million+ small businesses, but also gives the managers reasons to believe in their work and that they’re part of a larger mission. 48 Making employees aware of their own importance, the greatness of the company’s goals, and the feasibility of their mission is Starbucks’ unique way of enhancing employees’ morale. c. Crisis Management In the food service industry, companies’ crises usually fall into three categories:  Food-related crises: This category of crisis includes food mislabeling, food contamination, and so on. Any crisis that represents a threat to public safety is typically reported by all kinds of media as soon as the threat is confirmed. It’s difficult to win customers’ confidence back when such news is spread.  Government regulation: The government is an important stakeholder for Starbucks. The company’s business, as well as its reputation, would be negatively affected if it were to violate the government’s regulations. Certain legislation, such as New York City’s proposed “soda ban” on large volume containers, could also negatively affect the company’s business.  Disgruntled employees: Although Starbucks maintains a strict and thorough hiring process and extensive training programs, the company still cannot completely control the actions of employees who might harm the brand and promote a negative image to the public. For a company like Starbucks with its vast number of employees, it can be one of the company’s highest priorities to prevent these kinds of situations from happening. Starbucks appears takes a proactive attitude in dealing with all kinds of crises. The cochineal dye issue was one of the best examples. Ared food dye that was used in food and 49 beverage items at Starbucks, known as cochineal dye, is derived from tiny crushed beetles, making certain foods not vegan-friendly. In year 2012, a petition was started on Change.org asking Starbucks to reformulate the products containing this dye and replace it with lycopene, which is derived from tomatoes (Starbucks to Stop Using Bug Dye). This petition got social media attention and gathered more than 6,000 signatures on Change.org (Starbucks to Stop Using Bug Dye). The approach Starbucks took in solving the problem was clear and effective. First, the company acknowledged that cochineal dye was indeed used in certain Starbucks products. However, Starbucks did not apologize for its use, since this kind of dye is also used in food products made by other companies. Nevertheless, in keeping with its mission statement to be environmentally friendly, Starbucks started a thorough evaluation and ultimately decided to remove cochineal dye from its ingredient list (Dannon Bugs and Its Customers). The company’s response represents almost a textbook ideal solution to crisis management. Acknowledging the problem showed that Starbucks is responsible; refusing to apologize showed that the company wouldn’t assume causal responsibility for an accusation for which it was not at fault. By stopping use of the cochineal dye, Starbucks actually turned the crisis into an opportunity to show its social responsibility. It was also a great move to rectify the problem before it received any more negative attention from consumers or the media. From these steps, it seems like Starbucks has a very thorough plan to deal with crises and to turn public opinion around. d. The Use of Social Media 50 Starbucks’ social media strategy is built around its company website and six additional platforms, including Twitter, Facebook, Pinterest, Google+, YouTube, and My Starbucks Ideas. As of 2013, each of these accounts had millions of followers, excelling among most of the consumer brands that have social media presences. Branches of the company, such as Starbucks UK, also have their own social media accounts that post localized information. Unlike most consumer products companies’ successful social media accounts, Starbucks does not appear to post information frequently, nor does it actively engage in followers’ conversations. This fact reinforces that there are few hard and fast rules when it comes to social media. To generate and keep fans on all social media platforms, Starbucks has its own strategies, which the author observed as the following:  Cross platform consistency. The content on Starbucks’ various social media platforms is almost identical. For example, when Starbucks takes a photo, it shares it on Instagram, posts it to Facebook, tweets it on Twitter, and pins it on Pinterest (Schoultz). The strategy of consistent cross promotion ensures that messages get to all of the company’s customers, and the messages are customized by platform, so that customers can read them in their favorite ways.  Loyalty and customization drive customer engagement. Instead of solely focusing on accumulating new customers, the company also pays attention to existing customers. This strategy not only helps these accounts gain more followers but also helps cultivate more brand advocates. Social media incentives are another way to engage fans. Starbucks’ frequent social media promotions, such as “buy one get one free” garner an 51 extraordinary amount of engagement through comments, “likes,” and shares. Starbucks customers can get customized experiences such as personalized “signature” drinks. On the company’s social media platforms, especially Instagram and Pinterest, Starbucks encourages customers to display these customized items, which is another way to turn loyal customers into brand advocates.  Taking a stand: Starbucks demonstrates an ability to fit itself into trending topics. In addition to seasonal product promotions, the company has successfully convinced consumers that a reusable steaming cup is beneficial to the environment; it shows its support for the LGBT community; and it conveys its stance on gun control issues. By connecting customers with what matters in the world, Starbucks has generated quite a number of loyal social media followers.  My Starbucks Ideas: My Starbucks Ideas is a website where Starbucks does what it calls “business crowd sourcing.” It encourages customers to submit ideas for better products, improvements to customer experience, and new community involvement, among other categories (Schoultz). Customers can propose, view, and discuss ideas along with employees from various Starbucks departments known as “idea partners.” What’s more, the company polls its customers about their favorite products and has a leader board to track which customers are the most active in submitting ideas, comments, and poll participation. This website provides an official platform to allow customers to influence decisions for the company and thus stimulates their sense of loyalty. 52 e. CEO Involvement Howard Schultz, the chairman and CEO of Starbucks, was ranked as the 273rd-richest person in the United States by Forbes magazine in 2013, having a net worth of $2 billion (The Forbes 400). As the CEO of the company, Schultz’s outspoken attitude is well known. And because of that, he is loved, as well as hated, by a lot of people. In September 2013, in an open letter the CEO asked U.S. customers not to bring guns into the company’s stores. Earlier in the summer of 2013, gun advocacy groups used the Starbucks store in still-healing Newtown, Conn., as a podium for packing heat, which enraged gun control advocates. Many customers asked Schultz to get guns out of Starbucks cafes. The CEO suddenly found himself in the middle of a no-win shootout. Soon after that, Schultz asked customers not to bring guns in the store, which won gun control advocates’ support. If the CEO had kept silent, he would have suffered pressure from both sides, which is not good especially after the heated debate after Newtown shooting. By making it a store policy, Schultz terminated the heated debate around Starbucks, effectively removing the company and its employees from the center of the storm. Taking certain stances has made Schultz’s image, as well as the company’s image, more vivid in the public eye. However, this practice has also generated a lot of controversy around the company. Surprisingly, none of Schultz’s outspoken opinions appear to have negatively affected Starbuck’s business performance. Maybe Schultz knows that Starbucks is a brand that goes deep into American people’s lives. His outspoken words can get more eyeballs on the brand and may make loyal customers feel like they are linked to what matters in the U.S. and in the world. 53 5. Haidilao Hotpot Haidilao is the most successful hotpot restaurant chain in China. Founded in 1994, the company has 91 chain stores in 24 cities in China and two stores in Singapore and Los Angeles (Haidilao.com: About us). The company is famous for the high quality of its food and services. It also is well-known for its employee engagement strategies. Zhang Yong, the founder and CEO of the company, is one of the most reported-about people on all kinds of media, though he is not at all outspoken. Huang Tieying, a visiting scholar at Beijing University, wrote a book called You Can Not Learn from Haidilao to explain the company’s business strategies in detail. This book argues that the success of Haidilao is almost entirely based on one person’s–the CEO’s – unique strategies, which will be discussed in detail in the following sections. Haidilao is a private company, which is one reason why the company can follow the CEO’s strategy without any external shareholder disturbance. a. Corporate Social Responsibility As with most small to middle-sized private companies in China, Haidilao does not speak about CSR in the company’s mission. The company does not appear to have integrated CSR into its business strategies, and there is no place on its website that talks about the company’s CSR efforts. Despite that, the company appears to actually be doing CSR in its daily business. All of the employees hired by the company are rural migrant workers. In a labor-intensive society like China, to provide 10,000 migrant workers with decent jobs is one kind of CSR. Haidilao uses food ingredients that are grown or fed on its own farm, which has authentications from HACCP, 54 QS, and ISO9001. Haidilao makes sure that the food in its restaurants is hygienic and healthy, which also could be seen as a practice of CSR. Haidilao has a strong sense for doing good things. However, it still appears to lack a thorough plan to help the company implement CSR programs systematically. The risk about this is that if the company is not aware of CSR, and does not integrate CSR principles into its business strategies, it won’t do it for long if it conflicts with the company’s business benefits. b. Employee Engagement According to an interview with the CEO, Haidilao believes that catering to employees is more important than catering to customers (Secret of Haidilao’s Employee Engagement). Employees serve customers, so if the company makes them happy, they will serve customers with better quality in return. Therefore, Haidilao has many policies to improve its employees’ living and working conditions. First, unlike with other companies, most employees at Haidilao came to the company through their relatives’ and friends’ references. CEO Zhang Yong explains, “Employees will do their job diligently only if they have sense of affiliation with the company. Working with relatives and friends will add to the feeling of affiliation, and employees will feel happy working with their relatives. They will also be willing to spread their happiness to our customers” (Haidilao’s Three Tips for Employee Engagement). Secondly, Haidilao’s employees reside for free in dormitories that are in very good condition. The company also has concerns that if the dormitories are located too far away from the restaurants, the employees will spend too much time on the road and will not get enough rest. 55 Accordingly, the company chooses only dormitories that are within 20 minutes’ walking distance from the restaurants. Room cleaning service is included. The company spends $83 million each year on employees’ rent at each store (Becoming the King of Hotpot). In addition, in order to stimulate employees’ enthusiasm for work, the company gives 200 yuan ($33) to outstanding employees’ parents each month. Most of the employees are from rural places in China, and most of their parents don’t have medical insurance. Haidilao hopes that 200 yuan per month can provide them with compensation to some extent. The parents are so grateful that they ask their children to work for the company with all their hearts. What’s more, the company built a primary school in the rural town of Jiannin, where most of its employees are from, so that if the employees leave their children behind in their hometowns, the company can ensure that their children get high-quality educations. Chinese people value their families above all else. If a company takes care of its employees’ family members, it wins the employees’ hearts. Lastly, Haidilao has a very tempting promotion mechanism. The company promises that everyone who works hard in the company can get a promotion. Outstanding employees only stay in their positions for one year at most. After that, they get promoted until they reach the position of restaurant manager. If a manager does their job perfectly, they will be transferred to another city to take the position of manager, or they may get a position at the headquarters or other branches of the company, such as the logistics department. According to the CEO, at Haidilao, a promotion is not a probability; it’s a promise (Zhang). Haidilao’s employee engagement is quite different from that of the companies been discussed before, but it works. Haidilao knows that its employees are rural migrant workers. 56 Their needs—for example, better living conditions and better education opportunities for their children—are more basic and easier to fulfill than those of urban citizens. Rather than asking employees to devote themselves to volunteer work, the company provides material incentives and gives employees the feeling of being respected as its strategy for enhancing employee engagement. This group of people may join the company with little training, but they are loyal and eager to learn. If a company builds a team like this, it can be invincible, staffed by employees who are willing to serve customers with full hearts so that the company will profit. Perhaps not surprisingly, the employee turnover rate is extremely low, though other restaurants often talk to Haidilao’s employees and offer them higher positions and salaries (Haidilao’s Employee Engagement). The downside of Haidilao’s employee engagement strategy is that the employees may become too dependent on the company, which could lead to two consequences. One is that the employees will allow the company to exert enormous control and influence over them, until one day the employees realize that they don’t have the ability to live without the company, similar to the rise of company towns during the Industrial Revolution in the U.S. Or employees may develop higher expectation towards the company. If they take it for granted that they should have the best welfare among employees of all companies in China and the company becomes unable to meet their increasing expectations, the employees may protest against the company. c. Crisis Management The extreme popularity of Haidilao brought the company into the scrutiny of public eyes, it also brought the company into crises. In August 2012, a journalist in Qingdao camouflaged 57 himself as a job-seeker and was admitted by Haidilao. After working in the restaurant, he reported that the soup and drinks at Haidilao were all blended, while the company stated before that the soups were all made by the chef on the same day it’s been sold. He then reported that his manager told him not to tell this fact to the customers (Ou and Xie). This news shocked many people since Haidilao is perceived to be a responsible company that only provides high-quality food. However, it later turned out that customers forgave Haidilao. Here is what the company did that led to their forgiveness: First, right after the report appeared on the Internet, Haidilao admitted that it used blended soups and drinks in its stores. Meanwhile, the company explained that using blended soups and drinks is legal and an industry norm. In the same statement, the company said it appreciated the media speculation, published the stipulations of the State Food and Drug Supervision and Administration Bureau, and provided contact information of three higher-level executives who would take any questions or concerns that customers or the media might have. The company also welcomed customers to take kitchen tours in any of its restaurants so that they could see the production process for themselves. This response left the impression on stakeholders that the company didn’t blame the media, shift the responsibility to other companies, or ask for sympathy. Instead, it used government regulation to show that it did not break the law. And its humility won stakeholders’ heart. By communicating quickly, clearly and effectively, Haidilao stopped the situation from escalating. Secondly, CEO Zhang Yong posted a Weibo on the day the story appeared, stating that employees were not at fault for causing the crisis; it was actually at the management level. Nor 58 would the company blame the particular store that had been exposed. Instead, the company dispatched psychologists to the affected store to make sure that its employees were not stressed due to this incident. The CEO’s response gained more people’s support and immediately turned public opinion around. This gesture showed that Haidilao is a responsible company that would not avoid its responsibility and transfer accountability to employees. There does not appear to be a particularly sophisticated strategy behind Haidilao’s crisis management plan. All responses came out of the CEO’s philosophy: taking responsibility, protecting the employees, and always being humble. This philosophy effectively catered to every stakeholder during this crisis, including customers, employees, media, and the government. d. The Use of Social Media Haidilao has just one social media account, which is on Weibo. This does not seem to be much compared to other famous restaurants in China. However, a review of its Weibo account shows that the company creates a lot of viral posts, making its social media strategy a great success. Initially, Haidilao tried multiple ways to promote its Weibo account. For example, it often compared itself with Starbucks, stating that the two companies had a lot in common, such as excellent services and great employee engagement programs. However, this comparison strategy did not attract much attention from Weibo users. Then, the company came up with a “Haidilao Style,” which highlighted the company’s unique services. Haidilao encouraged its customers to describe the company’s services using the hash tag “the human race cannot stop Haidilao anymore.” Within a couple of hours, the phrase became the most popular one on Weibo, and 59 thousands people shared their experiences in Haidilao using this hash tag. Others even used this opportunity to suggest to Haidilao other services it should have. However, the account itself is not as popular as the topic. As of January 4, 2014, only 100,000 people followed the account. The company’s official account was following only eight other accounts and had 171 posts, most of which were about a new store opening and in-store promotions. The account did not appear to have many interactions with its followers. As a company that thrives because of its reputation, Haidilao should realize the importance of social media as soon as possible. Only in this way can the company keep in touch with its customers in the most direct way and continue to generate popularity and loyalty as it grows. As the company enters international markets such as Singapore and the United States, Haidilao should set up other social media accounts, such as on Facebook and Twitter, to target customers in these two countries. Relying on the company’s reputation in China will not be enough support for its localization strategy in other countries, especially when people in these two countries don’t use Weibo very often. e. CEO Involvement Haidilao’s CEO Zhang Yong did not continue to study after high school. Therefore, he may not know the classical way of doing business, let alone of doing public relations. However, Zhang has experiences doing many different kinds of jobs, such as a waiter and a deliveryman. He has developed a sharp business sense through years of interacting with customers. He also knows that employees are like the window of a company through which customers can see the company’s performance. Based on these experiences, Zhang Yong decided that the most 60 important stakeholders in his company were the employees and the customers. What’s more, the CEO kept his humility as a migrant worker, which made the company and its leader loved by the media and the government. Like most successful businessmen in 1990s China, he upholds some code of brotherhood, for example, by always taking responsibility when something goes wrong with the company so employees remain loyal to him. The book You Cannot Learn from Haidilao stated that, at first, Zhang Yong did not know whether what he did cultivated positive relationships with business management or helped with PR (Huang). He learned later that knowing people and doing good for people was the best way of doing business and PR, and this is one of the key reasons why Haidilao thrives. 61 6. Amazon Amazon (Nasdaq: AMZN) is an American international electronic commerce company based in Seattle, Washington. Having started as an online book store in 1994, it is now the world’s largest online retailer and sells almost everything one can find in a physical retail store (Loeb). Additionally, the company markets consumer electronics, such as the Amazon Kindle e-book reader and the Kindle Fire tablet computer, with the goal of optimizing sales of multimedia content via those devices. The company also is a major provider of cloud computing services. As an international company, Amazon has more than 13 separate websites in countries across North America, Europe, Asia, and Oceania (Amazon, Form 10-K). The company had 109,800 employees as of September 2013 (Protalinski). As an online retail company, Amazon’s primary way of communicating with its customers is through the Internet. The Internet has changed the methods of PR, especially for online companies that are housed on the World Wide Web. a. Corporate Social Responsibility Amazon has often been criticized as turning a “blind eye” to CSR. According to a 2011 report issued by Cone Communications, an agency that specializes in CSR, Amazon had “no CSR report, does not disclose GHG emissions to the Carbon Disclosure Project and was given an "F" by Greenpeace in a number of categories” (Is Amazon Beginning to Embrace CSR). However, according to the company’s website, Amazon is doing CSR throughout its production and service process: 62  The company’s buildings are environmentally friendly. Some of them, including four of the 11 Seattle Headquarters buildings, have been awarded LEED Gold Certification by the U.S. Green Building Council.  As an online retail company, all of Amazon’s consumer goods that are ordered online need to be shipped to customers’ homes. To make the shipping process more environmentally friendly, the company took the initiative to make frustration-free packaging. By avoiding plastic-coated wires and adhesive tapes, the company made sure that its packages are 100 percent recyclable. What’s more, Amazon is trying to persuade other companies to do the same thing with their packaging. The company reports that it has made headway with companies such as Philips, Polaroid, and P&G. It also tries to seek out the worst offenders of over-packaging and push them to make changes.  In addition to donating money to charities and disaster relief efforts, Amazon also started a website called AmazonSmile. The site, which offers an identical user experience to the original website, allows shoppers to donate a portion of their total purchase price to one of more than 1 million charitable organizations worldwide (AmazonSmile). Almost all of the products listed on the website are eligible, with the exception of digital products such as Kindle books. AmazonSmile does not cap donation amounts, so the more consumers buy, the larger the donation (Is Amazon Beginning to Embrace CSR). AmazonSmile allows the company to not only does charity itself, but also encourages its customers to be charitable in an easy way that can 63 generate pride. It seems that Amazon has implemented many CSR programs that fit with its business strategies. For example, the “frustrating free packaging” makes the shipping process easier and greener at little cost to Amazon; AmazonSmile uses Amazon’s own structure to make contributions to charities. Both programs could last for a long time since they benefit the company as well. However, some practitioners and scholars still don’t think Amazon does well in CSR. There might be two reasons for this:  Amazon does not fulfill some basic responsibilities. A company could have millions of ways of doing CSR, but if it does not meet basic requirements, the millions of efforts would be in vain. For example, Amazon does not disclose its GHG emissions to the Carbon Disclosure Project. As a company that relies on the shipping and logistics industry, Amazon’s greenhouse gas emissions index must be high, but it could publish the number and explain that the company has been doing things, including the “frustrating free packaging,” to reduce its environmental impact.  Amazon does not actively report on its CSR programs. According to the Guardian, although Amazon is a public company, it does not have a CSR report, which is quite rare (Gunther [2]). But not having a CSR report does not necessarily mean that the company did not do anything about CSR. Two takeaways can be gained from the Amazon case: it is important to fulfill basic requirements about environmental protection, employees’ benefits, and so on before 64 implementing other CSR programs. And informing others of what has been done is as important as actually doing it. Amazon’s competitive advantages as an online retailer are so formidable that the company may not have to worry as much about its carbon footprint or philanthropy. Or perhaps the company is too focused on increasing efficiency and services, that it sees reporting on CSR activities as a distraction. However, as the company continues to grow, pressures on Amazon are expected to grow as well. It’s to the company’s benefit if it were to implement and report upon CSR programs before activists begin questioning the company about its environment and social welfare efforts. b. Employee Engagement Amazon had 109,800 employees as of September 2013. That’s a huge team to manage, and while one might assume the company has effective ways of engaging employees since it is functioning well, media reports suggest that Amazon’s employee engagement may not come off as well as expected. In September 2011, an Amazon employee from its Breinigsville, PA, warehouse was interviewed on Pennsylvania’s Morning Call and criticized the company’s warehouse conditions and employment practices, saying that warehouse workers literally toiled in sweatshops where the temperatures could top 90 degrees (Gunther [1]). More recently, a BBC Panorama documentary shown in November 2013 claimed that Amazon exploited British warehouse workers. This documentary followed an undercover worker, Adam Littler, at Amazon's Swansea warehouse. Littler was shown wearing a "scanner" on his waist that tracked how fast employees 65 pick up items. The scanner bleeped if a worker made a mistake or was too slow. During the program, Littler was also shown jogging around Amazon's warehouse to collect items, clocking up almost 11 miles in a night. The BBC reported that tracking data is shared with managers who encourage slower workers to meet the higher "productivity targets" or else face disciplinary action (Ghosh). In its response, Amazon “strongly refuted” claims that it exploits its British employees, stating, “the safety of our associates is our number one priority, and we adhere to all regulations and employment law” (Ghosh). The company added that “Amazon has retained an independent expert who has visited our buildings and associates. In the independent expert's opinion, a picking role is similar to jobs in many other industries and does not increase the risk of mental and physical illness” (Ghosh). This response infuriated a lot of employees as well as the public. People may not really care if Amazon’s labor practices break the law or not. Employees need to feel respected, but Amazon’s response was seen as rather cold-blooded. In response to Pennsylvania Morning Call’s accusation, Amazon spent $2.4 million installing air conditioning at four warehouses including the Breinigsville facility. The company also reported investing $52 million in cooling all of its warehouses across the country in June 2012, an investment equivalent to over 8 percent of the company’s total 2011earnings. But again, the employees and the public did not appear to appreciate the gesture. First, the company made these investments only after the working condition in the warehouses was exposed. Making modifications after things went wrong is the way Amazon should have behaved; it’s totally 66 understandable that no one would appreciate it for its lateness. Second, Amazon’s statement about the investment was still seen as cold-blooded: “We made these changes to protect our employees and our products such as food and electronic equipment” (Gunther [1]). This statement may have made employees felt like they were merely as important as, if not less important than, the products, which was not acceptable. Based on these examples, it appears Amazon’s overall employee engagement strategies seem to be a failure. There are mainly two reasons for that. One is Amazon’s habit of appearing to be somewhat indifferent; the other is it may not be proactive enough in considering employees’ comfort in the workplace. This is surprising, as it’s coming from a company with such a strong record of efficiency and innovation. If Amazon believes that it can succeed without being as employee friendly as others, it may continue to experience unnecessary crises, which could further devalue the company’s CSR efforts. c. Crisis Management In the case of the warehouse expose, Amazon’s crisis management was not very successful; is the company more successful dealing with crises involving customers? In the summer of 2009, the rights holders of George Orwell’s 1984 and Animal Farm notified Amazon that illegal e-copies of the two books were being sold to customers with Kindle devices. After receiving the notification, the company removed the illegal copies from its systems and from customers’ devices, and refunded customers without any prior notice (Stone). This enraged customers. Amazon’s published Terms of Service Agreement for the Kindle did not give the company the right to delete purchases after they had been made; in fact, it states that 67 Amazon grants customers the right to keep a “permanent copy of the applicable digital content” (Stone). It is common sense that a retailer of physical goods cannot force its way into a customer’s home to take back a purchase, even if the product were bootleg. In Amazon’s case, some considered it rude for the company to issue refunds as if customers had asked for them. Realizing how rudely the company had behaved and how much damage the crisis cost to the company’s reputation, the CEO, Jeff Bezos, personally apologized for the incident as follows: “This is an apology for the way we previously handled illegally sold copies of 1984 and other novels on Kindle. Our “solution” to the problem was stupid, thoughtless, and painfully out of line with our principles. It is wholly self-inflicted, and we deserve the criticism we’ve received. We will use the scar tissue from this painful mistake to help make better decisions going forward, ones that match our mission” (Siegler). The company also asked customers who had purchased the deleted books to email a dedicated address to declare whether they would like another copy of the book or the $30 gift certificate or check. Amazon said the copies would be returned with annotations, perhaps in hopes of satisfying a student who filed a lawsuit against Amazon after he lost his class notes when the e-book disappeared (Krazit). Amazon could have checked its own system to find out who had purchased the e-books that were deleted. The company should have then written emails to those customers asking how they would like to receive compensation instead of asking the customers to write them an email. If the company had been more humble and considered its customers’ and employees’ standpoints, it likely would have solved its crises more effectively or maybe not had to face these crises at all. d. The Use of Social Media 68 Before 2011, Amazon was regarded as trailing in the industry of social media. The company had millions of customers and was a top online shopping destination, but those customers didn’t really connect with each other or with the company. During the 2009 crisis, @Amazon, the company’s official Twitter account, did not post a single post for four days after the New York Time exposed the deletion of the books. Amazon’s Facebook page did not have any posts about the topic other than user complaints. The company did not seem to care about engaging customers on social media platforms. In 2011, Amazon hired a director of social media, John Yurcisin, from WPP's Ogilvy &Mather to help the company come up with social strategies (30 Biggest Social Media Advertisers). Under Yurcisin’s leadership, Amazon got 3.3 billion social media impressions in 2012 and the company began to use Facebook as a way to drive customers with deals, sweepstakes, and giveaways. Since then, the online retail giant’s Facebook “likes” had grown to 22 million by 2013. Its social media channels have been more engaging and customer-centric, making Amazon’s Facebook account one of the most “liked” in the U.S (30 Biggest Social Media Advertisers). From the analyses above, it can be interpreted that Amazon is not doing well in public relations. It is not the most liked company from employee and customer points of view. However, the company’s business is doing well, and sales of Kindles were actually 60 percent more than anticipated in the year 2009. It seems that arrogance has been planted in Amazon’s corporate personality. The arrogance is partly based on the confidence that the company is the best in the industry. However, the best companies thrive because of customers’ trust and loyalty. Amazon 69 has learned from the crises that if it grows from being arrogant to ignoring stakeholders’ needs, it will fall from the altar. 70 7. Alibaba The Alibaba Group is a private group of e-commerce businesses including business-to-business online web portals, online retail and payment services, a shopping search engine, and data-centric cloud computing services (The Alibaba Phenomenon). In 2012, Alibaba’s B2B portal Alibaba and C2C portal Taobao together handled 1.1 trillion yuan ($170 billion) in sales, more than eBay and Amazon combined (The Alibaba Phenomenon). Alibaba was founded in 1999 in Hangzhou, China with the creation of Alibaba.com, a business-to-business portal designed to connect Chinese manufacturers with overseas buyers. Its consumer-to-consumer portal Taobao, the Chinese equivalent of eBay, features nearly a billion products and is one of the 20 most-visited websites globally. The Alibaba Group’s sites account for more than 60 percent of the parcels delivered in China (The Alibaba Phenomenon). AliPay (Zhifubao in Chinese), is an online payment escrow service provided by Alibaba. It accounts for roughly half of all online payment transactions within China. The vast majority of these payments are related to Alibaba services (Alibaba: The World’s Greatest Bazaar). According to CNN, Alibaba began exploring an IPO in the United States after a deal could not be reached with Hong Kong regulators in September 2013 (Wallace). While Founder and Chairman of the Board Jack Ma may have been an English teacher in the 1980s, he is now regarded as the greatest businessman in China, leading a highly admired company with 24,000 employees as of 2012. a. Corporate Social Responsibility Of all the Chinese companies examined in this thesis, Alibaba is the one with the most 71 Americanized CSR report. Its idea of CSR also appears to be the most advanced, from the point of view of integrating CSR into business strategies. According to its official website, at Alibaba, people believe that a CSR strategy can develop sustainably only when it is integrated into the company’s business model. The company believes that CSR is not a burden; instead, every corporation should find something in its business model that can incorporate CSR strategies. Alibaba also wants to convince its customers and partners that everyone has social responsibilities. In the age of the Internet, everyone becomes capable of fulfilling their social responsibilities (Alibaba’s Corporate Social Responsibility). The company believes that customers are the most important thing, followed by employees, and partners. It also believes that it is very important for a company to give back to society. As Chair of the Board Jack Ma said, “In the coming 10 years, Alibaba is going to serve more than 10 million small businesses as an e-commerce platform; it is going to create 100 million job opportunities globally; and to provide 1 billion customers with an efficient consumer platform. Meanwhile, Alibaba is going to be more focused on environmental protection. We will strive for a greener earth” (Alibaba’s Corporate Social Responsibility). Ma’s words are a great summary of what Alibaba does in CSR. This section will contain a more detailed analysis of the principles driving the company’s CSR programs.  Protect customers’ rights and guide responsible purchases Alibaba uses technology methods to protect consumer rights. According to the official website, since January 1, 2011, Alibaba had invested 0.2 billion yuan ($32 million U.S. dollars) to hire more than 2,000 people to monitor its platform for sham and shoddy commodities being 72 traded, making customers’ overall shopping experience satisfaction as high as 80 percent (Alibaba’s Corporate Social Responsibility). In addition to providing customers with a safe online shopping environment, Alibaba also tries to spread the idea of being good to its customers. The company’s platform uses technological methods to avoid dog meat, animal furs, shark fins, bear gall, and other animal products from being traded on its portals, as a way to protect animals. The company sets a higher bar than governmental regulations in banning commodities that might cause societal harm from trading on the platform. In addition, Alibaba launched a program called “Charity Babies.” Online merchants who take part in this program agree to donate part of their revenues to nonprofit organizations, and get a “charity baby” sticker on the description page of their participating commodities. Alibaba encourages customers to buy goods with the sticker so that they can make a difference while purchasing. By December 31, 2012, nearly 45 million customers had bought 110 million commodities with that sticker, generating 9.7 million yuan in donations.  Creating jobs and helping young people get jobs As of December 2012, Alibaba had created more than 10 million jobs in China, including the independent merchants and people who work directly for the company. Alibaba also provides entry-level and MBA-level online business courses so that people can learn how to do business without going to college. In a country that suffers from labor redundancy, Alibaba’s initiative not only helps young people find jobs but also helps the country by reducing the burden of creating jobs. 73 According to BBC, around half of the Chinese population are farmers (Chinese Rural Population). These individuals are typically not well-educated and tend to be behind market trends. For example, many farmers might begin to raise cows when they see the price of beef increase. However, due to supply and demand economics, the result of too many cows being raised automatically decreases the price of beef. Therefore, these farmers might never make much money due to their lack of anticipation. To solve this problem, Alibaba launched the “Taobao village” program to encourage farmers to sell their products through online platforms. This program not only widens the farmers’ market but also allows them to analyze what’s popular in the market by themselves. In 2011, there were a lot of bananas on the market in the province of Hainan, making the price of bananas extremely low. Knowing this situation, Alibaba established a channel on its website to sell the bananas to other provinces with higher prices. The farmers got money, people in northern China got access to high-quality bananas in winter, and Alibaba explored a new way of helping farmers. In addition, Alibaba encourages nonprofit organizations to open online shops on Taobao so that the millions of customers on the website can see the programs being undertaken by these nonprofits. If the customers like a program and want to make donations, they can use AliPay, which requires one click if the user have a Taobao account and does not generate additional costs. By the end of 2011, more than 100 million people had donated through AliPay, generate more than 73 million yuan ($12 million) for participating nonprofit organizations. As we see in the analyses above, all of the CSR programs implemented are based on Alibaba’s own services and technologies. The company does not incur additional costs since 74 these programs are integrated into the company’s existing business and technology models. Since the company began its way of doing CSR, it has actually helped a lot of people and generated its own positive reputation. More importantly, these programs are not one-off – they can last as long as the company exists. b. Employee Engagement Alibaba demonstrates that it values its employees through many employee engagement programs that make sure that employees feel positively about the company. When new employees come to the company, Alibaba assigns them a mentor who guides them throughout the first three years of work. This program not only ensures employees get familiar with the work process as soon as possible, but also builds an emotional bond among employees, which is highly valued in a Chinese working environment. Alibaba is based in Hangzhou, the city with the highest housing price in China. To help its employees buy houses, the company set up “iHome funding” to put down payments for employees at no interest. What’s more, Alibaba also negotiates with real estate companies to get the best rates for its employees. In addition, Alibaba tries to help employees fulfill their dreams about charity. The company encourages employees to choose one aspect of charity they are interested in, write proposals on how to implement programs, and trial operate the programs. Upon approval, Alibaba will fund such charity groups with 50 thousand yuan ($8.3 thousand) a year to support their programs. According to the company’s website, as of 2013, there are 11 charity groups running within Alibaba. This program not only cultivates employees’ management skills but also makes them 75 proud of making contributions to society. The self-founded organizations again help to build emotional connections between employees and the company. c. Crisis Management As an e-commerce portal, Alibaba has to deal with relationships with consumers as well as with independent merchants. Something going wrong on either side could trigger a crisis at Alibaba. In 2011, Alibaba found that over 2,000 independent merchants had swindled customers’ money during 2009 and 2010. It also found that some employees within the company actually helped the merchants doing the swindling. Alibaba became aware of this situation before it was disclosed to the public. The board asked then-CEO Wei Zhe and COO Li Xuhui to resign due to this management oversight. Then, in a letter to the public, Board Chairman Jack Ma wrote, “For such behavior that violates commercial integrity and the bottom line of our company values, any tolerance would be a crime to our customers and other employees. We must take actions to defend our values, all employees that were involved in this swindle directly or indirectly should assume responsibility for this. The managers of our B2B branch should take the main responsibilities” (Considerations of Alibaba’s Crisis Management). Alibaba took a proactive tone in managing this crisis. The company solved the problem even before the public noticed there was one. Then, two of the company’s core members resigned as a gesture of assuming responsibility. This fraud was actually a crime, but Alibaba stressed it as a violation of the company’s values, which indicated that the company valued integrity, and treated the situation as a low for the company. The resignation of the CEO and 76 COO was a great loss for the company, but it was a must to save the company’s reputation. Alibaba solved the problem of swindling seriously. However, at other times, the company has used a more relaxed tone to deal with crises, which in some cases allowed it to turn crises into opportunities. Since 2010, November 11 has become the “Chinese Black Friday.” On that day, Taobao usually generates more than 35 billion Yuan ($5.6 billion US dollars) in sales. In year 2013, the company’s communications team was so happy that it posted a Weibo on the official account saying, “Till now we have sold out 2 million underpants. If lined up, these underpants (could) be as long as 3,000 kilometers” (How Did Tianmao Promote through Crises). However, another account on Weibo did the math for Alibaba and figured out that if two million underpants lining up could be as long as 3,000 kilometers, then one individual pair underpants would be 1.5 meters long, which is obviously impossible. Other users on Weibo also doubted that the sales number was so carelessly counted and asked customers not to believe it. This post was so widely spread across Weibo that Alibaba was afraid that it would escalate into a crisis for the company. So, the VP and the official account responded to the Weibo at almost the same time. The VP apologized for the miscalculation and asked what size the person who posted the doubt on Weibo wore, since Alibaba planned to give him underpants as a reward for finding that mistake (How Did Tianmao Promote through Crises). The company’s official Weibo account, on the other hand, used Chairman Jack Ma as a shield, saying, “We’ve heard that Jack only got 1 point out of 100 in math in his first college entrance exam. In the second year, he got 19 out of 100. So please forgive us since if we are good at math, we won’t be able to join the 77 company” (How Did Tianmao Promote through Crises). This self-mocking kind of joke went viral on Weibo and people soon forgot the mistake the company had made but became more interested in the culture of the company. On the second day, the company’s communications team found that it could actually promote its company by mocking Jack Ma, so it created a series of dialogs to reveal how poor Ma’s math was. Again, these dialogs were a great success and went viral. Alibaba appears to have a thorough crisis management plan that puts crises in different categories, so that the communications team knows which attitudes to use when dealing with different crises. Alibaba’s guiding principle is that, no matter what crisis it faces, the communications team, as well as the whole company, should take the chance to spread its values and promote its brand image. d. The Use of Social Media Alibaba, along with its subordinate companies, has more than 10 Weibo accounts. The communications team is very good at engaging customers. However, what really makes Alibaba’s social media strategy stands out is its ability to create conversations and events. A review of Alibaba’s social media platforms shows that the communications team is good at generating conversations. Every day, the social media team will dig up what is hot on the Internet and try to find elements that can be integrated into Alibaba’s social media content. The ability to take advantage of these hot issues helps each of the company’s social media accounts generate millions of followers. However, what really appears to differentiate Alibaba’s social media platforms is its ability 78 to create events. For example, November 11 is known as “Chinese Singles’ Day.” On that day, some people celebrate their status as single; some people wish to meet their partners as soon as possible. In 2009, Taobao, a subsidiary of Alibaba, launched a discount event in order to “comfort those lonely people on this lonely day.” The event was promoted across its official website and social media platforms. Young people, single or not, flooded the online shopping portal to get discounted commodities. Since then, Taobao has made November 11 the shopping carnival in China. On that day in 2013, Taobao generated 35 billion yuan ($5.8 billion) in trading volume (including 5.35 billion yuan from mobile), which was equivalent to half of the country’s total volume of retail sales (Wang). Starting each October, all of Alibaba’s social media accounts begin to generate buzz for the sales carnival. These accounts continuously tell their followers what discounts they can get on certain commodities and that the number of commodities is limited. These social media accounts create an atmosphere of excitement and tension at the same time, making customers rush onto Taobao in the first seconds of November 11. Alibaba also took the initiative to spread its e-commerce business onto social media platforms. In May 2013, Alibaba spent $586 million to acquire 18 percent of Weibo’s shares, which indicated Alibaba would spread its business onto Weibo. On August 5, 2013, Weibo and Alibaba announced that the Taobao version of Weibo had been launched online. This cooperation allowed Weibo users to order commodities and make payments with their Weibo accounts. Online merchants could also post their commodities on Weibo and manage all their sales performances and comments on the site. Before this function was made possible, many Taobao merchants already posted their commodities on Weibo. If people liked these goods, they would 79 have to leave Weibo and go to Taobao to make a transaction. Alibaba’s initiative not only made its social media platforms more popular but also led the new trend of social media shopping. The key reason for the success of Alibaba’s social media strategy is that the company makes sure that all of its strategies fit into its larger business strategies and can deliver benefits for customers. 80 Chapter 4: Conclusions 1. Similarities Across Countries and Industries Based on the analysis of companies’ PR Practices in different industries in the U.S. and China, the author found there are some universal rules for great corporate PR practices: a. The companies with the best PR Practices, achieved their success by appearing to integrate the goals of PR and communication with the company’s financial and commercial strategies. b. Very few of the best practices were only about PR or Communications functions. They appeared to always involve the leaders of human resources, government relations, investor relations, marketing, community outreach, and other departments communicating consistently. So, most of the time, whether a company’s PR performance is positive or not may depend on how much influence the CCO has in the company, or how much the CEO recognizes the importance of aligning communications, including PR as part of the company’s performance. c. Traditional PR’s “best practices list” may no longer be as useful for today’s PR practitioners. Formal methods and systems of operating PR are valuable, yet may have limited impact on target audiences. Practitioners need to think of new ways that go beyond traditional methods of doing PR, which is very challenging. However, critical thinking, possessing business acumen, and taking a proactive point of view still remain to be core competencies in PR. d. Ethical practices should be considered the most important thing in excellent PR practices. Ethics lays the foundation for all other strategies and tactics. If a company cannot perform its PR ethically, not to mention practice its overall business strategies ethically, no matter how dazzling 81 the effects are, it will fail at the end of the day. e. Corporate Social Responsibility (CSR) has often been classified as a part of PR. Based on the cases examined, it appears CSR is becoming an especially effective way to improve corporate reputation by demonstrating the contributions companies can make to society as well as to the bottom line, while showing a constructive perspective of business. f. Social media for engaging stakeholders appears to have been embraced by almost all of the successful corporate PR practitioners whose companies were evaluated in this thesis. Social media can make “two way communication” possible, in that companies now not only push information out, but also can listen to stakeholders’ feedback, including their needs and comments. g. Almost all of companies that were considered appeared to have best practices in PR in place thorough their crisis management activities. The specific plans may be different, but the apparent core principles were the same: to react as soon as possible (not responding is also a way to react, but it must to be the result of a decision after thorough consideration); to represent the company, but speak from the stakeholders’ standpoint; and to use language expressing compassion. h. Employees are treated as assets in the most successful companies assessed here. They appear to be appreciated for more than just producing for the company, but representing it with activities such as spreading the company word on social media and interacting with stakeholders on a daily basis. i. In today’s more digitally-fueled targeted markets, some stakeholders are likely to be more 82 important to companies than others. Companies that demonstrate best practices in PR appear to have different strategies targeting different stakeholders. General, over-arching strategies are less likely to be effective any longer. 83 2. Different Practices in Two Countries PR practices in China and the U.S. have some distinct differences. In this section, the author will discuss the general contrasts in these two countries. a. The understanding of PR Because of the differing stages of economic development in each country, companies in one country may have totally different understandings of PR than in the other, including its function and how it may be valuable. In the United States, PR is considered a business function. It is used mostly to promote products and help companies build or maintain their reputations. It is a discipline that may be considered different from other functions, such as Marketing. So when measuring Key Performance Indicator (KPIs) of PR, U.S. practitioners may take “share of voice” into consideration rather than sales performance, which would be a marketing metric. In addition, strong PR practices may help companies maintain positive reputations, effectively deal with crises, and rebuild companies’ images when necessary. In other words, PR practices in the U.S. are primarily about companies’ reputation and image, which indirectly help the companies to grow their business. In China, although many companies have PR departments, most of them are likely to function as Advertising departments, with added responsibilities for social media. In the Chinese language, the word “public relations” is closer to “lobbying.” It’s not about an organization’s publics; instead, PR means that when a corporation has trouble, it should lobby the government or whomever exposed the crisis to stop the everlasting exposure. Just like “propaganda” in the 84 U.S., the word “public relations” in China is not always considered positive or neutral. Sometimes, it means that a company may resort to using whatever methods are necessary to get something from the government or other stakeholders. So the KPI for PR practitioners in China might not only include “share of voice” but also how many sales or real benefits a PR campaign can bring to the company. b. The most important skill for PR practitioners In the era of traditional media, writing was the most important skill for PR practitioners in the U.S. In the current age of social media, visuals are gaining momentum, although writing, or the ability to generate content, is still the most important skill a PR practitioner can have. Just as Seitel wrote in his book, “Even in the age of computer, writing remains the key to public relations. Public relations practitioners are professional communicators. And communication means writing” (Seitel 396). Clarity in writing, especially in a multimedia environment, will always be desirable. Meanwhile, in China, socializing is considered an important skill for public relations practitioners. Successful public relations practitioners are expected to know how to build guanxi, or interpersonal relationships, with their stakeholders. Chinese culture is relationship-oriented. Confucius emphasized the importance of personal relationships and the relationships among countries in order to build a harmonious society. Even today, people still utilize guanxi to expand their interpersonal networks to obtain various sorts of resources, and it is sometimes key for business success. In the case study of China Life, the author found numerous occasions in which guanxi had been used, which indicates that if a company has more interpersonal resources, there 85 is a greater possibility that the company will leverage the resources as assets in their PR practices. c. Differing perspectives on corporate social responsibility In the United States, Corporate Social Responsibility (CSR) may be considered a form of company self-regulation that has been integrated into business models. According to McWilliams, Siegel, and Wright (2006) “Business monitors and ensures that CSR actively complies with the spirit of the law, ethical standards, and international norms. In some models, a firm's implementation of CSR goes beyond compliance and engages in actions that appear to further some social good, beyond the interests of the firm and that which is required by law” (McWilliams, Siegel, and Wright). This opinion indicates that the ideal way of doing PR is to align a company’s business operations with its social benefits and then to think about charity. From the United Health and Starbucks cases that were analyzed, it was apparent that they tried to do good things throughout their business processes. Even Amazon focused on integrating its CSR works throughout its service processes. On the other hand, not a lot Chinese companies may think about CSR when considering their business strategies. Doing good for society is always considered the government’s responsibility rather than companies’. Moreover, Chinese people are taught that the dire environmental situation today has been caused by Western countries’ Industrial Revolution. Companies in Western countries have been emitting greenhouse gases for more than 100 years, and should be responsible for dealing with the resulting environmental pollution. Such things, learned from primary school, make Chinese business people feel protecting the environment is 86 not their responsibility. However, they still give money to nonprofit organizations and disaster relief activities since they believe that they will be admired if they take such actions and that such admiration eventually will one day transfer into improved business performance. d. Different Manners on Social Media Platforms Social media has become an important platform for two-way communication. With different cultural backgrounds and communications habits, companies in the two countries behave differently on social media platforms. Because of the U.S. Constitution’s First Amendment protecting free speech, American companies have gotten accustomed to critics of their companies. Therefore, when social media proliferated, companies leveraged it as a chance to listen to their customers, make explanations, and achieve progress. Although some companies sometimes disable the “comment” functions on their social media platforms, for the most part, large American companies are embracing social media as a valued communication channel. However, as seen with the China Life case, companies in China don’t really appear to clearly understand why they should utilize social media. Some companies may not be ready to accept public criticism; some may not know how to engage or communicate with followers. In China, it appears most companies still rely on one-way communications strategies on social media, hoping that followers will just read and compliment their posts but not debate with or criticize the company. For example, it seems that China Life dares not use the company’s name to register on Weibo. These concerns might also be one of the reasons why Wechat, a mobile text and voice messaging communication service launched in year 2011, became extremely popular 87 in China but has not yet taken off in the U.S. The difference between Wechat and Weibo (the Chinese analog to Twitter) is that Wechat allows companies to publish news on a certified Wechat account, as well as to chat with customers one-on-one. In that way, if the company is criticized, it is more like a private conversation rather than a humiliation in a broad public forum. As 2014 unfolds, Chinese scholars predict it will be a year of Wechat, and that it has become not worth investing in Weibo anymore (Tang). 88 3. Differences across Industries in Two Countries In reviewing the cases for this thesis, the author also analyzed companies in different industries, to determine if there were different practices due to the differences in each industry. Among the six companies that were analyzed, China Life was the only state-owned company; the other two Chinese companies were private, while the U.S. companies were all public companies. a. Public companies tend to practice PR in an organized way, which includes some government-regulation for investor communications. They must publish an annual financial report; they are supervised by board members; and they may be more careful than privately-held in dealing with crises, in order to not to affect their stock prices. In China, state-owned companies also are well organized. On one hand, since most of the state-owned companies in China are also public companies, they are supervised by shareholders. However, as state-owned companies, they also report to the government about their business performance. When there is a natural disaster, for example, these companies should be the first ones to donate money and organize aid groups. These companies are also concerned about crises that could negatively affect their reputation, since their image to some extent represents the government’s image as well. So when a crisis happens, state-owned companies may be more likely to cover a situation up than admit it and solve it accordingly. In China, private companies’ effectiveness in practicing PR are dependent on the level at which they emphasize the importance of PR. For example, Alibaba CEO Jack Ma is aware that his company’s business is based on its reputation, so he trained his communications team as the 89 most admired companies do. His company appears to have thorough crisis management plans; its CSR programs appear to all align with its business strategies. These reflect the degree to which the company values its reputation and ensures that Jack Ma and other C-suite executives are well informed about how to build and maintain the company’s positive reputation. Conversely, Haidilao does not appear to have a thorough PR plan, yet still manages its reputation well. Secondary research indicates that its theories about managing reputation stem from CEO Zhang Yong’s personal values. He may not even necessarily be aware that his employee management skills and his belief in serving customers have become the best PR tools for the company. No matter what attributes a company may have, to do beneficial things for key stakeholders as well as for society is a key to success for all companies. b. The Insurance Industry The insurance industry is not highly respected in both countries. And the analysis conducted for this thesis indicates that the respective companies’ PR practices are not the best among the three industries that were evaluated. Insurance is a necessary evil for all citizens. No matter to what degree a company is admired, people are still careful when they make buying decisions. Although a company’s reputation is extremely important, when it comes to customers’ own benefits, the customers would examine details of the benefits the companies provide carefully. At this time, brokers and word-of-mouth may actually be the most important things to attract potential customers. If insurance companies could more closely integrate their CSR practices into employee and broker relations strategies and then do something that benefits communities, the companies’ PR could be even more successful. Of course, to provide insurance products that 90 benefit policyholders when they are in need of help is another way of doing CSR. What’s more, companies like China Life may not care as much about their images as other companies do, since no matter what they do, people must still buy their insurance. However, a company’s reputation may be analogous to a bank account: if the expenditure (bad reputation) continuously exceeds the income (good reputation), eventually its image will be “bankrupt,” and people will abandon the company at the end of the day. c. The Food Service Industry It appears that early on, this industry learned about the importance of PR. The food service industry lives on reputation, and because of fierce competition, companies and restaurants regularly use PR to do promotions and to deal with crises. Food safety issues, government regulations, and employee dissatisfaction are three things that may trigger crises in the food service industry. If a company is exposed in one of these crises, the impact of the crisis may overshadow its CSR efforts, no matter how much CSR work it has done. With social media, the crises can become the topic of sustained conversations, beyond the company’s control. Reactions, such as boycotts, petitions and sales declines can then harass those companies for a long time. So, besides having brilliant promotions, companies in the food service industry must try their best to avoid crises, so that customers will continue focusing on the great products the companies provide. d. The E-commerce Industry This seems to be the only industry in which Chinese companies are comparable with U.S. companies in regard to PR practices. Because this industry is relatively new, companies in the 91 U.S. and China started at almost the same time, and along with the fact that C-suit executives in China nowadays are more educated in Western company rules, it’s not surprising that Chinese companies may perform at the same level as U.S. ones, at least in the field of PR. As noted in the case studies, the two companies in the e-commerce field appear to sometimes behave arrogantly. This may be a common failing among many tech companies, such as Apple and Netflix, which may be considered arrogant by consumers, but still accepted because these companies provide unprecedented technology experiences. However, people can still choose to patronize companies they find more considerate, which every tech company should consider when using PR to manage their reputation. Avoiding the perception of being arrogant would be very helpful, in addition to the sophisticated technologies these companies use to build their images. 92 4. Looking Forward: Advice for Corporate PR Practitioners a. Corporate Social Responsibility In the case studies it was apparent that most companies’ CSR activities included environmental metrics, such as reducing carbon emissions and efforts to make rivers clearer and the sky bluer. However, as extreme weather and natural disasters occur more and more often, companies need to consider ways they might help prevent natural disasters or at least make thorough relief plans, and integrate these into their business plans, since such disasters may affect companies’ suppliers, customers, or even their own operations. Preventing or mitigating natural disasters should not merely be limited to planning for CSR programs, but also seen as a way of limiting adverse effects to the companies directly. b. Employee Engagement Companies may engage employees in CSR programs by asking them to take part in volunteer work. It’s a great method to engage employees, but perhaps it’s time to engage in more interesting ways. For example, Alibaba’s initiative of encouraging employees to set up their own nonprofit organizations not only demonstrates the company’s unique CSR approach, but also provides a chance to cultivate its employees’ leadership and other skills that they might be not able to learn at work. c. Crisis Management Communicating with sincerity continues to be critical in crisis management. With the development of social media, companies are increasingly required to respond to consumers in a more timely manner, and to face stakeholders directly through all kinds of social media platforms. 93 Getting to know different stakeholders’ priorities, their presence on different platforms, and having a strategic response plan beforehand become extremely important. d. Social Media Performance Just as companies don’t run ads on all TV channels and in all newspapers, companies don’t necessarily need to maintain accounts on all social media platforms. As during the traditional media era, content, including written words and visuals, is still the most important thing driving communication via social media, even in paid posts and promotions. However, the most important thing remains finding where the stakeholders are, and finding ways to effectively engage them. 94 Appendix 1: Transcript of interview with Ying Dai, the chief new media officer at China Life Author: Thank you for your time in doing this interview, I really appreciate that. Dai: My pleasure. Author: First of all, congratulations! Now you are the first chief new media officer in China Life. It is a new founded department in your company, right? Dai: Yes you are right. The new media department in China Life was founded in October 2013. Before that our company has a Weibo account and a Wechat account. We do not manage those accounts by ourselves; we hired a vendor to help us with our social media content. Now we are still cooperating with that vendor, but we are more engaging in the decision making process on what to publish on our social media handlers. Author: When I was interning in China Life, there was a fear that the social media platforms would turn into a customer complaints platform. So the senior managers don’t want the company’s social media handlers to be popular. Is the situation still the same now? Dai: Well, as you know, insurance is not the most respected industry in China. Our customers don’t always understand us, and there are a lot of complaints. It happened before that when we promoted our new insurance product on Weibo, the comments and retweets were all negative. And that’s not what we want. As we are establishing the new media department, we hope that we can figure out a way to deal with this problem. Author: social media is a great platform that allows companies to communicate with their customers directly. China Life should seize this chance to build a more engaging and friendly 95 image among customers, but not to resist this trend. Dai: Yeah you are right. Author: Before the new media department, you were the head of the propaganda department, what were your major responsibilities there? Dai: Every state owned company in China has a propaganda department, and its functions are pretty much like the functions of PR department in the western countries. So when I was in the propaganda department, my major responsibilities were writing press releases, organizing CSR events, and dealing with crises. We build relationships with all kinds of media, especially those prominent financial presses. We also do media buying and put advertisements on media. Author: You talked about CSR. As far as I know, China Life devoted a lot of money and energy in all kinds of CSR programs. However, people don’t know a lot about your CSR efforts. How could that happen? You have a lot of media sources, and you are a state owned company, it’s very easy to spread your words out. Dai: You are right, we have a lot of CSR programs every year. We do good things, but we usually don’t tell people about those things, or all the feedback we get would be negative. Chinese people believe that it’s China Life’s obligation in doing good things, just as parents should pay for their children’s tuitions. It’s an obligation; we should do it, but never talk about it. Last year, we figured out another way to do CSR. We launched the program called “Building Dreams for Earthquake Orphans”, in which we asked our customers to do help those orphans with us. It’s turned out to be a great success: the customers helped us to spread the word out, it is more powerful than we talk about this, and customers’ testimony are less likely to generate 96 negative responses online. It’s our first time in engaging customers in our CSR programs, and we believe we can do better in subsequent events. Author: Let’s talk about crisis management. China Life encountered with a major CSR crisis last summer in Shanxi Province right? Dai: Yes, I remember you were interning in our office when the crisis broke out. One of our employees in Shanxi posted an article on social media, saying that China Life compelled the employees to buy the insurance products themselves. So the man turned to social media for help because no one heard his appeals through internal channels. The post went viral, and it had really bad influence on our company. The crisis could have been kept as an internal one if the communications between the headquarters and our branches were expedite. So when the scandal was exposed, we dispatched staff members from headquarters to those branches to listen to their appeals, and to make sure that things like this won’t happen again. We have learned from this, and we are making progress. Author: How do you see the future of public relations at China Life? Dai: We will leverage more on social media, of course. We will encourage two way communications, so that we know more about our customers, and our customers will understand us in a positive way. We will continue to implement CSR programs, and we wish more people would know about our efforts. Author: It’s a pretty realistic prediction, and I believe it will come true within your tenure. Thank you for telling me so many insights. Dai: You are welcome. Good luck on your thesis. 97 Bibliography “A brief history of Public Relations in China”, Chinapr.com, 15 Nov. 2012. Web. 21 Dec. 2013. <http://www.chinapr.com.cn/templates/T_Second/index.aspx?nodeid=23&page=ContentPa ge&contentid=868> “About”. UnitedHealth Group. Web. 24 Dec. 2013. <http://www.unitedhealthgroup.com/About/Default.aspx> “About us.” Haidilao Hotpot. 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Asset Metadata

Creator Xiang, Tiantian (author)

Core Title A comparison of corporate PR practices in U.S. and China: a case study approach

School Annenberg School for Communication

Degree Master of Arts

Degree Program Strategic Public Relations

Publication Date 04/29/2014

Defense Date 04/28/2014

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag China,corporate PR,excellent practice,OAI-PMH Harvest,Public Relations,U.S.

Format application/pdf (imt)

Language English

Contributor Electronically uploaded by the author (provenance)

Advisor Swerling, Jerry (committee chair), Jackson, Laura Min (committee member), Yang, Aimei (committee member)

Creator Email tiantianxiang0719@gmail.com,txiang@usc.edu

Permanent Link (DOI) https://doi.org/10.25549/usctheses-c3-405709

Unique identifier UC11296492

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Legacy Identifier etd-XiangTiant-2445.pdf

Dmrecord 405709

Document Type Thesis

Format application/pdf (imt)

Rights Xiang, Tiantian

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Access Conditions The author retains rights to his/her dissertation, thesis or other graduate work according to U.S. copyright law. Electronic access is being provided by the USC Libraries in agreement with the a...

Repository Name University of Southern California Digital Library

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