University of Southern California Dissertations and Theses

Through the application of international public relations, the Chinese government can neutralize the negative effects of the "made in China" stigma, thereby protecting China's national image

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Through the application of international public relations, the Chinese government can neutralize the negative effects of the "made in China" stigma, thereby protecting China's national image

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Content THROUGH THE APPLICATION OF INTERNATIONAL PUBLIC RELATIONS, THE CHINESE GOVERNMENT CAN NEUTRALIZE THE NEGATIVE EFFECTS OF THE “MADE IN CHINA” STIGMA, THEREBY PROTECTING CHINA’S NATIONAL IMAGE by Ao Kong Copyright 2008 Ao Kong A Thesis Presented to the FACULTY OF THE GRADUATE SCHOOL UNIVERSITY OF SOUTHERN CALIFORNIA In Partial Fulfillment of the Requirements for the Degree MASTER OF ARTS (STRATEGIC PUBLIC RELATIONS) December 2008 ii Acknowledgements I would first like to thank those who agreed to be interviewed for this thesis’ primary research section, including Dr. Dennis Schorr, Jian Wang, Professor Mike Chinoy and China expert Eric Olander. My sincere gratitude also goes to my committee members, Michael Parks and Sriram Dasu, as well as to my committee chair, Jennifer Floto. Thank you all for your valuable comments, questions, input and encouragement. I also want to thank my parents and my fellow friends Susan and Anty Ma for all of their help in inspiring me with new ideas and different perspectives during my research, and for supporting me as always to pursue my dream of being an outstanding public relations practitioner. iii Table of Contents Acknowledgements iii Abstract v Chapter 1: Introduction 1 1.1 Introduction 1 1.2 International Public Relations and its Domain 3 1.3 Definition of National Image 4 1.4 High Involvement of the Chinese Government and Communist Party in 5 Chinese Economy 1.5 The Importance of International Public Relations to China 6 1.5.1 Challenge from Globalization 6 1.5.2 The Importance of Soft Power 6 1.5.3 The Clash of Information Monopoly in the New Information Era 7 Chapter 2: Literature Review 9 2.1 The Country-of-Origin Effect 9 2.2 China’s Unfavorable National Image in American Media 11 2.3 China’s Difficulties in Practicing International Public Relations 12 2.4 The Perception of “Made in China” in the Eyes of Western Branding Professionals 14 Chapter 3: Primary Research 15 3.1 Product Quality Scandals associated with “Made in China” 15 3.2 The Stigma of “Made in China”: News Coverage Content Analysis and a Public Poll 16 3.2.1 Public Poll 16 3.2.2 Content Analysis on News Coverage from Three Major American Newspapers 17 3.3 Response and International Public Relations Campaigns from the Chinese Government 20 3.3.1 Campaigns to Address the Quality Problems 20 3.3.2 Media Campaigns 22 3.3.3 Strategic Public Relations Steps 23 3.4 Old-fashioned Methods of Accusing Foreign Media and Domestic Media Control 25 3.5 Feedback and Comments from the Media and Public 26 3.6 Comments and Suggestions: Eric Olander Interview 30 iv 3.7 Digest of Eric Olander Interview 33 3.8 Comments and Suggestions: Professor Mike Chinoy Interview 34 3.9 Digest of Mike Chinoy Interview 37 3.10 Dr. Dennis Schorr Interview and Digest 38 3.11 Dr. Jian Wang Interview and Digest 40 Conclusion 43 Bibliography 48 v Abstract A series of quality problems of Chinese-manufactured products in 2007 was a major crisis in China and attracted extensive international attention. As the chaos gradually settled down, many questions remain, for instance: does the issue have a long-term impact on the “Made in China” label or China’s national image? How much progress has the Chinese government made in handling crises after the 2003 Severe Acute Respiratory Syndrome (SARS) crisis, the milestone that made Chinese officials recognize the importance of international public relations? This thesis explores the stigma of the “Made in China” label and the public relations practices implemented by the Chinese government during 2007. It also examines global marketing and consumer behavior theories that explain the reason individual product incidents can damage the country of origin’s image and affect its long-term economic development. The thesis provides suggestions for the Chinese government to better handle crises and build a more favorable national image by utilizing international public relations strategies. 1 Chapter 1: Introduction 1.1 Introduction As the only Chinese student in the 2006 strategic public relations program at the University of Southern California, I am very concerned about China's image among American media and publics, and how I can apply the sophisticated public relations strategies I have learned in the United States to contribute to my home country. I realize there is a huge gap between what the Chinese are expecting and trying to show and what is perceived here in America. Where does the problem stem from? This is a good opportunity for me to utilize my thesis to further explore this phenomenon and hopefully offer a good solution to this breakdown in communication. A series of Chinese-manufactured product quality scandals in 2007 generated considerable and long-lasting concerns. in the United States and other countries. According to 24-Nation Pew Global Attitudes Survey (Pew Research Center, 2008), “in 19 of 24 countries, at least half of those surveyed say Chinese products are generally less safe than those produced elsewhere. There is a consensus throughout 2 much of the West that Chinese products are not as safe” (p.49). In the current global market, products made in China are ubiquitous, yet why did the individual incidents cause such a huge stigma on the “Made in China” as a whole? How did the Chinese government handle the crisis and was that effective? I started my examination and found out the relationship between countries’ images and the perception of their products, and the gap between assumed successful public relations practices by China, and the mainly negative feedback from America are all keys to the lingering product stigma. Although China’s exports were not directly affected by the 2007 product quality crisis (David, 2007, p. C1), “China's favorable ratings (have been) slipping further since 2006… people around the world have growing concern about China's growing economic power and the impact it is having on the well being of other nations”(Pew Research Center, 2008, p.39). The Chinese government should realize the importance of international public relations in all aspects of protecting China’s national image and winning the battle in the international public opinion court. Moreover, while the current top priority for China is to advance its ability to manage crises and sustain an economic boom, it is also urgent for Chinese officials to reform deeply-rooted social problems and secure the country’s long-term development. Case studies and research in this thesis focused on how the Chinese government interacted with American media and public during and after the period of “Made in 3 China” product quality scandals in 2007. The thesis is not all inclusive of Chinese international public relations practices; however, the lessons presented in these examples can help people better understand my objective and the overall concept. 1.2 International Public Relations and its Domain According to Dennis L. Wilcox (2005), “International public relations is an organized effort to establish mutually beneficial relations within nations”(p.378). Generally speaking, international public relations activity is divided into two categories: one is pursued by enterprises and the other is conducted by governments. A popular definition of governmental international relations from Hu Ning Sheng (1994), a Chinese scholar, is that in the process of international communications, governments adopt well-planned public relations strategies to achieve their goal of building positive national images and gaining understanding and support from external publics (p.178). Key elements involved in this concept are listed below: 1. The international public relations environment, which mainly includes: the target country’s political system, foreign policies, laws and regulations, educational level, religious belief, language and values. 2. International publics, including aspects such as their characteristics, psychology, behavior. 4 3. International communications, including cross-cultural communications, the way foreign media operate, and related strategies. 4. Public relations activities, such as campaigns targeting foreign publics, press conferences and events targeting foreign media. 1.3 Definition of National Image National image is a complex concept that no agreement on its definition has been reached among academics. A widely-accepted definition in the western world is that national image contains four dimensions: political, economic, technological and social desirability (Martin & Eroglu, 1993, p.193). It is “as the total of all descriptive, inferential and informational beliefs one has about a particular country” (Johansson & Moinpour, 1977, p.65) A popular theory in China was proposed by Sun You Zhong (2002), a professor at Beijing Foreign Studies University. He said that: National image is people’s systematic perceptions of a nation’s politics (including government's image, diplomatic ability and military affairs etc.), economy (including financial capability, average living standard), society (including the social security, stability, and nationality, etc.), and culture (including technological capability, education, cultural heritage, and values etc.) (p.16) National image can form from a direct experience with the nation, such as living in or traveling to the country. It can also be obtained from outside sources, such as media and word of mouth. Moreover, it could be inferred from experiences related to the country, such as the impression of the products from that particular country. More 5 often, however, foreign publics don’t have a direct experience with the particular country, so national image becomes the images presented by foreign media and accepted by foreign consensus. Thusly, national image essentially depends on the nation’s real situation, and can be manipulated to a certain extent, which indicates international public relations can play an important role in managing and the shaping national image (Xu, 2000). 1.4 High Involvement of the Chinese Government and Communist Party in Chinese Economy Elizabeth, C. Economy (2007), Senior Fellow and Director for Asia Studies of Council on Foreign Relations noted that Since 1945 when the People’s Republic of China was founded by the Chinese Communist Party (CCP), the country’s economy was tightly controlled by the central government and guided by the Communist Party. The turning point of Chinese economic development came in 1978 when Deng Xiaoping became the unofficial leader of the nation. In an effort to encourage economic growth and increase the standard of living among Chinese people, Deng instituted a series of reforms that overhauled Maoist policies concerning China’s economy. It was during these reforms that China moved away from the traditional communist style command economy and began to participate in world markets. International trade along with foreign investments invigorated the Chinese economy and brought revenue to the starving nation. The Chinese dual track economic system, in which state owned companies cooperated with privately owned enterprises, promoted technological advancements and the diversification of industry. [However,] there is still a large portion of the Chinese economy that is state directed…The government keeps a big finger in the economic pie. Therefore, when issues such as 2007 “Made in China” product quality scandals presented a threat to the country’s exports and economic development, Chinese officials and CCP were more concerned and involved than other nations’ government and parties would have been in the same situation. 6 1.5 The Importance of International Public Relations to China 1.5.1 Challenge from Globalization Australian scholar Benno Signitzer and American scholar Timothy Coombs (1992) asserted that wide participation of the 21st century public in international affairs has been promoting the development of international public relations. Thus, it is becoming more meaningful for governments to build a strategic and direct relationship with the international public (pp. 137-147). Building a positive national image is essential to preventing a developing country’s culture from being marginalized. Nowadays, the maintenance and development of national culture heavily depends on its position on the stage of international communications. As described by Sewpaul (2006), “the potential to dilute or even annihilate local cultures and traditions and to deny context specific realities…the effect of dominant global discourses can cause individual and cultural displacement”(pp.419). An unpopular national image will drive a given country’s culture and business ties out of the international mainstream, while other popular cultures keep invading this marginalized nation. Therefore, national image is crucial in terms of protecting its national legacy. 1.5.2 The Importance of Soft Power In the context of international relations theory, Joseph Nye (2004) introduced the term, soft power, to describe “the ability of a political body, such as a state, to indirectly influence the behavior or interests of other political bodies through cultural or 7 ideological means” (p.25) Non-military factors such as economy, society and culture, are obviously strengthened in current international relations, therefore, the importance of “soft power " is rising. National image is an important component of soft power, and an important intangible asset of a country. On one hand, soft power plays an important role in a nation’s crisis management. Robert Jervis (1970) said that the reputation of a nation could support it to get over the hard times of crisis, and scholars such as Peter Van Ham (2001) pointed out the influence of national image on building international cooperation and organizations. On the other hand, “consumers exhibit varying predispositions towards products originating from certain countries. National characteristics are the basis for evaluating products, attributes and brands, before consumers have direct experience with them” (Zhang, 1996, pp.266-287) . Therefore, a positive national image gives the country a competitive advantage in the international economic competition by gaining favor from the publics toward the nation’s products or services offered. 1.5.3 The Clash of Information Monopoly in the New Information Era In the new media era, the longstanding information monopoly in China no longer works for either its internal or external publics. The Chinese government should make more effort in a strategic way to get their messages out. 8 There were already more than 200 million internet users in China by 2005, and the number has been growing dramatically. Blogs, online discussion boards and user- uploaded videos enable the public to directly participate in the discussion of international affairs. Meanwhile, by gradually penetrating Chinese mass media formerly controlled by the state, private investors and foreign media tycoons dramatically liberated the nature of them (Majid, 2004). Almost all of China’s major TV stations have been using content provided by independent private producers. Many major newspapers, including People’s Daily, controlled by Chinese Communist Party, use their web pages to cover controversial issues not normally allowed to be featured in the traditional media. In addition, wider audience participation on live call-in radio and TV programs has introduced an unprecedented level of free thinking and speaking into broadcasting (Zhao, 1998, p.156). The new environment, though still under censorship, has encouraged topics that were previous taboo to inch its way into the public forum. Booming internet usage in China has been broadening people’s access to a wider range of information resources not open to the public before. In order to communicate with international public effectively the Chinese government has to keep abreast with the new media evolution. 9 Chapter 2: Literature Review 2.1 The Country-of-Origin Effect The paper "Countries and their products: A cognitive structure perspective” (Shimp, Samie & Madden, 1993) introduced the concept of “country equity,” which was defined as “that portion of consumer affection toward a brand or product that is derived purely from the product's associations with a particular country” (p.323). There are several associations that arise from the consumer's overall perception of the “country-related intangible assets, such as technical advancement, fame, workmanship, creativity, design, and service” (Kim & Chung, 1997, pp 361-386). This perception makes consumers believe there is something special about the products from a particular country (Bilkey & Nes, 1982). 10 Especially, when considering the purchase of safety or health-related products, such as automobiles and food, consumers are more concerned about the country-of- origin’s image. When they see the country’s strengths are applied to products that it is known for, this “product-country image” will be positive. For instance, Japanese electronics, French fashion products, and German automobiles represent a favorable “product-country image” match (Roth & Romeo, 1992, pp. 477-497). While a country’s image is shaping the perception of its products, it can also be the other way around: country’s image, like brand name, can be viewed as “a summary construct,” which is defined as “consumers recode and abstract individual elements of information into higher order units or chunks” (Simon, 1974, pp.1-23). This summary construct theory implies that consumers make abstractions of product information into country image which, in turn, “directly affects consumer attitude toward a brand from the country instead of affecting it indirectly through product attribute rating” (Wright, 1975). According toLevy’s international marketing theory (Levy, 1991) on marketing stages in developing nations, Original Equipment Manufacturer (OEM), “a cheap source of goods to be labeled abroad” (1991, p.34) is the first stage. Relying on imperative and uninhibited development of low-cost technology capitalism, China currently has become the global OEM production center, especially since its inclusion in the World 11 Trade Organization (Hu, 2008). Therefore, “Made in China” is a symbolic brand representing all its exports. Consumers, influenced by the “summary construct” psychology will assume all “Made in China” goods have very similar product attributes. Therefore, individual cases such as product recalls of China’s exports could contaminate “Made in China” as a whole, and impact the development of China’s country equity. 2.2 China’s Unfavorable National Image in American Media At the 2006 China International Public Relations Conference, Wang Guo Qing (2006, June 22), deputy director of the State Council Information Office of China, released statistical analysis on how China was portrayed in American media: Among the 243 pieces of news randomly picked from coverage on China- related issues in 2005 from three major newspapers in the United States of America, Los Angeles Times, New York Times and Washington Post, that covered China-related issues, 64 pieces were objective news that described the fact itself; 83 items were negative news that purely blamed China; and 96 pieces were balanced reporting that represented both sides of the story…China’s national image had changed a lot since the 1990s, around the time of Tian’anmen Square Issue, when negative news reports about China were up to 60%-70% of regular coverage. The fast growth of China’s economy has enticed huge interest by American media. Quotes from China’s central government have obviously increased, but negative reporting still accounted more than 30%. The negative American media coverage does not only contribute to an unfavorable Chinese national image in the United States, but even worse, it also places political pressure on China. Robert Kapp, former president of the US-China Trade National Committee, described how the American media caused a crisis in Sino-American relations: 12 When certain American reporters criticized certain Chinese policies, such as environmental and human rights issues, their articles would get the attention of United States Congress. After that, the Congress started discussions on the problems and gave Chinese government political and diplomatic pressure. In that situation, China usually prone to launch a counterattack, and the conflict thus began and last from four to six months. (Li, 2005) In the process of opening up to the world, the Chinese government is facing more and more international public scrutiny. Carrying on an effective communication with the international audience will help build a positive national image. Chen Yao Chun (1999), a Chinese scholar who has been researching Chinese government public relations, believes that China lacks experience in governmental international public relations research and practices: for instance, China has no plan on how to manage its image and it does not know how to communicate with western media. All communications must go through the official diplomatic channels and this often times makes the situation worse. Based upon the previous research, the Chinese government should learn from its latest international public relations problems and position itself better by proactively setting and advancing its own agenda. 2.3 China’s Difficulties in Practicing International Public Relations China’s difficulties in practicing public relations and communication marketing are based on many cultural, historical and economic reasons. 13 One fundamental problem is the lack of international public relations knowledge and experience in China in terms of directly working with international media. The phrase “public relations” was first introduced into China in 1984, but not until recent years, particularly in 2002 did “SARS, activism in Asia and corporate governance lead to the public relations profession getting more seriously involved in corporate issues and giving serious advice” (Toth, 2003, July). Therefore, when facing crises, China was used to either hiding away from or playing tough against the western media; consequently, it hardly had its voice heard. According to the findings from the 2004 Chinese Crisis Management Conference brief (2004, October 1-3), problems also lie in the Chinese political system. Approximately 50 experts on China worked together to understand the Chinese central government’s decision-making process to deal with crises. The conclusion they drew from their research findings are the following: • Chinese Communist Party (CCP) decision-making is based on consensus opinion within the party. This cumbersome method can result in paralysis and does not allow Chinese leaders to react quickly to crises. • The decision-making process within the CCP is compartmentalized and opaque, even to lower-level Chinese officials. Also, officials are reluctant to give the CCP “bad news.” This has led to incomplete or incorrect information being passed to high-level decision-makers. • The signals sent by the Chinese government, both to domestic and foreign audiences, are not as clear-cut as the government believes them to be. • China’s crisis management strategy is geared towards obtaining the maximum political advantage for China, as opposed to resolving the crisis. China tries to define the crisis on its terms in order to shape the resolution favorably. 14 2.4 The Perception of “Made in China” in the Eyes of Western Branding Professionals Even before the 2007 product quality incidents and in the eyes of western branding professionals, “Chinese brands had been suffering from negative perceptions, and perhaps, negative realities” (Swystun, Burt & Ly, 2005). In 2005, Interbrand, one of the largest international branding consulting firms, conducted “The Chinese Brand Survey”. This online survey of 243 western branding professionals were very similar in attributing “Made in China” as “cheap, poor value and poor quality; attributes like prestige, trust and safety were the least associated with Chinese brands ” (Swystun, Burt & Ly, 2005). At the end, the Interbrand report (Swystun, Burt & Ly, 2005) suggested that “Chinese brands were competing solely on tangible dimensions like quality and price and they wouldn’t compete more effectively until they inject personality and emotion into their products and services.” 15 Chapter 3: Primary Research 3.1 Product Quality Scandals associated with “Made in China” In 2007, there were highly publicized quality issues, product recalls and import bans initiated by the United States, Canada, the European Union, Australia and New Zealand against products manufactured in and exported from China. The first big problem discovered in May, was when pet food from China that was contaminated by melamine sickened and killed thousands of pets. Then, in August and September, toy manufacturing giant Mattel recalled more than 18.6 million toys manufactured in China because of toxic lead paint and loose magnets both of which are extremely dangerous to children. It was the biggest recall in Mattel’s history.” (Ogando, 2007) The Toy Industry Association reported that in 2007 the lead paint problem associated with “Made in China” has also plagued most big toy manufacturers such as RC2, Corp, Hasbro, Bindeez, Marvel Toys, and Dolgencorp (WCPSC, 2007, July 19). “The number of Chinese-made products recalled in the United States doubled in the last five years. Chinese imports accounted for more than 60 percent of the recalls announced by the Consumer Product Safety Commission and 100 percent of the 24 toy recalls in 2007” (Crutsinger, 2007, July 6). 16 Moreover, the list of Chinese exports found to be contaminated expanded to seafood, dumplings, vegetables and toothpaste. In Panama, Chinese glycerin contaminated with diethylene glycol (DEG) caused several deaths (Lumpkin, 2007, July 18). As stated in the testimony before United States Senate, Murray M. Lumpkin, M.D.(2007, July 18), Deputy Commissioner of International and Special Programs in 2007, “chemical counterfeiting generally and DEG-contaminated products specifically coming from China have been, and still are, on-going concerns for the U.S.” 3.2 The Stigma of “Made in China”: News Coverage Content Analysis and a Public Poll The growing alarm over products made in China spread throughout the western world and tainted the reputation and trust of the products bearing the label. 3.2.1 Public Poll An October 2007 survey of 1,000 consumers conducted by Amplitude Research and University of Michigan reflected Americans' perception of “Made in China” products, after the series of product quality problems. • A majority (55.2%) agree with banning imports from China until safety can be assured. • 47.8% of consumers note that they have stopped buying some products after discovering they are manufactured in China. • Only one in five of the consumers surveyed (19.4%) felt that recent news stories on the quality and safety of Chinese imports are unfairly portraying China as the biggest offender. • 83.2% of consumers agreed that laws should be passed requiring adequate testing of all imported products for safety. This question resulted in the highest level of agreement among respondents of all questions on the survey. 17 3.2.2 Content Analysis on News Coverage from Three Major American Newspapers In 2007, the American media extensively covered the “Made in China” problem. The author was aware of the fact that television reports with sensational shots on this issue were very influential, however, due to the difficulty in finding TV programs from the past, the author only conducted an in-depth review and content analysis of online versions of news coverage about “Made in China” quality problem, in 2007 New York Times, Washington Post and USA Today. Though it was hardly the whole picture of American media reporting on this topic, the content analysis can serve as a reference to extrapolate the mainstream American print media’s general attitude towards it. The author conducted internet research with different key word combinations using the search engine on the above-mentioned three major American newspapers’ websites respectively. News articles that included key words: “China 2007 and toys/ lead paint/ food/ pet food/ toothpaste / pharmaceuticals/ recall /quality” were reviewed and all the irrelevant and repeated results were deleted. To measure the research results, the author defined a complete condemnation of all China-made products as negative news, whereas reports that talked about specific quality issues or included explanations from China as balanced/ objective news. Findings in New York Times There were 68 news articles that matched the search criteria. Among them, 39 were balanced/objective reports and 29 were negative. 18 One example of negative reports would be a lead of the article “Dancing Elmo Smack Down” in the July 26, 2007 edition: “the recent wave of recalls and warnings from China has ignited worldwide concern about the safety of Chinese products, potentially mucking up a global system built, in large part, on outsourced manufacturing.” Another lead of a negative article “What's a Parent to Do?” in the September 29, 2007 issue read: “in an effort to offer some guideposts for parents, retailers like F.A.O. Schwarz are highlighting countries of origin of their merchandise.” An example of negative headlines would be “As More Toys Are Recalled, the Trail Ends in China” in the June 19, 2007.edition. A piece of neutral news would be the article “Putting Playthings to the Test” in August 29, 2007 issue which said, “The alarm bell went off for Mattel just as it was preparing to announce that it would recall 1.5 million Chinese-made toys tainted with lead paint.” Another balanced story would be the article on August 23, 2007 entitled “Scandal and Suicide in China: A Dark Side of Toys” that questioned if the toy quality problems were rooted in the western companies squeezing their Chinese contractors too hard. Findings in Washington Post There were 77 news articles that matched the search criteria. Among them, 37 were balanced/objective reports and 40 were negative. One especially inflammatory article appeared on May 7, 2007, named “The Risk 19 with China.” It stated: “The issue of tainted food given pets and other animals and related articles about China's food production standards should give pause to the free-traders who appear to be willing to sacrifice human...” Another negative headline was “A Country on the Edge; An expert sees danger in China's weakness, not its strength.” on September 30, 2007. A balanced story would be the article on October 30, 2007 entitled “Chinese Arrest 774 In Product Crackdown; Attempt to Calm Importers' Fears”, that somehow acknowledged the efforts that the Chinese government had made to address the issue. Findings in USA Today There were 69 articles that matched the search criteria and only 20 of them were balanced/ objective. A balanced article on June 13, 2007 edition read “China promises safe food products for '08 Olympics; Plays down international concerns over safety record.” Examples for negative headlines would be the one on August 3, 2007 “Lead use can be accidental -- or not”; or “Recall of more China-made toys unnerves parents” on August 3, 2007; and the one in the June 18, 2007 edition “China balks at lead limits.” Most leads of the articles were also negative. For instance, the lead in the August 3, 2007 USA Today said “All are beloved children's characters that were licensed to toy manufacturers who contracted with companies in China to make the toys. 20 And all have had those toys recalled;” and another lead on August 15, 2007 “A rash of recalls is feeding a growing consumer fear of all products -- particularly seafood, pet-food ingredients and now, toys -- that carry the stamp "Made in China." Based on the findings from the aforementioned print media content analysis and public poll, the growing stigma of “Made in China” has escalated. 3.3 Response and International Public Relations Campaigns from the Chinese Government In response to global accusations, Chinese officials launched a series of campaigns to deal with both the real quality problem and national image problem. 3.3.1 Campaigns to Address the Quality Problems The State Council of China, the chief administrative authority in China, announced in May 2007 that all food manufacturers were under immense scrutiny, and those that did not meet the standard would be shut down and blacklisted on the administration’s websites. In addition, a new system was installed for certifying the quality of toys. In Guangdong, the center for toy manufacturers, the provincial government conducted a series of well-publicized raids on toy factories, and due to their quality problems, more than 700 export licenses were revoked. Meanwhile, the Chinese press published 21 a myriad of stories about improvements in the quality and inspection of Chinese toys (RadioFreeChina, 2007). On July 10, Zheng Xiaoyu, chief of State Food and Drug Safety Administration, was executed after being found guilty of taking bribes worth some 6.5 million yuan ($850,000) to approve fake and unsafe pharmaceuticals and foods. “Zheng's execution marks the first time China has imposed a death sentence on an official of his rank since 2000.” (China Daily, 2007, July 10) In September, a Cabinet-level panel led by China’s Vice-Premier Wu, Yi (2007, October 10) started a four-month nationwide campaign to improve product quality and official supervision. Targets in the campaign included catering businesses, pharmaceuticals, agricultural products, food processing, toys, electrical wires, and all the imports and exports, especially those concerning public health. She also declared that the State Council of China “set up a system that would force local governments to sponsor and oversee quality-control training for enterprises. If a product quality problem emerges, local governors who are in charge of the industry will also be punished (Wu, 2007, October 10). 22 3.3.2 Media Campaigns A series of public relations initiatives were also on their way, and the first wave was a high-profile media campaign. On July 10, 2007, the Embassy of the People's Republic of China in Washington D.C published an advertisement on Page 11A of USA Today, with the headline “We're addressing safety,” that addressed the public’s safety concerns: Chinese food products are exported to more than 200 countries and regions. More than 99% of Chinese food exports have met safety standards over the past two years… The Chinese government takes seriously the feedback from importing countries… [The government] has clarified the causes of recent incidents... [and] has taken measures to ensure that products are safe. (Wei, 2007, July 10) The advertisement provided detailed investigational information and an explanation of the causes of the product quality incidents. At the end, it stated: Isolated cases should not be blown out of proportion to mislead the public into thinking that all food from China is unsafe… Our government asks countries that import our products to treat Chinese exports in a scientific and fair manner and work with us to address the issue. On August 19th, 2007, Li Chang Jiang (2007), the director of the General Administration of Quality Supervision, Inspection and Quarantine of China, held a media conference to respond to international media inquiries related to the product quality crisis. In his comments, he cited a series of statistics that showed the steady rise of quality exports from China: “from 2004 through the first half of this year, 99% 23 of Chinese food exports to America have met quality standards, and 99.8% of food exports to Europe and Japan have met quality standards”. He also noted that China did have strong safety standards, and problems at a few companies shouldn't be used to paint the whole country's products as unsafe. He emphasized that it would be unfair for well-regarded Chinese companies to suffer in the backlash against the “Made in China” label. “Though within China, reports on the scandals have been restricted, a great number of overseas media have been reporting on faulty Chinese goods. The overseas reports have already begun to have a political impact inside China” (Xue, 2007, Aug 27). To address the concerns from the domestic public, also starting August 19, China Central TV, the state broadcaster, launched a week-long special series of primetime documentaries on its Economy Channel: The series was collectively titled "Believe in Made in China," and included episodes such as "Trace the Source of Made in China," "Experience Made in China," "China's Top 500," and "Foreigners Buying Chinese Products." Each segment was 90 minutes long and included praise for and illustrations from Chinese officials, foreign enterprise executives, industry experts, and chamber of commerce representatives. All of whom endorsed “Made in China” products and called on the Chinese people to restore confidence in the country’s manufacturing ability (Xue, 2007, Aug 27). 3.3.3 Strategic Public Relations Steps A series of strategic public relations steps were taken by the Chinese government, starting with reaching out to international opinion leaders. In November 2007, the 24 General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) of China in cooperation with the World Health Organization, a high-level food safety forum was held in Beijing. More than 300 governors from more than 40 countries in the US, Europe, Japan and 20 international organizations were invited to attend the conference to discuss food safety and consumer protection issues. Li Chuanqing, assistant Commissioner of Quality Surveillance Examination Quarantine Bureau of China, made a speech including typical public relations messages. He first stressed China’s sincerity to solve the problem: The Chinese government cares about product safety. China is willing to take the responsibility of protecting consumer’s well-being,” he told the conference. Then he shifted the focus by advocating that “the consumer products’ safety should be a shared responsibility that calls for international cooperation…one common problem came from the lack of communication between the Chinese manufacturers and the foreign designers and importers (NLPEKAGR, 2007, November 26-27) Meanwhile, international PR consulting agencies were hired to advise Chinese senior officials. Ogilvy PR Worldwide provided strategic PR counsel to the Chinese government to respond food-safety concerns. Scott Kronick, president of Ogilvy PR China, said via his e-mail to PRweek (2007, Septermber 17) that We have been telling them to be transparent and communicative in the steps they are taking. We're suggesting that they stop blaming the foreign media and not to provide guarantees, but rather to let people know what steps they are taking to rectify the situation (p.02) Patton Boggs, a premium US lobbying firm, was hired to provide counsel on "United States Congressional matters." in regards to China’s exports. Patton Boggs confirmed that starting July 11, 2007, the Chinese embassy paid a $22,000 monthly retainer for the firm's services, though he did not explain what those services were (Dinmore & Heiser, 2008). 25 3.4 Old-fashioned Methods of Accusing Foreign Media and Domestic Media Control While the Chinese government has been trying to practice effective crisis management and conduct public relations campaigns to convince its internal and outside publics that the product quality issue was taken seriously, officials resorted to the old-fashioned method of deflecting blame on to biased western media and governments. According to the International Herald Tribune, China is sending a clear message that it intends to crack down on tainted defective exports. But officials are also shifting the blame: accusing the United States of protectionism, faulting multinationals for sloppiness, charging foreign media with sensationalism and finding flaws with U.S. goods like soybeans. (Lague, 2007) In August, Foreign Minister Yang Jiechi spoke on Chinese national TV calling the toy recall a plot to hurt China. "Demonizing Chinese products, or talking of the Chinese product threat, I think, is simply a new form of trade protectionism" (Mooney, 2007). In the US-Sino Strategic Dialogue conference, Vice Premier Wu Yi said it was evident that trade protectionism and trade discrimination were involved. She believes that the politicization of economic and trade issues was issued to control exports from China. (Virtual Information Center, 2007, December 17) 26 While blaming the “biased” western media is a strategy for the Chinese government to shift the international focus on its own problem, tightening restrictions on domestic media reporting of the scandals is its way to deal with pressure from inside the country. Paul Mooney, an American freelance journalist who has been reporting on China for more than 15 years, listed his observations regarding how the Chinese government had “the [domestic] media's hands tied”: In July, an undercover journalist with a hidden camera claimed to have secretly filmed a restaurant making baozi, or meat buns, stuffed with chemically treated, finely chopped cardboard. The story appeared on Beijing TV and CCTV before officials declared it a hoax. Within weeks, the reporter was arrested and sentenced to one year in prison, with scanty details of the case made public. Discussion of the tainted buns was soon wiped off the internet. And to make sure there was no further local reporting on any food issues, Beijing propaganda officials in August announced a crackdown on "false" news reports and handed Chinese media heads a list of taboo topics. Not surprisingly, food safety topped the list (Mooney, 2007). 3.5 Feedback and Comments from the Media and Public Some foreign officials and public relations experts saw the Chinese government’s positioning as a sign that the “old dragon” was finally changing the way it handled its public crises and the way it communicated with international audiences. Quoted in a Mooney’s (2007)’s article, Scott Kronick, president of Ogilvy Public Relations Worldwide/China, praised the way the Chinese government handled the 2007 “Made in China” crisis. He noted that it was the best Chinese official response he had ever seen in his 12 years working in China. "They really improved compared 27 to the way they responded in the past…I think they recognized that people need information. Kapp also made favorable comments on China’s efforts to the U.S Congress. He said, “the Chinese are learning to walk the walk and talk the talk.” Professor Li Wenya, who taught public relations in Shenzhen University (the first school that offered PR classes in China), was especially satisfied with the change of attitude of the Chinese government. The Chinese government started to understand hide doesn't work anymore in the era of internet. Now there is no monopoly of information, so when the government says X but everybody knows it is Y, at the end, the government is losing control, and that is what happened during SARS crisis. This time the way China Central TV (CCTV) reported the product quality issue indicated the Chinese government is adopting more transparent measures to deal with public crisis. For instance, CCTV had a series report on how the government deal with the contaminated China-made dumplings crisis in Japan: the government immediately sent a task team to work with Japanese experts and find out the reason was the tainted plastic pack; then this particular Chinese manufacturer issued an apology and came up with a plan to fix the problem and prevent it from happening again. The best part was the Chinese government also invited the Japanese experts to visit all the manufacturers that produce exports to Japan, where the Japanese team found food quality there was even higher than the standard set by Japan. Finally, Japan side announced that they still had confidence “Made in China” (Li Wenya, personal communication, 2008, March 18,) Nevertheless, it seemed that criticism still came from the western media and the public about the Chinese way of doing international public relations. Their first dissatisfaction was about China’s blaming Mattel for design problems and also Mattel’s apology to China. A multitude of western media described it as “a 28 humiliating public apology to the Chinese people” (Clark, 2007, September 21), even though it was well-received by Chinese people as “winning the battle”. Mattel executive Thomas A. Debrowski issued an apology on August 22, after meeting with Li Chang Jiang, Chinese product safety chief in Beijing. It said, “Mattel takes full responsibility for these recalls and apologizes personally to you, the Chinese people, and all of our customers who received the toys” (Merle & Mui, 2007). Response from the U.S was overwhelmingly unfavorable. For instance, a Sep 25, 2007 Fortune (Chandler, 2007, September 25) article called “Why Mattel’s ‘apology’ to China only makes it worse” states, “far from dispelling suspicions of China, political theater of this sort only reinforces the notion that China’s rise is less peaceful than just plain…scary. Debrowski’s apology didn’t win much sympathy for Chinese manufacturers in the non-Chinese press. Most US coverage hinted broadly that Mattel’s confession was coerced.” Meanwhile, some bloggers in the United States had harsher comments on Mattel’s apology to China. Navarro, Peter (2007) a business professor at the University of California, Irvine, though being known as anti-China, said in his blog that Mattel’s latest display of ‘foot in mouth’ disease is his open apology for Mattel's failures for safety lapses related to the manufacture of defective toys in China. Make no mistake about this. The ultimate audience for this apology was not the U.S. Congress or U.S. consumers. Rather, it was a classic kowtow to the Chinese. 29 Online message boards were also replete with negative comments. For instance, a message on CNN Money online said that It should serve as a warning to all those other MNCs (Multinational Corporations) who rushed to outsource all their manufacturing to China! Once you do that your supply chain is effectively owned by others and you have to kowtow to whatever they demand. After all it IS an absolute dictatorship, which is forgotten by most westerners (Ramesh, 2007, September 30) Meanwhile, the Chinese officials’ finger-pointing attitude and control on internal media also aroused criticism. “The default position of government officials is usually either to crackdown or to deny, and that is what these guys are doing,” said Russell Leigh Moses, a Beijing-based academic” (Xue, 2007). Mooney said that the “Chinese government has been making some effective progress to protect the national image; however, these steps were accompanied by a seemingly contradictory policy of denial and finger-pointing.” He further indicated that neither foreign nor domestic media were treated the right way: Various officials took turns alleging that the bad publicity was the work of biased foreign journalists and jealous trading competitors. At the same time, while the domestic media carried some hard-hitting stories about these issues (product quality related issues), their work were banned by the government. In many cases, journalists and whistleblowers have been punished or arrested for writing about such issues while the guilty producers go free. With the media's hands tied, the best monitoring system and laws in the world will not work. Until China liberates the media – and no one expects that to happen anytime soon – product safety and public-health issues in China will continue to be a global concern.” (Mooney, 2007) 30 3.6 Comments and Suggestions: Expert Eric Olander Interview Eric Olander is currently vice president of KSCI LA18 TV Station, the largest Asian language TV station in the United States, based in Los Angeles. He also has worked as a CNN producer for 12 years. With an MA in International Relations and Public Affairs from the University of Hong Kong, Olander spent 20 years working, studying and living in China as a CCN Asia senior producer and correspondent. As an American media manager whose work has dealt closely with the Chinese government and American public relations agencies, Olander has extensive knowledge of the Chinese government’s media policies, international public relations strategies, and eastern and western mindsets. He shared his thoughts with the author during a face-to-face interview in March 2008 on what the Chinese government did wrong and how they should have done better in the 2007 product quality problems that caused a stigma on “Made in China”. In your opinion, will the concern about “Made in China” affect the sales of Chinese- made products in the United Sates? As long as the level stays stable like it is now, which is that 99.9% products from China are still safe. There is no doubt that there are some problems coming from China, but they have not been wiped out enough to change the market behavior, and certainly not perception. "Made in China” products are not in danger in terms of sales because American consumers are just concerned about the price. I know it for a fact, because there have been research done that American consumers will pay for products at Wal-Mart and Target, even if they know poor working conditions and cheap labors are involved. Will they pay one more dollar to improve the labor condition? They wouldn't. By the way, Americans are not unique on that; all people are concerned about good prices. While price is so evident in buying decisions, as long as “Made in China” is still the lowest price choice, the sales won’t be affected here. 31 Does that mean the crisis associated with Chinese-made products in 2007 should not be a big concern to the Chinese officials if the sales won’t be affected? Absolutely not. Image is not about sales, but more about the feeling toward the nation. China has had a bad reputation in the U.S for a long time. Most Americans above 35 still form their opinions about China based on the Tian'anmen Square issue. That crisis endangered China’s national image again. The Chinese government’s unsophisticated public relations practices and social development problems were further exposed in that crisis. What did the Chinese government do wrong when they dealt with the international media and public, as you observed? The Chinese have been doing this for more than 60 years. When the Chinese approach the international media, they are extremely unsophisticated, so the big problem was actually how Chinese officials handled this crisis. The Chinese blamed American journalists, primarily from television, for asking the wrong questions, which, in turn, caused officials to provide the wrong answers! Why, in your opinion, didn’t Mattel’ s apology make China look better in the western world? From a PR point of view, blaming Mattel and forcing it to apologize is not the right way. They didn’t understand that the brand perception of Mattel in the west is much better than the brand perception of China. Westerners like me grew up with Mattel toys and love Mattel, whereas China doesn’t have a good image in their minds. So who would people side with? China or Mattel? The Chinese government just didn’t understand our brand loyalty to Mattel is a lot stronger than our brand loyalty to China. Look at what Mattel did; they admitted they have design flaws and mistakes, and that they are going to work on corrections. The way Mattel handled it should be the way that China handled it. Mattel’s taking the moral high road left China in a worse position in eyes of westerners. What do you think the Chinese should have done better in terms of public relations to communicate with the western public and media? . First, China should admit its problems. China doesn't like to admit anything negative. For an entire generation they even denied they ever had an AIDS case, and they denied the SARS problem at the beginning. That is part of their classic culture dating back centuries. The traditional mainland mentality is never to 32 show any emotions to the foreigners, especially when they said the problem was from design. Americans were most proud of their ability to design quality products, so the Chinese gave a bad impression to the American public. Second, the Chinese need to have a much more open way to deal with international media. When Chinese get criticisms from outside, they feel very insulted, but you have to look at it openly and fairly. Just because you are Chinese, doesn't mean you automatically defend China. The part of being loyal and patriotic is helping your country improve. That is why America is prosperous. Sometimes we need to criticize and face the truth. Third, they should have experts available who speak English, without speaking to translators. Imagine how intimidating it is when American consumers turn on TV to hear Chinese people speaking and blaming the brands they like. First and foremost is to have a native speaker to explain what the situation is, saying that we are a developing country, we made mistakes but we are working on the solutions. A great way to do PR is to organize massive media tours of all the Chinese factories showing examples that Chinese factories are doing great. They should fly all of the American media to an array of sites, and try not to hide any factories. Now the situation is if western media want to get into factories even in Beijing, it is very difficult. Actually, lots of Chinese factories are beautiful and the government should be proud to show them off. Because I have been lucky enough to go to these factories to see them; they are really well- maintained. Not every factory is sweatshop and the best way is to show that is to engage the American media in open media tours of Chinese businesses... In today’s global economy, you don't benefit from hiding. You get benefit by appearing in and getting on TV shows to talk about it. What are the social development problems you said that were presented in the 2007 product safety crisis in China? The irony is, in fact, that while so many companies are outsourcing to China, we don’t see that the manufacturing plants are brand new; they are all state-of-the- art. We just make no connection between the factory and the quality of "made-in China." Manufacturing in China, in a global market, really has nothing to do with China. You can open the same factory everywhere. It is all automated and there is not human labor making a difference. Products can be made along the assembly line, with computers dictating exactly what workers should do. Exporting is another issue; it is actually tied to the social development problem. There is the corruption, the lack of enforcement, and the ineffective legal system. 33 When manufacturers learn about inspections from the government, local officials are all paid off. There is no real inspection or real oversight from the government. The corrupted society is the biggest threat to China, and ultimately to the whole world. 3.7 Digest of Eric Olander Interview Eric Olander’s views can be summarized in four main points: 1. The sales of “Made in China” products have still been increasing because of its competitive advantage of having low price. However, the stigma worsened the west’s feeling toward the country as a whole, given that China has already had a longtime unfavorable image in the western world. 2. From a public relations point of view, the Chinese government’s blaming Mattel and forcing it to apologize is not right because the brand perception of Mattel in the west is much better than that of China. Mattel’s taking the moral high road left China in a worse position in eyes of Americans. 3. Facing the crisis, China should have a much more open way of dealing with international media. It will be beneficial to show the good side to the outside world by organizing massive media tours to all the great Chinese factories. 4. In a global market, manufacturing is all automated, so the “Made in China” quality issues actually exposed the country’s social development problems such as corruption, the lack of enforcement, and ineffective legal system. China should feel the urgency to tackle them. 34 3.8 Comments and Suggestions: Professor Mike Chinoy Interview Mike Chinoy, a visiting professor at the Annenberg School of Journalism, also a senior fellow at Pacific Council, recently completed his tenure as CNN's Senior Asia Correspondent, capping over thirty years of international journalism experience. Chinoy served as Beijing Bureau Chief from 1987 to 1995. During that time he covered the 1989 events at Tiananmen Square. He was also Hong Kong Bureau Chief for five years. Chinoy has deep insight of the Chinese political system, the Chinese culture and the international public relations strategies and messages favored by the western media. He shared his thoughts with the author during a face-to-face interview in April 2008 on longtime public relations problems with the Chinese government, especially during public crises, and what strategies and messages should the officials have adopted for the 2007 “Made in China” product quality crisis. (Chinoy, personal communication) In your opinion, besides the individual Chinese manufacturers’ problems, what are other factors contribute to the 2007 “Made in China” product quality crisis? I think some of them are the result of the nature of the Chinese system and also the result of the behavior of the foreign business. The Chinese central government has much less authority in regions. It can’t say something and everybody obey. The legal system in China is a lot better than 30 years ago, but still underdeveloped. Also the way doing business in China has very little emphasis on quality, but everything is about to make money; the culture is not to follow the rules but to ban the rules to make extra profits. Factories subcontract for many levels and each subcontractor cuts corners. Meanwhile, there is a huge pressure from foreign companies to achieve the “China price” and squeeze the margin. The combination caused the crisis. 35 How do you think of the Chinese government dealt with the western media during the crisis? In China, there is tremendous sensitivity to face criticism, which is rooted from the Chinese history and people learned that in school as well. The narrative people grow up in China with is that the foreigners oppressed China for more than 100 years. Finally, from 1949 we stood up and we are not going take it from foreigners anymore, so when the foreigners criticize them, there is a certain instinctive seeing through rose-colored glasses. However, that is not the point: if people and pets die from your products, the fact that Americans treated you badly hundred years ago is irrelevant in this case. The Chinese export is huge, so one percent is large, and secondly the bad outcomes generates attention, so you cannot say it is unfair and the issues go away. I know in this crisis, the Chinese government really took responsibility to work with western companies to rule out problems, but when their response initially was to downplay, deny it, or blame somebody else, it looks like you are covering the truth up. It feeds the perception in the media and public that you have something to hide, even it is not. If you were consulting the Chinese government, what public relations messages would you suggest them to send to the foreign media? The classic advice is if you have a problem, admit it, look like you are addressing it, don’t try to cover it up, because inevitably, the cover-up get discovered, and the cover-up is always worse than the crisis. The most worthwhile message to deliver is that the product quality problem it is a violation to the government policy, and we are going to aggressively track down anybody who produces shady goods and punish them. We are imposing codes on products. We are open about it and keep people posted on what we are doing to improve things and work with foreign clients. We are a developing country that produces and exports so much stuff, and we are in the middle of reform process and not finished yet. We have shortcomings but we work as hard as we can to overcome it. We are terribly sorry for anybody for suffering the consequences and that is not reflective of “Made in China”. Look, China is a developing country with so many people, and 25 years ago we even didn’t have legal system at all. Now we have courts and laws but it is still a long way to go. What’s American legal system like in 1850? What were American factories like in 1900? That is all the levels in industry development. We are aware of it. Inevitably these things crap up, but we are doing everything 36 we can to stop it. As China becomes modern and developed, these episodes will decrease. What international public relations outreach would you suggest the Chinese government to conduct? The government has not mastered the skill of getting on TV , and radio...their foreign administration spokesperson comes out only once a week. In situation like this, you should get your most polished English speaker to come out right on the next day to call the Today show, Opera, CBS and etc, saying we are sending this guy out to openly answer any question. Because if it looks like you are being proactive, you won’t win the battle. The point is to develop polished people who speak in fluent foreign language to defend and explain China in terms that for international audiences to understand. The more you do that, the better you have chances to present your case. Not only talking, you need to really do stuff. I would invite a TV crew to go with inspectors into factories that they are going raid, shut down, and take away the bad guys. Instead, there was a New York Times business reporter who went to investigate a problematic manufacturer and was detained by the guards and locked up. That was the same as putting a gun at your head and shot yourself. The less you show, the more people think you are hiding. Do you agree the saying that most western media are anti-China? I don’t think so. Most journalists are cynics, who don’t believe excuses, because they have been around enough with politicians and business men. They have a healthy dose of cynics and for long time they didn’t see the open attitude from the Chinese government. I don’t think journalists come in to anti-China. They come in to find stories and learn about the truth. Especially for the Chinese government, saying the press is biased doesn’t solve the problem but looks like shifting the blame. In stead of addressing the issue, you are blaming the messengers. Also, if you say the news is distorted but you don’t allow any journalists go there, how could they see your side of story? You can’t claim the press is wrong and simultaneously don’t allow the press to see it by themselves. Blaming or keeping the press out doesn’t work. Journalist is a craft. Good journalists are trained observers. They are trained to ask questions, understand complicated issues, and be fair and balanced. If you don’t allow trained observers in, average people especially foreigners who have no training, historical background and understating will inevitable risk you a huge distortion. You can’t get away without leaking information out nowadays. If you try to keep the mainstream media out, you risk more. 37 What should be the role that PR agencies play to help the Chinese government? Though the PR agencies cannot change the underline policies, they can come up with some tactical suggestions. Exposure to them will help the Chinese think about a different approach to PR. It will be great if agencies can deliver somebody that is helpful to save the western media dealing with the red tape in China. Generally speaking, what are better approaches for the Chinese government to deal with the western media? The Chinese government has news briefings once a week: the spokesperson only comes out every Tuesday. But, say the issue comes out on Wednesday, you need someone to respond on the next day. If you wait too long until the next week, it is not news anymore, and meanwhile, who has shaped the public discussion? Even if it is just an official statement, read it, then the media have the sound bite to put into the story. I think the Chinese ambassador should invite the U.S press editors in chief to breakfast and follow with on-the-record interviews. Journalists like the feeling of access. When the foreign minister take the journalist to lunch and tell him/her what’s going on, the journalist gets more sympathetic than getting a dry press release. Don’t treat the media like enemies. Cultivate them. Share things, honestly, and don’t just give crap. It will be very smart for the Chinese officials to have lunch regularly with all the journalists in Washington. If you don’t give journalists the tool to do the work, they will get it from somewhere else. If you work with them, the journalists get all the stories and the officials get their spins out. That is sophistication. Think about the recent Tibetan and Olympic chaos, if your story is only a press release from Xinhua agency, and meanwhile the media can talk to Dalai Lama for two hours in his living room, which side is going to get more sympathy? 3.9 Digest of Mike Chinoy Interview The author summarized Mike Chinoy’s comments into four main points: 1. The 2007 “Made in China’ crisis stemmed from the undeveloped social system of China and the problematic way of multinationals doing business and outsourcing. 38 2. China is sensitive to foreign criticism, because the country was oppressed by the west for more than 100 years. However, they should realize that the fact that Americans and other Western nations treated the Chinese badly 100 years ago is irrelevant; in this case that they blame China for having people and pets died from its products. 3. To downplay and deny the problems feeds the perception in the media and public that one has something to hide and is guilty. It causes them to ignore all the efforts you have actually made. The correct way of dealing problems like this is to apologize to those who suffered the consequences, show a sincere attitude and determination of tracking down the problems, and keep media and public posted. 4. Most western journalists are not biased against China, but come in to find stories and learn about the truth. China cannot claim the press is wrong while precluding them to find out the truth. It will be very smart for the Chinese officials to build close relationship with western media, cultivate and give access to them, not to treat them like enemies or give them crap. 3.10 Dr. Dennis Schorr Interview and Digest Dr. Dennis Schorr, an associate professor of clinical marketing in Marshall School of Business in the University of Southern California is widely know for his research on strategic flexibility, marketing resources and capabilities, and competitive advantage. His research is mainly on global marketing strategies and practices, with emphasis on 39 brand management, consumer packaged goods and high-technology products and services in Japan, China, and Chile. (University of Southern California, 2008) During his interview with the author in April 2008, Dr. Dennis Schorr explained the developing process of former OEM countries, such as Taiwan, Japan, and Korea, along the value chain in the global market, and how the 2007 China’s recall crises will hamper it from completing this process. His views can be summarized in five main points: 1. Country image carries over into the publics perceptions of the products from the country, especially those related to safety and health, such as food and medicine, and those that are costly, such as automobiles. 2. People don’t trust new brands in general, so when the countries don’t have strong national images, their products cannot compete in the international market. Therefore, products from these countries don’t sell under specific brand names, but the countries work as Original Equipment Manufacturers instead. 3. Several leading enterprises that have strong marketing skills and sales records from OEM producing countries will gradually start selling under their own brand names, such as Haier and Lenovo from China, but they purposely isolate their brands from the original countries at the beginning. As more and more companies from OEM countries reach this stage, the positive experience from the customers and favorable 40 review from media coverage will make products from these countries widely accepted, and thus these OEM countries can move up to the value chain to export their original brands. Taiwan, Japan and Korea all went through this progress. In conclusion, reliable export records benefit a country’s image and country’s equity helps its companies to build internationally accepted brands. 4. China, in recent years, has been gradually losing its most important competitive advantage: the low costs of raw material and labor. The emergence of its competitors like Indonesia and Mexico are trying to take over its position as the world’s manufacturing base. China has to move up to the value chain as soon as possible. 5. Product quality problems aggravate China’s unfavorable image as an unreliable source of products. It takes time for China to gain back international consumers’ trust. Therefore, countries competing with China will have better chances to gain western business and meanwhile, China’ successful original brands will have fewer chances to be accepted internationally. 3.11 Dr. Jian Wang Interview and Digest Dr. Jian Wang is an associate professor at Purdue University who has dealt closely with public relations, integrated marketing communications, and international advertising in the U.S. and China. The views expressed by Dr. Jian Wang over the phone on April 18 th , 2008, focused 41 on the meaning and his suggestions on better practices of public relations crisis management in China, which can be summarized in five main points: 1. The 2007 “Made in China” problem had an influence on China politically and economically. During the toy recall, there were underlying issues and discourse of US-China trade relations. For instance, some American politicians had been argued that Americans losing jobs due to outsourcing to China. However, the quality of the imports even cannot be guaranteed. This kind of argument will threaten the future of US-China trade relationship. 2. In the recall crisis, the Chinese government made progress in both action and communications, In terms of public relations, the speed of their responses were not quick enough to meet the 24/7 news cycle. When the perception was already there, it was hard for China to present their case forcefully regardless. 3. China needs to understand its target audiences’ views of China, even negative, to know what public relations strategies and platforms they should use. 4. China needs to diversify its channels to communicate with the western public. It should not be the government spokesperson that talks all the time. Different types of voices, such as from research institutes and trade associations, talking on the Chinese government’s behalf will gain the credibility. 42 5. China should have long-term programs to help the foreign public gain broad understanding of China to polish the national image to gradually get rid of the bias. 43 Conclusion Throughout 2007, the Chinese government and many Chinese manufacturers were heavily scrutinized for the poor quality and safety of their manufactured goods. However, China’s exports were not directly affected, according to newly released data from both independent western analysts and the Chinese government. China said Friday that it exported $878 billion worth of goods in the first nine months of 2007, up 27 percent from the period last year, when Chinese exports posted record volume. ''Forty million toys may be bad for dozens of toy makers in Dongguan,'' said Dong Tao, an economist at Credit Suisse, referring to one of southern China's toy-making centers. ''But that's small potatoes for China's over $1 trillion a year of exports'' (David, 2007, October 13, 2007 Saturday, p. 1) Despite of that, the Chinese government should understand that the success of brands comes from the “relationship” with customers, not sales numbers. The reason toxic pet food, lead-filled toys, and dangerous tires are so damaging to the “Made in China” label is because of the fear and terror that resonates among their consumers. If these feelings accompany “Made in China” in the minds of consumers, the brand will ultimately fail. 44 In the toy industry or even among all the OEMs, China is a dominant player. Therefore, it is hard for its competitors to take advantage of the recall in a short time when the world still heavily relies on low-price products from China. However, based on this research, the 2007 China manufactured products’ quality crisis will cause a long-term blanket notion of “Made in China” as poor quality. This, in turn, creates a barrier for Chinese companies to move up to the value chain, a threat on US-China trade relation, and even a stigma on China’s national image. Based on the Chinese government’s reaction to a series of “Made in China” product quality problems in 2007, the western world is noticing that China has made vast improvements, both in solving real problems and utilizing the power of public relations. Compared to its former record and in regards to its disclosure of information, the Chinese government adopted much more transparent attitudes toward the public and media. It also applied effective crisis management by cooperation with international stakeholders via obtaining advice from seasoned outside public relations experts and gaining domestic support through active internal media communication. Nevertheless, the old-fashioned media control and scapegoat tactics worked to undermine China’s intention and actual efforts on neutralizing the stigma of “Made in China” and the national image. 45 Based on this research, it is suggested that the Chinese government needs to continue to improve its public relations practices in several aspects: Internally, Chinese officials should appreciate and encourage the domestic media’s role in helping the government oversee issues, instead of banning their investigations and ignoring existing problems. Besides efforts from the government, those involved factories, trade organizations and local associations should also stand out and directly communicate with the international public, as well as take responsibility for their fault and assuage bad reactions from the public. Externally, China should actively work toward eliminating the barriers for western journalists who are reporting on China. It should also engage in proactive media campaigns such as media tours, frequent media briefings and interviews to help western journalists learn the truth about Chinese-made products. Blaming or not engaging the foreign media for internal problems will always backfire; cultivating these opinion leaders is the only strategic way to deliver a real image of China and get messages of its side out to the world. From a strategic public relations point of view, the Chinese government should also learn the psychology and brand loyalty of the foreign consumers. For example, since China has been running low on credibility whereas Mattel has been a longtime 46 favored brand in the west, it makes China look worse in the court of international public opinion to have Mattel apologize to the Chinese. In this case, Mattel took the high road and gained more sympathy. This incident was a good opportunity for China to learn how to conduct strategic international public relations. Finally, China should improve its publicity operations overseas. It should have media programs in multiple languages to communicate with the local communities. China has international media channels, but they don’t work effectively, because those programs are based on Chinese scripts and dry messages not designed for international audiences. The best example is how the BBC Chinese channel operates; in order to better communicate with its target audiences, the station is staffed with Chinese nationals. Therefore, programs from Chinese media targeting western audiences should employ western producers and reporters to be better accepted. The good news is that the 2007 stigma may fade. The report from “Interbrand” (2007) showed that Three factors may mitigate the challenge with a "Made in China" label: first, most consumers do not consistently check for the country of origin label; second the high costs of shifting production to another country left consumers with very little choice in the short-term; third, over time, consumer trust in a product brand may counter-balance concerns about the country of origin. However, Chinese products still have a long way to go, the meaning of which goes far beyond the label itself: Japan and South Korea were once OEM manufacturers 47 like present-day China, but now they have become exporters of well-known brands, such as Sony, Toyota and Samsung. However, over the past 30 years, Chinese products have been taking more global market shares, but not a revolutionary step to propel its soft power to gain international consumers’ trust and respect. Protecting the “Made in China” label is the vital first step to gain consumers’ confidence in the country’s capability of producing high quality products; after which comes the hope for them to accept original brands from China. Only through this process can China move up to the value chain. In the end, the harsh reality China needs to face is that though effective international public relations could help show a good aspect of the Chinese culture, the country still has to to overcome its many social problems, such as corruption and lack of law enforcement. 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Asset Metadata

Creator Kong, Ao (author)

Core Title Through the application of international public relations, the Chinese government can neutralize the negative effects of the "made in China" stigma, thereby protecting China's national image

School Annenberg School for Communication

Degree Master of Arts

Degree Program Strategic Public Relations

Publication Date 10/22/2008

Defense Date 08/02/2008

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

Tag branding,Communications,crisis management,Government,made in China,Marketing,national image,OAI-PMH Harvest,Public Relations

Place Name China (countries)

Language English

Contributor Digitized by the University of Southern California (provenance)

Advisor Floto, Jennifer D. (committee chair), Dasu, Sriram (committee member), Parks, Michael (committee member)

Creator Email kong_ao@hotmail.com,kongao@yahoo.com.cn

Permanent Link (DOI) https://doi.org/10.25549/usctheses-m1696

Unique identifier UC1305919

Identifier etd-Kong-2052 (filename),usctheses-m40 (legacy collection record id),usctheses-c127-116686 (legacy record id),usctheses-m1696 (legacy record id)

Legacy Identifier etd-Kong-2052.pdf

Dmrecord 116686

Document Type Thesis

Rights Kong, Ao

Type texts

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

Repository Name Libraries, University of Southern California

Repository Location Los Angeles, California

Repository Email cisadmin@lib.usc.edu