No One Wants to Work for Americans

Part II in our "reputation economy" (it's not real but if we keep saying it, maybe it will become real!) series: today there's the news that a whole bunch of state-owned companies in China are looking for top-level management. Unhappy with the companies' performance, the government wants to up its game and made the unprecedented move of taking out full-page newspaper ads. Per the New York Times story (here):

"While some of the positions were restricted to Chinese citizens, many of the posts were open to foreign applicants..."

Based on my experience, there won't be a single foreigner hired for any of these positions. And there will most likely by 10 zillion local Chinese applicants....because (according to Newsweek):

In August, China’s biggest job-search site released a survey of 200,000 Chinese college students, ranking their preferences for employment. Only three non-Chinese multinational corporations made the list of the top 50: Google, Microsoft, and Procter & Gamble, all in the top 10. That’s a steep decline from the 21 foreign firms that made the list last year.

So, no one in China wants to work for a non-Chinese (read: Western or Japanese) company. You see, U.S. corporations are facing a perception problem in today's troubled "reputation economy."

"...particularly since the financial crisis, big Chinese companies are seen as offering less-risky jobs with more growth potential."

In short, it's risky to work for a U.S. company that will just stagnate until it then shrivels and dies.

On the topic of job opportunities, you would think a company like Sands China would offer everything that a globe-trotting executive would desire: growth industry (gambling in China), U.S. parent company, seasoned international management. But before you send off your resume, you'd better determine if you meet the strict age and race requirements (in the Macau Daily Times):

"Local gaming operator Sands China wants to have a new Chief Executive Officer (CEO) in place by the end of this year according to the company’s acting CEO Michael Leven, and the company would prefer the appointee to be Asian. “It doesn’t have to specifically be a hospitality or casino executive, but definitely someone with the right age and experience."

It IS very common for Asian companies to state in ads, etc. that they want someone of a certain age and they usually even request a photo. We don't know (or care to do the work to find out) if Sands China is allowed to have blatantly discriminatory hiring practices and operate completely outside of U.S. EEOC regulations (if it is a U.S. company, I would say no). Legality aside, this is an astoundingly non-PC attitude for the leader of a major company to be displaying in a public forum. And, they surely will be deluged with applicants as Leven says you don't need any relevant experience and just simply need to be the right age and race.

Thanks for reading
Jonathan Gardner

PR Guy Scared HP into Firing Hurd?

When HP needed justification in axing CEO Mark V. Hurd recently, they called in a consulting firm - one that is inexperienced in crisis communications or even tech - to give them grade-school PR 101 advice that amounted to "scandals are bad and scary."

When this story blew up last week, initial reports focused on allegations by an actress/marketing consultant (aren't they all multitasking these days) named Jodie Fisher that Hurd had sexually harrassed her. These charges proved untrue but an investigation showed that the CEO had submitted inaccurate expense reports to the tune of $20,000. All in all, the story had a little sizzle and no steak.

Then Hurd announces his "resignation" last Friday and we find out he'll get around a $37 million payout.

All the while, behind the scenes, the board at HP was being advised by something called APCO. We dug a little and learned this is a PR firm (that few have ever heard of). A PR rep had been counseling the company ahead of this scandal (just how much of a heads-up did they have?). The PR person used some classic fear tactics to get their client to act ("if you don't fire this guy in 24 hours, the world will end...and Fox News will say bad things about you!") But what they were told, really was of the "monsters are under your bed" variety.

Says The New York Times:

At a presentation to the directors of H.P., the public relations specialist from APCO cited recent sexual imbroglios like the one that diminished Tiger Woods. The specialist cautioned that only 20 percent of top executives survive these types of allegations and then they usually end up leaving because of the weight of negative publicity. He also warned that Gloria Allred, the celebrity lawyer representing Mr. Hurd’s accuser, would thrust H.P. and Mr. Hurd into a media nightmare...The representative from...APCO... even wrote a mock sensational newspaper article to demonstrate what would happen if news leaked.

Now, whether you agree or not about HP firing Hurd - who seemed a pretty effective leader - I'm more interested in this approach. The scare tactics the PR guy used would normally only work on/be employed with fairly unsophisticated clients (or on children afraid of the dark). One would think the HP board would be fairly with-it people who wouldn't need the PR 101 lecture. In short, this is all PRETTY OBVIOUS stuff that we would use when we were talking to client audiences holed up in some 4th-tier city in a 3rd-world country who had never even HEARD of PR. So, what he's saying is essentially true, but I can imagine the eye-rolling and smirking going on as he delivered his "presentation" (a crappy PowerPoint with his homemade newspaper stories?). It's all very grade-school.

He may have been appointed to this task solely to provide cover. I think we can all be sure some "account supervisor" from APCO didn't spur the board of HP, a mega-billion-dollar corporation, to make such a huge move. It is possible that a few members of a board - which had already decided to act - brought him in to add to the momentum on the decision-making and at least make a show of getting outside opinion. Though you would think they would bring in a brand-name, big PR company or management consultancy.

Surely, the PR rep is getting lots of slaps on the back at his cubicle today. We can be sure that whoever gets a new business pitch from APCO in the near future will be seeing a slide/hearing a shpiel about "providing critical crisis and issues management c-suite counsel to HP." Let's forget the fact that they actually "...[do] not have a particularly strong reputation for crisis management or technology expertise." If you happen to be subjected to this presentation, just remember: there are no monsters under the bed.

Thanks for reading,
Jonathan Gardner

Angry Samsung Slings Poo in PR War

The New York Times has an interesting story (here) about an insider's book that "reveals" the massive corruption that has plagued Samsung for years. Those of us who have worked in Asia and with Korean companies (I consulted inside LG for years) find this "news" completely unsurprising. Huge Asian companies generally got that way by cheating (as did the US's own Goldman Sachs), and in the insular, feudal, confucian and patriarchial "family" business model, corruption and outright thievery is endemic.

As expected, Samsung's PR "strategy" has been to bully the media to pay no attention to Kim Yong-chul's book and is circlingthe wagons. The company is responsible for 20% of Korea's exports, so their tactics have been pretty effective at keeping things quiet. Also, Koreans have this bizarre, worshipful slavish regard for Samsung. This is something you need to go there and see to believe (it reminds me of the mindless Khmer Rouge minions and their devotion to the ruling organization "Angka" in the "Killing Fields")

Of course, we are in the connected age, so Twitter, blogs and the like have led to runaway success for this book. Leading to the Times writing about it.

The deafening silence coming from Samsung HQ has been broken by the one and only quote the reporter gets from the company. And boy, oh boy, it's a doozy!

I ask all my fellow crisis communications, PR and branding brethren what they think about this PR approach. If your company was going to issue one and only one official on the record statement to rebut the HUGE allegations made in a book that blows your company's kimono open, would this be what you would say?

“We are seething with anger, but we are not going to sue him and make him a star again,” said Kim Jun-shik, Samsung’s senior vice president for corporate communications. “When you see a pile of excrement, you avoid it not because you fear it but because it’s dirty.”  

Sometimes we have to hit back when we are attacked. But isn't this a bit over the top? I'm guessing from the title that this is perhaps the TOP PR person at Samsung. Doesn't this strike you as a really juvenile, unprofessional and defensive way to comment? This is the spokesperson for the most "respected" company in Korea. Is this the best person the TOP electronics company in  the world could hire?

Based on my experience, this kind of company has NO clue how to do PR/communications and they mostly hire idiots. Also, I don't get this "make him a star again" bit. This would make one assume that the author has been a "star" before. A star of what? Isn't saying that only serving to elevate the opponent?

Also, I agree poo is dirty and I do not fear it.

Anyway, I really have to spend some time thinking about this one. This is really extreme PR.

Thanks for reading.

Jonathan Gardner

Communications Lessons from Mark McGwire and Richard Nixon

We've all seen TV "confessionals" as part of a media strategy: Bill Clinton's, A-Rod's, Mark Sanford, Jim Bakker, et al. Now comes Mark McGwire's all-out media blitz Monday in which he admitted using steroids to enhance his game.

Since the dawn of the TV age (and probably earlier, but I'm lazy to do the proper research), the idiot box has been viewed as a useful platform for addressing concerns, silencing critics, apologizing for wrongdoing, etc.

Richard M. Nixon famously used the then new medium (the "Checkers" story) to dispel corruption rumors and build public support that would force Eisenhower to keep him on the ticket.

Recently we saw South Carolina governor Mark Sanford attempt to use TV to very publicly get a handle on a messy personal life. First, he held a press conference to talk about how he lied about going hiking, but was with his mistress in Argentina, then he (mistakenly) KEPT going on TV to ramble on about his misdoings and have a meltdown.

The difference here, now, with a case like Mark McGwire, is that it's all being VERY carefully stage-managed (WHO or what was in control of Sanford?). As the New York Times notes in a great, behind-the-curtain story (a piece that was surely managed by the McGwire PR team) about the PR strategy:

The one-day plan — coordinated over the past month by Ari Fleischer, a former White House press secretary who runs a crisis-communications company, and the St. Louis Cardinals, who recently hired McGwire as their batting coach — contrasts with last year’s roll-out of Alex Rodriguez’s steroid admission.

In this case, it looks like maybe the strategy will work. Why? EVERYONE has known forever that McGwire used steroids. So the "news" that he is admitting it is NOT a big deal. There is no "wow" factor here. He was properly coached to be very contrite and emotional about the admission.

But the pitfalls lie along the road of contrition: He COVERED up wrongdoing. It's not the crime that gets you but the obfuscation.
 
Nixon stands as a interesting example of a communications strategist and what he did/or could have done. There is a great quote from the Oliver Stone film "Nixon" that sheds light on crisis communications and the art of public confessionals:

H. R. Haldeman: Eight words back in '72. 'I covered up. I was wrong. I'm sorry'. The American public would have forgiven him. But we never opened our mouths, John. We failed him.

Since we all knew McGwire did steroids, that aspect doesn't much matter. Note the A-Rod example. We don't really care. Regardless of the Times saying that A-Rod's confessional was rolled-out differently, there are different factors here. A-Rod is a beloved Yankee. We can all get past it. He has built up (and continues to increase) his personal capital with the public over the years and we can forgive him.

Communications, marketing, branding, all things at work here -- all revolve around TRUST. Trust with the consumer, which in the case of sports is a BIG group: basically the entire audience who watches or cares about what Mark McGwire (and in some sense, baseball in general) is doing. Do we trust McGwire? Has he built up the trust capital with the public over the years? Is he a "beloved" figure?

The crisis communications approach at work here is about restoring and enhancing trust with stakeholders. The messages: Trust me, I fouled up, I'm sorry, I know it was wrong, I will never do this kind of bad thing again.

The trick has always been to say "I'm sorry" and do it quickly and earnestly. Mark McGwire has done it a little late in the game, but we'll see how this affects his own legacy.

Thanks for reading.
-Jonathan Gardner

Fauxscaling and the Risks of Repositioning Brands in Asia

Pirate handbags sold on the street aren't the only "brand fakes" around these days. There's a whole sector of the global economy dependent on taking a downmarket to middling brand and -- given the breath of a fresh start -- repositioning in new, developing markets. Often, these strategies rely on something we call "fauxscaling," creating a fake brand story/legacy and using tactics to create an image inconsistent with the brand's more downmarket image in its home market.

One could spend all day making a list of the American or European brands that have:

1. Repositioned themselves from downmarket (or middle-market at best) to "upscale" overseas and/or in doing so have

2. Created some dubious back-story and other propaganda for the brand (read: lying).

I have personally seen a GREAT deal of fauxscaling in Asia. With newly emerging, rapidly growing economies there, Western companies have rushed in to make as much money as fast as possible, creating a brand-land-rush to make a market and establish a brand (no matter how crappy the brand is perceived back home) before the competition.

Examples of fauscaling Western brands abound in Asia:

Buick in China is positioned as upscale.

Haagen-Dazs has created upscale-ish shops in Asia and engages in fauxscale tactics like the "legacy myth" in many markets. In Taiwan, nearly all locals believe the faux-story publicized at Haagen-Dazs shops: that the brand is some kind of vaunted European company with an accompanying false creation story. No one I spoke with in Taiwan is aware that Haagen-Dazs (a phony name, to boot) was started by a couple in Brooklyn and the company is part of the General Mills conglomerate.

Pierre Cardin is STILL considered an upscale brand in some parts of Asia, though the last time it was consider such in the U.S. was probably 30 years ago.

Starbucks is growing its reputation as "upscale" in developing markets, such as China and Thailand.

In Taiwan, TGI Friday's is considered an "upscale" date night option for young adults in the major cities (just TRY impressing your date here in the U.S. by taking them there!).

Mary Kay has fauxscaled its way to its current "upscale" position in Asia. The New York Times recently had a story about this in China. When I worked with a marketing/communications consultancy in Asia, my colleagues in Korea were working on the first wave of this, helping to create the fauxscale myth for Mary Kay there.

So, how hard is it to fauxscale a Western brand in Asia? It's REALLY not that difficult, just follow some steps like these:

1. Hire a multinational marketing/communications consultancy. They will be your fauxscale "bridge," bringing together local market sensibilities and a connection to "main office" U.S. brand leadership.

2. Create a lot of fake creation story buzz and endorsements. This is usually accompanied with the promotion of the brand's tenuous connections with "celebrities" back in the U.S. or other home markets. Even better if you can bring the celebrity to the local market to promote. A great example of this is the Lux brand (VERY downmarket) in Asia. They used Liv Tyler as the spokeswoman/endorser in their ads. I don't think the C-lister would sell much product here in the U.S.

3. Bring your fauxscaling brand to the local market to create a new category. Starbucks is a great example of this. They have had no problem convincing the local market (most of whom have never lived overseas) that they are "upscale" as they open "posh" looking coffee bars and introduce coffee culture to markets where this never existed before ("You don't know what upscale American culture is? Well, look here, THIS is what we are telling you it is.")

4. Focus some of your fauxscaling on markets where: A. There is a built in obsession with anything foreign and/or "upscale: (in China ANYTHING with a brand name/logo is worshipped); and, B. The media is corrupt (or at the least, not very ethical or skeptical) and will collude with you in promoting brands.

BUT, with any fauxscaling strategy, there is the danger of SERIOUS missteps.

A couple of years back, there was a HUGE wave of media sensation throughout greater China regarding a Haagen-Dazs scandal. The tabloid press had a field day showing video of bumbling Chinese workers storing ice cream cakes in filthy bathrooms in an illegal factory, etc. (read the story here)

Gawker has a post on the most recent trouble for fauxscaling Haagen-Dazs in India (item here). The brand's new India branch overreaching in trying to market itself as upscale. In doing so, they've been accused of racism, elitism, and just general cultural insensitivity.

These gaffes have certainly hurt the brand but they are by no means the only risks that may come with fauxscaling.

Along with the risk of global brand confusion and inconsistency that is inherent with these strategies, there is the real possibility that these fauxscaling efforts could backfire and negatively impact the brand back in the home market. What if, for example, 20 years from now China is REALLY dominant. Let's say immigration policies have changed, lots of wealthy (not just poor immigrants) Chinese move to the U.S. They will carry with them the idea that Buick is an "upscale" brand. Well, this is inconsistent with the brand's positioning here in the U.S.

What if all those folks who believe Haagen Dazs to be this upscale European brand with lots of history find out that that is COMPLETELY untrue? Wouldn't there be some backlash against the brand and erosion of brand "trust" and value?

You should multiply all the risks by 1000 due to the tremendous growth of social media and its ability to destroy a brand overnight (Dominos, anyone?).

It is clear that fauxscaling will no doubt continue unabated, but so will the pitfalls experienced as brands try for a second life overseas. The smart companies out there will be successful and stay out of trouble if they have the right counsel and teams in place as they embark on these global ventures.

Thanks for reading.
-Jonathan

Teenagers realize 'it's all the same'

Good, though redundant, story in the NY Times about teenagers realizing that since the economy is dreadful they shouldn't be asking for much from their parents. They've "lost interest" in expensive stuff and seem to now find Aeropostale a reasonable alternative to Abercrombie & Fitch as "it’s kind of the same thing." The Times did have stories a while back how stores such as Aeropostale that offer "value" were doing better. In the last year they also had pieces about how the bloom is off the rose for luxury in Japan, a market that is traditionally a huge percentage of luxury retailers' market. Young people in Japan have to some extent gotten over the whole "must have a Louis Vuitton bag" thing and are being more reasonable and practical as well.

The article notes that youngsters are gravitating more toward the Gap (which has been struggling to make a comeback) and even - God forbid - TJ Maxx.

The kids are also seeking quality. One would think this would spell an opening for a brand such as Uniqlo, which is a serious HIT here in NYC for folks wanting quality, stylish fashions at Gap-comparable prices. With H&M (a similarly positioned, though more stylish brand) expanding all over the damned place, it may be Uniqlo's time to get large nationwide.

Thanks for reading,
Jonathan