mslgroup reputation impact indicator study 2015 (china edition)

The Age of Earned Trust:

MSLGROUP’s ReputationImpact Indicator Study[China Edition]

The MSLGROUP Reputation Impact Indicator

A major global survey and report that combines both intuitive and rational dimensions when studying the reputation of leading multinationals.



Anders KempeEMEA President for MSLGROUP

Foreword

The reputation of a corporation is its license to operate. It has a decisive impact on the success of the organization and is generally regarded as one of its most important assets. And yet, we would argue, there is clearly a need for a much deeper understanding of the multifaceted elements that contribute to corporate reputation than currently exists today.MSLGROUP has chosen to take a somewhat atypical approach to the study of reputation. Moving beyond simple rankings, or analyses of ‘drivers’ of reputation alone, we take a more holistic look at how a company must act to build a strong reputation that can facilitate success over time. The result of our research is this, the Reputation Impact Indicator study, part of MSLGROUP’s ongoing efforts to create better knowledge and tools for corporations to better understand how they can influence their reputation.

In the study, we have chosen to look at corporate reputation among a global general public. General public, because how they, as consumers and citizens, view corporations has a substantial and increasingly important impact on how other audiences view them. Global, because we live in an ‘always on’ and ‘on-demand’ world, where different audiences are constantly connected to each other. Today, more than ever, a multi- stakeholder perspective is necessary.

Among many new findings, the study also confirms a long-held assumption: actions speak louder than words. The factor with the largest impact on an organization’s reputation is simply how well it delivers its products and services, and if they are delivered in an ethical manner (you can of course follow rules and legislation, yet still fail in the court of the public opinion). In short, the study confirms that being perceived as a company that consistently delivers high-quality products and services in an ethical way is what matters most when it comes to building and maintaining a reputation.

If actions do speak louder than words then does this mean that communication is of less importance in the building of reputations than we may have thought? No, on the contrary – communication has a very significant role that should not be underestimated. Not least when we consider, as our study shows, that while brands may be global, corporate reputation is most definitely local. Assuming broad brand awareness across multiple countries for the well-known global brands covered in the study, it seems clear that how a company communicates with people in different countries or regions influences what those people think of a company, how robust its local reputation is. In this sense, we should think of global corporate reputation as the sum of a company or brand’s local reputations.

1



Foreword

Our study findings underline that it is this more qualitative approach to brand awareness that is key to establishing a robust reputation. And authenticity and engaging storytelling are undoubtedly at the heart of any such approach.

Underlining our commitment to a more holistic view of corporate reputation, we analyzed how people retrieve the information that they then use to form an opinion about a company. What we found is that this is largely an intuitive process, and that abstract knowledge about a company is not enough to engender a strong reputation in the public’s mind’s eye. A significant part of a company’s reputation is a matter of instinct, based on how ‘relatable’ that company feels. We refer to this as the ‘Mind Space’ the company occupies. Here, communication plays an important role, as an organization needs to communicate its actions repeatedly and engage with its stakeholders, so as to build clear associations – linked to its core business – that can easily be held in a person’s mind. Our study findings underline that it is this more qualitative approach to brand awareness that is key to establishing a robust reputation. And authenticity and engaging storytelling are undoubtedly at the heart of any such approach.

That an organization’s reputation is shaped most by intuitive, gut-felt pieces does not however mean that reputations can be quickly built. Instead it means that we have to think in advance: always have the communicative aspect in mind when making business decisions.

MSLGROUP’s Reputation Impact Indicator study is an attempt to ‘dissect’ corporate reputation, to study the components of which it is made up, and to then take a holistic view of each one’s relative impact on reputation at both a global and industry level. I hope you find the report to be inspiring and thought-provoking reading.

Kindly,Anders Kempe

21

Introduction

Globalization has eliminated many boundaries to create a more interconnected world. It has also played a part in enabling companies to become global brands and conduits of these connections.We live in an era where McDonald’s, Coca-cola, and Starbucks could be found just about anywhere in the world, and the companies work very hard to make sure the same product and quality of service can be found regardless of location.

Cultural differences aside, though, local, highly personal experiences can greatly affect perceptions of those very same global brands. This is the premise in the first-of-its-kind MSLGROUP Reputation Impact Indicator study in which China is included.

China, along with our ‘new world’ peers India, Brazil and South Africa, tops the charts with our significantly higher Reputation Core scores, that is we are more optimistic about companies than the developed Western ‘old world’. When a nation is growing and prospering, it’s understandable its people would have a more positive outlook. But that doesn’t mean we are less demanding.

A more confident China means companies face greater pressure to earn the trust of its people. Across the four industry clusters targeted in the study (pharmaceutical, Internet, FMCG and consumer electronics), China rated delivering on promises and good customer service as the top drivers of corporate reputation with respect to customer relationships. Furthermore, all industries in China offered some level of participation for customers to create new products and services. None of these items were significant at the global level.

The Chinese public is also rigorous about corporate behavior with acting ethically and being a positive influence on society the primary drivers of reputation. Environmental care is particularly important in China, too.

The groundbreaking piece in this study is ‘Mind Space’ and the relatability of companies. We can all agree that a company’s ‘hardware’ – the products and services – drive much of our opinions about an organization but it’s the ‘software’ – the vision, the social responsibility, the relationships – that turns customers into admores or adversaries. From the study we see that Chinese consumers are demanding better corporate ‘software’ and leading the charge in some industries.

3

Daisy ZhuManaging Director for MSLGROUP China

Overall this study validates some ideas about corporate reputations and provides a fresh perspective on Chinese views about companies and brands. More importantly, it provides us with a more plausible metric for communicators to achieve business goals. This fulfills our Business-Driven Communications positioning. Communications may be an art but the Reputation Impact Indicator and Mind Space provides the science. Through our study we can advise communications practitioners and stewards of corporate reputations on the why and how they can preserve or enhance their reputations in dynamic China, foster enduring relationships with stakeholders and contribute to the betterment of Chinese society.

I hope you enjoy this report and it stimulates new thinking and actions for you!

Kindly,Daisy Zhu

Globalization has eliminated many boundaries to create a more interconnected world. It has also played a part in enabling companies to become global brands and conduits of these connections.We live in an era where McDonald’s, Coca-cola, and Starbucks could be found just about anywhere in the world, and the companies work very hard to make sure the same product and quality of service can be found regardless of location.

Cultural differences aside, though, local, highly personal experiences can greatly affect perceptions of those very same global brands. This is the premise in the first-of-its-kind MSLGROUP Reputation Impact Indicator study in which China is included.

China, along with our ‘new world’ peers India, Brazil and South Africa, tops the charts with our significantly higher Reputation Core scores, that is we are more optimistic about companies than the developed Western ‘old world’. When a nation is growing and prospering, it’s understandable its people would have a more positive outlook. But that doesn’t mean we are less demanding.

A more confident China means companies face greater pressure to earn the trust of its people. Across the four industry clusters targeted in the study (pharmaceutical, Internet, FMCG and consumer electronics), China rated delivering on promises and good customer service as the top drivers of corporate reputation with respect to customer relationships. Furthermore, all industries in China offered some level of participation for customers to create new products and services. None of these items were significant at the global level.

The Chinese public is also rigorous about corporate behavior with acting ethically and being a positive influence on society the primary drivers of reputation. Environmental care is particularly important in China, too.

The groundbreaking piece in this study is ‘Mind Space’ and the relatability of companies. We can all agree that a company’s ‘hardware’ – the products and services – drive much of our opinions about an organization but it’s the ‘software’ – the vision, the social responsibility, the relationships – that turns customers into admores or adversaries. From the study we see that Chinese consumers are demanding better corporate ‘software’ and leading the charge in some industries.

Introduction

Overall this study validates some ideas about corporate reputations and provides a fresh perspective on Chinese views about companies and brands. More importantly, it provides us with a more plausible metric for communicators to achieve business goals. This fulfills our Business-Driven Communications positioning. Communications may be an art but the Reputation Impact Indicator and Mind Space provides the science. Through our study we can advise communications practitioners and stewards of corporate reputations on the why and how they can preserve or enhance their reputations in dynamic China, foster enduring relationships with stakeholders and contribute to the betterment of Chinese society.

I hope you enjoy this report and it stimulates new thinking and actions for you!

Kindly,Daisy Zhu

4

Executive Summary

In the Age of Earned Trust companies need a holistic approach to build a strong reputation that can facilitate success over time. The MSLGROUP Reputation Impact Indicator is the first-of-its-kind global study of the general public to find reputation trends on a macro and industry level, as well as lay the foundations of a reputation framework for additional future research and insight.This report highlights the China findings and summarizes the global study1. The results provide insight into what drives the views held by the general public of some of the world’s best-known global corporate brands.

MSLGROUP also carried out in-depth analysis of reputation drivers within four industry clusters, to study the relative impact of each for a given industry, and the differences between the four industries. The selected industries cover the pharmaceutical, consumer electronics, FMCG and Internet-based businesses sectors.

The key findings from the global study include:

The main dimensions driving corporate reputation today are the perception of a company’s products and services, and that company’s business behavior: How well is the company delivering on its core business promise - represented by the products and services - and is it seen to be doing so in an ethical, transparent way.

At the industry level there are clear differences in the relative impact of different reputation drivers within each dimension, e.g. corporate behavior is significantly more important in the pharmaceutical industry compared to the other three industry clusters studied, underscoring the importance of fact-based input for reputation management.

The findings provide insight into what drives the general public’s views of some of the world’s best-known global corporate brands.

1.The field research was conducted during the last quarter of 2014, by means of a survey on a statistically validated sample of the general public in 10 countries, totaling 26,467 qualified respondents. The survey was complemented with analysis of social media content for 10 selected companies.

5

Executive Summary

Reputation drivers linked to actual consumer experience have greater significance than corporate reputation when evaluating Net Promoter Score (NPS). Unsurprisingly, there is a clear correlation between corporate reputation and NPS, and the most important driver for both is how well a company is perceived to deliver its products and services.

A strong ‘Mind Space’ can engender a robust corporate reputation. There is a correlation between how easy it is for respondents to mentally associate with a specific company or brand – its ‘relatability’ - and reputation. High brand awareness alone is not enough. The ideas, images, feelings one associates with a given company need to be easy and quick to draw upon, positive in sentiment, and linked to that company’s products and services. Companies that have this clearly defined ‘Mind Space’ will enjoy a more robust corporate reputation, while companies that do not easily invoke such mental associations, or invoke neutral rather than positive associations, will have a weaker reputation. There are also differences for which factors have the largest impact on reputation between respondents with positive, neutral and negative associations. For the former, the perception of products and services is most important, but for the latter group aspects of corporate behavior play a more significant role.

Important discoveries from the research:

• An optimistic ‘new world’ versus a skeptical ‘old world’. Contrary to traditional thinking, China, along with ‘new world’ peers Brazil, India and South Africa, has a more positive perception of companies than counterparts in North America, and particularly Europe, where respondents can be said to demonstrate greater skepticism towards companies in general.

• Brands are global, corporate reputation is local. There are large variances in the reputation of individual companies at a country level. Even though a brand is recognized globally, the reputation of the company is local.

• Social media content reflects the relative importance of the reputation dimensions. A large majority of discussions online are about topics related to company products and services, and this is also the area with most un-aided engagement. A majority of negative posts online are related to corporate behavior, confirming the negative impact of this dimension.

6

The Study

Anders KempePresident, EMEA, MSLGROUP

“…and yet, we would argue, thereis clearly a need for a much deeper understanding of the multifaceted elements that

contribute to corporate reputation than currently exists today.”

7

The Study

Given the sheer volume of data that now washes across our screens, it would stand to reason that a customer’s view of a company or brand is now necessarily arrived at more quickly, and therefore intuitively, than in days past.

A New Age, A New Charter for ReputationWith the ever-increasing volume of communication and number of information channels around us, it is crucial that companies use fact-based input to evaluate which elements have the largest impact on their reputation. These factors will of course vary across industries and markets, and also depend on the audience.

Given the sheer volume of data that now washes across our screens, it would stand to reason that a customer’s view of a company or brand is now necessarily arrived at more quickly, and therefore intuitively, than in days past. Most reputation modelling or reporting assumes a rational, deliberative model. None have tried to quantify a more intuitive approach, let alone figure out how first impressions turn into long-held views. And this is one issue at the heart of MSLGROUP’s Reputation Impact Indicator study: How does the intuitive, gut-feeling view an individual holds about a company impact upon that company’s reputation?

1

8

A New Reputation Framework Combining Rational Response with Intuitive Associations: The MSLGROUPReputation Impact IndicatorThe MSLGROUP Reputation Impact Indicator is one of the first studies to examine the link between spontaneous, intuitive associations with companies and a more deliberate and rational response to statements about companies. We aim to layer intuitive brand associations and expectations over a more traditional, ‘deliberate’ reputation measurement approach with this study.

2

Robert Gelmanovski

The research also sheds light on the drivers of corporate reputation and the challenges of managing corporate reputation from a global perspective. This has been achieved through a detailed exploration of the drivers of reputation and the relative significance of each driver across industries and markets.

The resulting model, the Reputation Impact Indicator, is based on a Reputation Core consisting of three questions:

• Do you like company x?

• Do you trust company x?

• Do you respect company x?

ABOUT THE RESEARCH

The research behind the Reputation Impact Indicator was designed by Robert Gelmanovski, a researcher in reputation management at the Royal Institute of Technology in Stockholm (KTH) – who is affiliated with MSLGROUP in the Nordics, and Dominic Payling, Director and Head of Planning & Insight at MSLGROUP in London, alongside a reference group of senior consultants from MSLGROUP’s global network.The research was then conducted by Robert Gelmanovski.

A statistically validated sample of the general public aged 16–65 in 10 countries was surveyed in the last quarter of 2014 in online panels provided by CINT, a company with a presence in more than 60 countries. A total of 26,467 interviews in 10 countries were conducted, at least 2,500 interviews per country. Countries covered: United States, Canada, United Kingdom, France, Germany, Sweden, China, India, Brazil, and South Africa.

The questionnaire consisted of 38 questions on reputation, plus background questions on media consumption, age, and educational background.

10 countries

26,467interviews

The Study

9

Mind Space: Measuring the Strength of Brand AwarenessCompanies and brands rely on the brand awareness metric to validate how well the organization is doing in a market or the performance of a marketing campaign. This metric is useful in establishing benchmarks and standards for evaluation, but wouldn’t brands want to know how easy consumers or audiences were able to recognize a brand? Is this brand awareness built on positive, negative or neutral associations? How does brand awareness relate to corporate reputation?

The MSLGROUP Reputation Indicator Index differentiates from other reputation studies by exploring intuitive reputation awareness or the mental associations related to a particular company or brand. When this is linked to a more rational, deliberate view of reputation, the results show a profound impact on corporate reputation: by creating spontaneous associations with a company, we create a metric that demonstrates strength of brand awareness. We call this capacity ‘Mind Space’.

3

ABOUT THE METHODOLOGY

The questionnaire was divided into two parts: one covering spontaneous associations and expectations, and a second part with 25 reputation statements with a 7-grade scale (1 = do not at all agree, 7 = agree completely). Answers were indexed to a scale 0–100. An index difference of 2 points was considered statistically significant.

Respondents were asked to evaluate 41 global corporations, chosen because of their worldwide operations and international outlook, and only respondents with a higher degree of brand awareness of the companies (‘somewhat familiar’ or ‘very familiar’) were allowed to complete the survey.

In parallel with the quantitative research, online content was analyzed for 10 of the 41 companies, with this content categorized into one of the four reputation dimensions of the MSLGROUP Reputation Impact Indicator model.

While we have chosen to focus on the overall findings and implications of the research for reputation management, not on company-specific insights, data about individual companies is sometimes used to illustrate a general point.

The Study

Answers to the three questions around the Reputation Core were then combined and expressed as an index from 0–100, giving an indication of a company’s reputation. In order to better understand what is driving the Reputation Core Index we then looked at four dimensions that contribute to the building of reputation, each reflected through a number of questions:

1. Strength of relationship (how well a company builds relationships with external audiences)

2. Perception of products and services

3. Perception of corporate behavior

4. Perception of financial performance

These four dimensions were drawn from international academic research in the field of reputation and are reflected in a number of questions, with each question then correlated to the Reputation Core – thus identifying reputational drivers.

Underlying the results in each area is ‘reputation content’, i.e. the messages and conversations linked to a company, the majority of which are today delivered and digested via digital channels. We analyze reputation content across multiple channels and then link that content to the reputation dimensions and the Reputation Core, thus exploring which pieces of content are building or eroding reputation.

10

ABOUT THE KNOWLEDGE BASE

Fombrun, Charles J., Naomi A. Gardbergand Joy M. Sever (2000), ‘The ReputationQuotient: A Multiple Stakeholder Measureof Corporate Reputation’, The Journal ofBrand Management, 7 (4), pp. 241–255.

Wartick, S. (2002), ‘Measuring CorporateReputation’, Business & Society, Vol. 41No. 4, pp. 371–392.

Helm, S. (2007), ‘One Reputation orMany? Comparing Stakeholders’Perceptions of Corporate Reputation’,Corporate Communications: AnInternational Journal, Vol. 12 No. 3,pp. 238–254.

Walker, K. (2010), ‘A Systematic Reviewof the Corporate Reputation Literature:Definition, Measurement, and Theory’,Corporate Reputation Review, Vol. 12No. 4, pp. 357-387.

The Study

MSLGROUP’s ReputationImpact Indicator model

Examining the relationship between the Reputation

Core, the underlying reputation drivers and the

content produced by and about companies.

Reputation Content

ReputationDrivers

ReputationCore

11

Alongside the four dimensions of reputation, the study also looks at intuitive reputation awareness and the impact on corporate reputation. This intuitive aspect of reputation is then linked to a more rational, deliberate view of reputation.

Definitions and explanations of conceptsCorporate reputation: The general collective judgment of a corporation based on assessments of the impact of performances and actions attributed to the corporation over time.

NPS, Net Promoter Score: The inclination to recommend a company.

Brand awareness:The extent to which a brand is recognized by potential customers, and is correctly associated with a particular product or service.

‘Mind Space’: The ease with which a respondent can answer questions about the company. Measures the strength of brand awareness.

Reputation Core Index:The measure of corporate reputation used in the study.A combined score that answers the questions ‘Do you like company x?’, ‘Do you trust company x?’, and “Do you respect company x?’

Products and services:The term used for a group of reputation drivers reflecting the quality of the company’s offering.

• X offers high-quality products/services• X meets customer needs• X offers products/services that are good value for money• X is an innovative company• X produces its products/services in a sustainable way

Corporate behavior:The term used for a group of reputation drivers reflecting a company’s actions and business behavior.

• X acts ethically• X is open and transparent about the way the company operates• X has a positive influence on society• X cares for the environment• X cares for its employees

Relationship:The term used for a group of reputation drivers reflecting the quality of the company’s relationship with its customers.

• X involves the customer in the creation of new products/services

• X delivers on its promises• X is open to criticism and suggestions for improvement• X communicates in an honest and sincere way• X offers good customer service

Financial performance:The term used for a group of reputation drivers reflecting a company’s financial performance.

• X is a profitable company• X has a capable leadership

The Study

12

A more qualitative approach to brand awareness building positive associations that are easily accessible in the minds of stakeholders – is therefore a key to a strong reputation. And the more closely this ‘Mind Space’ is linked to a company’s products and services, the better.

Brand Awareness is not Enough, Building a Strong ‘Mind Space’ and Positive Connotations is KeyOnly respondents claiming to know the companies that were surveyed ‘fairly’ or ‘very well’, and could spontaneously associate things with the company, were allowed to answer the subsequent questions on the drivers of reputation, meaning all respondents effectively were brand-aware of the participating companies. Seventy-eight per cent of respondents found it easy to come up with spontaneous associations with a company, and the Reputation Core Index was 43% higher among that group. In other words, occupying a customer’s ‘Mind Space’ – the ease

4

with which an image of a company is created in an individual’s mind’s eye – is an advantage.

When respondents were asked to define these connotations, 53% defined them as positive, 38% as neutral, and 9% thought of them as negative.

Unsurprisingly, associating negative things with a company is linked to a low reputation score. But what was surprising was the significant difference in impact upon reputation found between neutral and positive associations. Positive associations resulted in an average Reputation Core Index that was 60% higher than that of neutral associations. Clearly a more qualitative approach to brand awareness – building positive associations that are easily accessible in the minds of stakeholders – is therefore a key to a strong reputation. And the more closely this ‘Mind Space’ is linked to a company’s products and services, the better. These findings were true for all markets, age groups, and industries covered in the study.

So, in a world where businesses and brands are constantly battling for attention, simply grabbing people’s attention is not enough. Organizations need to generate positive ‘Mind Space’, if they are to build a robust reputation.

Share of respondents who thought it was easy versus difficult to identify things they associate with a company in the survey

22%

78%

Difficult

Easy

Share of positive, neutral, and negative associations

Positive

Negative

Neutral

38%

53%

09%

The Study

13

Dominant brands are not only recognized, they also occupy ‘Mind Space’ in relevant stakeholder groups that is in line with the qualities with which the brand wishes to be associated.

Creating a robust and relevant ‘Mind Space’ goes beyond creating brand awareness. A company not only needs to grab attention and make stakeholders aware of its existence, it needs to create an impression that allows one to easily attribute characteristics to the brand, thus increasing the chances of making it the brand of choice. In this respect, ‘Mind Space’ can be said to be the quality of awareness about a brand.

In today’s world of speed and transparency, ‘Mind Space’ is created from a number of brand conversation sources. What do we think of when we hear a particular brand name? How automatically were those connotations invoked? Are the characteristics we ultimately associate with a brand in line with the desired brand positioning?

A robust ‘Mind Space’ requires two parts.The things one associates with a company need to be easily drawn upon, thus making the process intuitive: if a person has to spend time going through a structured thought process in order to work out what they think, then the ‘Mind Space’ in question is already weaker than if sentiments are gut-felt. Secondly, the associations need to reflect a positive, company-specific understanding of the brand. If the associations are generic and equally true for all companies in the industry, ‘Mind Space’ is also weakened.

Brandx

How do we define ‘Mind Space’?

Positive associations linked to a stronger Reputation Core

Neutral associations lead to a much weaker reputation

Reputation Core Company I like Company I trust Company I respect

0

85

Neutralassociations

Positiveassociations

The Study

14

The importance of building positive associations is also confirmed at the industry level, with levels of corporate reputation being significantly higher among respondents who associated positively with a company versus those who demonstrated more neutral associations. This was true across all industries.

One interesting observation here is that the positive impact of ethical business behavior and drivers including ‘acts ethically’, and ‘produces its products in a sustainable way’ is much stronger

among respondents who judge their own associations to be negative than among respondents who associate positive things with a company. For this group of respondents, the questions related to ethical business behavior have a bigger impact on corporate reputation than drivers related to product and service quality, value for money and meeting customer needs.

How the financial performance of a company is perceived is also dependent on whether the respondent judges the things they associate with a company

Citizenship dimension driverslinked to type of association

Acts ethically

Open and transparent about the waythe company operates

Positive influence on society

Cares for the environment

Cares for its employees

Pharma Consumerelectronics

FMCG Internet

Posi

tive

asso

ciat

ions

N

egat

ive

asso

ciat

ions

N

eutr

al a

ssoc

iatio

ns

The Study

15

to be positive, neutral, or negative. For respondents with positive associations, ‘profitable company’ has a slightly positive impact on corporate reputation, whereas for respondents that judge their associations as negative, the profitability has a strongly negative impact on reputation. An interesting observation is the large impact of capable leadership among respondents with negative associations. One explanation for this could be that respondents with negative associations put more trust in a company’s leadership to change the perceived negative aspects of their business.

From the below, we can see that the attitude of the target group not surprisingly has a large impact on corporate reputation, and also that the relative contribution of different drivers varies significantly between respondents with positive and negative attitudes. Again, this highlights the need to adapt communication to the relevant audience, based on a thorough understanding of their attitudes and motivations.

Financial performance driverslinked to type of association

Pharma Consumerelectronics

FMCG Internet

Pos

itive

ass

ocia

tions

N

egat

ive

asso

ciat

ions

N

eutr

al a

ssoc

iatio

ns

Profitable company

Capable leadership

Clear vison for its future

Good potential for future growth

Delivers better financial results thanits competition

The Study

16

• Products and services have the greatest influence on corporate reputations in China as well as the other markets surveyed, but corporate behavior is a stronger driver in China than the rest of the world.

• Acting ethically is the most important driver for pharmaceutical companies in China.

• Environmental aspects are more important for the Internet industry in China.

• Company vision is an important driver for the financial dimension on corporate reputation.

• Environmental care is an important contributor to corporate behavior.

• Delivering on promises strengthens relationships and corporate reputation.

Actions Speak Louder Than WordsWhat is the strongest driver of corporate reputation among the general public?

To answer this question and others, we analyzed the degree to which different attributes of the four reputational dimensions (perception of products and services; perception of corporate behavior; perception of financial performance; and strength of relationship) drive reputation.

Perception of products and services showed the strongest correlation to the Reputation Core Index, thus the strongest reputation driver in China and all countries surveyed. This dimension is made up of five different drivers, which together reflects the quality of the company’s offering.

After products and services, corporate behavior (the degree to which a company is perceived to be doing business in an ethical, transparent way) correlated most strongly with a high Reputation Core Index. For companies that scored low on the Reputation Core Index there is a clear correlation to low scoring on corporate behavior.

FINDING5

By contrast, financial performance has no statistical significance on corporate reputation in China, and is the least important driver for enhancing reputation among the general public across all markets surveyed. Financial performance and the quality of a company’s management obviously has a defining impact on many other stakeholders, not least investors, but it is not surprising that the general public can be said to form opinions about a company’s reputation first and foremost as consumers or citizens, rather than as investors.

It’s worth noting that of the four dimensions Chinese respondents place greater importance on corporate behavior compared with the global results; the other dimensions were weaker than the global study. This challenges the thinking that Chinese consumers are indifferent to how companies conduct themselves publicly and affirms what we see – that as economic development and social progress benefits China, the public are increasingly more demanding and are expecting companies to live up to their own standards.

Global

ChinaThe Impact of Different Dimensionson Reputation Core Index

Financialperformance

Relationship Corporate behavior Productsand services

0

–

+

The Study

17

The general public in China have higher expectations on the corporate behavior of pharmaceutical companies than of companies in the other industries under review.

On an industry level there are significant variations in how different reputation drivers contribute to the reputation core. We first look at the reputation drivers of two specific industry clusters – pharmaceutical and Internet – and then delve into four different dimensions amongst all four industry clusters.

a. Acting ethically is the most important driver for pharmaceutical companies in China

The reputation drivers for companies within the pharmaceutical industry display some unique characteristics: Although corporate behavior is important for all industries, it has a larger impact on reputation within the pharmaceutical industry. ‘Acts ethically’ is most important driver for corporate reputation in China and second most important in all industries. Of the top five reputation drivers in the pharmaceutical industry in China, three are related to products and services

(‘producing products and services that are good value for money’, ‘produces its products in a sustainable way’, and ‘offers high-quality products/services’) and two are related to citizenship and sustainability (‘positive influence on society’ and ‘produces its products in a sustainable way‘).

Unlike the global study, delivering on its promises, capable leadership and innovation significantly impact reputations of pharmaceutical companies in China.

It’s worth noting that there is a strong negative impact for the financial performance of pharmaceutical companies and a level of cynicism about their growth prospects in China. This may be related to the government anticorruption campaign in the pharmaceutical industry which highlighted a number of problems.

This leads us to believe that people have higher expectations on the corporate behavior of pharmaceutical companies than they do of companies in the other three industries under review, perhaps more so in China.

Global

ChinaTop reputation driversin the pharmaceutical industry

1 2 3 4 5 6 7 8 9 10 11 12 13 14

0

–

+

1. Offers high quality products/services

2. Offers products/services that are good value for money

3. Produces its products/services in a sustainable way

4. Acts ethically

5. Meets customer needs

6. Communicates in an honest and sincere way

7. Is open and transparent about the way the company operates

8. Has a positive influence on society

9. Is a profitable company

10. Has a capable leadership

11. Offers good customer service

12. Is an innovative company

13. Has good potential for future growth

14. Delivers on its promises

The Study

18

Respondents in China clearly see companies playing a part in caring for the environment.

b. Environmental aspects are more important for the Internet industry in China

Companies within the Internet sector also display an industry-specific pattern. By far, offering high quality products and services is the most important driver in China and the other markets in the global study. That’s where the similarities end. In China, environmental aspects are more important with sustainable production and care for the environment among the top drivers. With growing public concern in recent years about pollution and natural resource degradation, respondents in China clearly see companies playing a part in caring for the environment.

Like the pharmaceutical industry, acting ethically is a significant driver of corporate reputation in China. Unlike the global study, providing products and services that are perceived as ‘value for money’ is a core driver of corporate reputation in China.

It’s worth noting that ‘open and transparent about the way the company operates’ and ‘capable leadership’ are not significant reputation drivers in China compared with global results. This may reflect a certain reality that many companies in China, Internet or not, have some element of state ownership thus its operations and leadership are inconsequential.

Global

ChinaTop reputation driversin the Internet industry

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

0

–

+

1. Offers high quality products/services

2. Offers products/services that are good value for money

3. Produces its products/services in a sustainable way

4. Acts ethically

5. Is an innovative company

6. Meets customer needs

7. Cares for the environment

8. Delivers better financial results than its competition

9. Communicates in an honest and sincere way

10. Is open and transparent about theway the company operates

11. Has a positive influence on society

12. Is a profitable company

13. Has a capable leadership

14. Has a clear vision for its future

15. Has good potential for future growth

16. Involves the customer in the creation of new products/services

17. Offers good customer service

The Study

19

While company profitability isn’t an important aspect for corporate reputations, delivering better financial results over its competitors is consequential – this is particularly the case for pharmaceutical and Internet companies.

C. Company vision is an important driver for the financial dimension on corporate reputation

Overall, financial performance of a company is not a positive driver for corporate reputation among the general public in China and globally, but we do see some statistically confirmed differences between industries. Additionally the impact of this dimension appears to be affected by pre-existing views respondents may hold about a company.

We see wider acceptance for financial performance as a driver of corporate reputation especially in the FMCG and Internet industries in China. And while company profitability isn’t an important aspect for corporate reputations, delivering better financial results over its competitors is consequential – this is particularly the case for pharmaceutical and Internet companies.

In general, the company’s leadership have positive contributions to corporate reputations, especially in the pharmaceutical and FMCG industries. Potential for future growth is particularly important in the consumer electronics industry.

Company vision is more important in China that what we see globally. This is particularly notable in the Internet industry where vision is ranked much higher than capable leadership. In the past, Internet companies in China were built around CEOs who became celebrities and role models. However, the industry’s rapid development and the boom-and-bust of copycat Internet ventures disappointed Chinese consumers who have high expectations. Therefore, genuine innovation has become an indicator of a company’s value and true differentiator. This backs the point that innovation is regarded highly as a reputation driver in the Internet industry.

With the exception of FMCG, a high profit margin has a negative impact on the reputation of all three other industries in the global study: ‘profitable’ seems to be seen as a dirty word. In the FMCG and Internet industries, strong company leadership has a positive impact on corporate reputation but we do not see the same pattern in the pharmaceutical and consumer electronic industries. For consumer electronics and Internet businesses, a perceived potential for future growth has a positive impact, yet by contrast, there is no statistically confirmed relationship between this driver and the reputation of companies in the pharmaceutical and FMCG industries.

Global

ChinaTop reputation drivers of the financial dimensionwithin the pharmaceutical industry

0

–

+

Delivers betterfinancial results than

its competition

Has a capableleadership

Has aclear visionfor its future

Has goodpotential for

future growth

Is aprofitablecompany

The Study

20

Global

ChinaTop reputation drivers of the financial dimensionwithin the consumer electronics industry

–

+

0

Has acapable

leadership

Hasgood potential for

future growth


Delivers betterfinancial results

than its competition


Global

ChinaTop reputation drivers of the financial dimensionwithin the FMCG industry

–

+

0

Has goodpotential for

future growth

Hasa capableleadership

Delivers betterfinancial results

than its competition



The Study

21

Global

ChinaTop reputation drivers of the financial dimensionwithin the Internet industry

–

+

0

Deliversbetter financial resultsthan its competition


Hasgood potential

for future growth

Hasa capableleadership


The Study

22

Compared to the global results, environmental care is more important in China, but surprisingly producing in a sustainable way has no statistical significance for any of the industries.

d. Environmental care is an important contributor to corporate behavior

Companies’ commitment to social issues seems to be largely judged as a sum of their perceived overall contribution to society. Acting ethically and positive influence on society have significant impact on reputation core, and a change in this driver will bring about the greatest change for corporate reputation across all industries. In China, we see a higher regard for social influence in the FMCG and consumer electronics industries, which perhaps reflects a direct relationship between brand visibility and community interest.

It’s especially notable that environmental care is more important in China, but producing in a sustainable way has no statistical significance for any of the industries. One could argue that Chinese consumers understand the value of protecting the environment but aren’t willing to pay more for products that are produced more sustainably as they often come at a higher cost.

Surprisingly, care for employees has a low impact on corporate reputations, particularly in the pharmaceutical industry. Compared with global study, concern for the environment is perceived to be more influential than care for employees. The fact that it was targeted for corruption in China suggests that better treatment of company employees would have strengthened ethical behavior and improved reputations.

The Study

23

Impact of the corporate behavior dimensionon the Reputation Core Index

Pharma Consumer electronics FMCG Internet

Acts ethically

Open and transparent aboutthe way the company operates

Positive influence on society

Cares for its employees

Cares for the environment

+

–0

Global

ChinaTop reputation drivers of the corporate behavioral dimensionwithin the pharmaceutical industry

–

+

0

Has apositive influence

on society

Actsethically

Cares forthe

environment

Is open andtransparent about

the way thecompany operates

Cares forits

employees

Global

ChinaTop reputation drivers of the corporate behavioral dimensionwithin the consumer electronics industry

–

+

0

Actsethically

Has a positiveinfluenceon society

Cares forits

employees

Is open andtransparent

about the waythe company

operates

Caresfor the

environ-ment

The Study

24

Global

ChinaTop reputation drivers of the corporate behavioral dimensionwithin the Internet industry

–

+

0


on society

Actsethically

Cares forits

employees

Is open andtransparent about

the way thecompany operates

Cares forthe

environment

Global

ChinaTop reputation drivers of the corporate behavioral dimensionwithin the consumer FMCG industry

–

+

0


on society

Actsethically

Cares forits

employees

Is open andtransparentabout theway the

companyoperates

Cares forthe

environment

The Study

25

Involving customers in creating new products and services reflects a deeper level of customer engagement in China that strengthens the relationship dimension.

e. Delivering on promises strengthens relationships and corporate reputation

When it comes to the ‘relationship’ dimension of reputation (reflecting the quality of a company’s relationship with its customers), delivering on its promises and good customer service are the main drivers in China. This seems reasonable as Chinese consumers buy a product or service from a business, thereby establishing a relationship, albeit a transactional one. When companies fail to provide or deliver, consumers begin to doubt and lose trust, which ultimately erodes the relationship.

This is starkly different from the global study where communicating in an honest and sincere way is the most significant driver of this dimension. The Internet industry in China is the only cluster that places considerable importance on this aspect. In an industry that operates in a virtual world being authentic and truthful are paramount to corporate reputations.

Interestingly, we see a high level of openness across all four industries under review in China where being open to criticism and suggestions for improvement impact corporate reputations, especially in the consumer electronics industry. Part of this may be related to significant policies at protecting consumer rights in China and the industry’s response by welcoming suggestions for improvement and publicizing it.

Another notable item is the involvement of customers in creating new products and services in China with all industries offering some level of participation. This aspect was missing at the global level; there was no statistical significance in the FMCG industry. This reflects a deeper level of customer engagement in China that strengthens the relationship. It also best illustrates that actions do speak louder than words.

The Study

26

Impact of the relationship dimensionon the Reputation Core Index


Delivers on its promises

Communicates in an honest and sincere way

Offers good customer service

Is open to criticism and suggestions for improvement

Involves the customer in the creation of new products/services

0

+

–

Global

ChinaTop reputation drivers of the relational dimensionwithin the pharmaceutical industry

–

+

0

Offersgood customer

service

Delivers onits

promises

Communicatesin an

honest andsincere way

Is open tocriticism and

suggestions forimprovement

Involves thecustomer in the

creation ofnew products/

services

Offersgood customer

service

Delivers onits

promises

Communicatesin an






services

Global

ChinaTop reputation drivers of the relational dimensionwithin the consumer electronics industry

–

+

0

The Study

27

Global

ChinaTop reputation drivers of the relational dimensionwithin the FMCG industry

–

+

0

Offersgood customer

service

Delivers onits

promises

Communicatesin an






services

Offersgood customer

service

Delivers onits

promises

Communicatesin an






services

Global

ChinaTop reputation drivers of the relational dimensionwithin the Internet industry

–

+

0

The Study

28

The B2B industry earned the highest reputation core scores in China; Consumer electronics placed first globally.

Global Brands,Local ReputationA global corporate reputation might well be the sum of local reputations in each individual market, but how reputation is constructed in those markets means that each must be attended to with insight and care. This is a significant challenge not least given the growing importance (and reach) of web-based communication.

Respondents in China are more positive of the reputations of the companies in the study, where reputation scores ranged from 84 to 63. A more telling story are the differences between industry clusters: the B2B industry earned the highest reputation core scores in China, well above consumer electronics and retail industries and compared to being ranked sixth out of seven in the global study. In China, the Internet industry ranks sixth in China, which is far from second place globally.

The differences might be explained by ‘mind space’: consumer-focused industries with a higher relatability for the general public have a higher reputation score in the study. Another part could be attributed to the idea of respect and how it’s related to knowledge. The average Chinese consumer may not be knowledgeable about B2B companies but it doesn’t preclude them from respecting them, especially if they are Fortune 500 Companies. Third-party or independent rankings provide some assurance of positive corporate reputation but this also raises the question about what really generates like, trust and respect. As far as local differences within the global survey findings are concorned, two particular areas stand out:

6

1. Europeans are more skeptical about companies than respondents from the BRICS

The average Reputation Core score for companies was 66, across the 10 countries surveyed. However, the study found that reputation varies significantly between countries and companies: the lowest Reputation Core score was 28 and the highest 91. Examining different regions we observed that Europeans rate companies much lower than their counterparts in North America do, who in turn lag behind respondents in the BRICS countries surveyed – Brazil, India, China and South Africa. Indian respondents produced the highest average Reputation Core score of 79, while Swedish respondents evidenced the lowest average Reputation Core score of 51. The study demonstrates that in general, Indians hold corporations in very high regard, with the lowest Reputation Core score among the companies surveyed being 72. These differences observed between ‘the old world’ and ‘the new world’ underline the need for a finely-tuned reputation strategy, one that avoids a ‘standardized’ global definition of reputation.

FINDING2. There are considerable market

variations when it comes to a company’s reputation score

Globalization has become one of the most dominant business trends in the last three decades, and a significant amount of corporate and marketing communications work is carried out with the purpose of building a robust, global corporate brand. Indeed, the brands we have studied in this research are companies with an impressive global presence.

The study demonstrates that despite having high brand awareness in all markets, a company’s brand can have a markedly different reputation in individual countries. We found numerous examples where both the strength of the Reputation Core and the associations people make with, and discussions they have about brands were very different.

For example, GlaxoSmithKline has a Reputation Core Index score between 42 and 81, the highest being in India and the lowest in Sweden. On the other hand, AstraZeneca sees its Reputation Core score vary between 52 in Canada and 84 in Brazil. Taken together with the previous finding regarding different population’s overall attitudes to and views of corporations (less skeptical in Asia, more so in Europe), this highlights the challenges facing marketing communications leaders at global brands, and the clear need for local knowledge of the stakeholder environment.

The Study

29

Global Brands,Local ReputationA global corporate reputation might well be the sum of local reputations in each individual market, but how reputation is constructed in those markets means that each must be attended to with insight and care. This is a significant challenge not least given the growing importance (and reach) of web-based communication.

Respondents in China are more positive of the reputations of the companies in the study, where reputation scores ranged from 84 to 63. A more telling story are the differences between industry clusters: the B2B industry earned the highest reputation core scores in China, well above consumer electronics and retail industries and compared to being ranked sixth out of seven in the global study. In China, the Internet industry ranks sixth in China, which is far from second place globally.

The differences might be explained by ‘mind space’: consumer-focused industries with a higher relatability for the general public have a higher reputation score in the study. Another part could be attributed to the idea of respect and how it’s related to knowledge. The average Chinese consumer may not be knowledgeable about B2B companies but it doesn’t preclude them from respecting them, especially if they are Fortune 500 Companies. Third-party or independent rankings provide some assurance of positive corporate reputation but this also raises the question about what really generates like, trust and respect. As far as local differences within the global survey findings are concorned, two particular areas stand out:

1. Europeans are more skeptical about companies than respondents from the BRICS

The average Reputation Core score for companies was 66, across the 10 countries surveyed. However, the study found that reputation varies significantly between countries and companies: the lowest Reputation Core score was 28 and the highest 91. Examining different regions we observed that Europeans rate companies much lower than their counterparts in North America do, who in turn lag behind respondents in the BRICS countries surveyed – Brazil, India, China and South Africa. Indian respondents produced the highest average Reputation Core score of 79, while Swedish respondents evidenced the lowest average Reputation Core score of 51. The study demonstrates that in general, Indians hold corporations in very high regard, with the lowest Reputation Core score among the companies surveyed being 72. These differences observed between ‘the old world’ and ‘the new world’ underline the need for a finely-tuned reputation strategy, one that avoids a ‘standardized’ global definition of reputation.

2. There are considerable marketvariations when it comes to a company’s reputation score

Globalization has become one of the most dominant business trends in the last three decades, and a significant amount of corporate and marketing communications work is carried out with the purpose of building a robust, global corporate brand. Indeed, the brands we have studied in this research are companies with an impressive global presence.

The study demonstrates that despite having high brand awareness in all markets, a company’s brand can have a markedly different reputation in individual countries. We found numerous examples where both the strength of the Reputation Core and the associations people make with, and discussions they have about brands were very different.

For example, GlaxoSmithKline has a Reputation Core Index score between 42 and 81, the highest being in India and the lowest in Sweden. On the other hand, AstraZeneca sees its Reputation Core score vary between 52 in Canada and 84 in Brazil. Taken together with the previous finding regarding different population’s overall attitudes to and views of corporations (less skeptical in Asia, more so in Europe), this highlights the challenges facing marketing communications leaders at global brands, and the clear need for local knowledge of the stakeholder environment.

The Study

30

Global

ChinaSector scores for the 7 industries covered in the study

–

+

0

HealthcareB2B Automotive Consumerelectronics

Internet Consumerretail

Banking/financialservices

6981

7280 71

80

69

79

75

79

7378

71

77

Showing the difference inReputation Core across countries

Rep

utat

ion

Sco

re

79

76

75

74

67

64

61

60

59

51

Stronger

Weaker

India

Brazil

China

South Africa

United States

Canada

United Kingdom

Germany

France

Sweden

New world

Old world

The Study

31

Globalization has become one of the most dominant business trends in the last three decades.

90

0

–

8176

69 67

57 56 56 54 52

India Brazil China South Africa Canada United States

UnitedKingdom

Germany France Sweden

42

The Reputation Core score ofGlaxoSmithKline in different countries

90

0

–

8478 77

68

58 57 56 54 52 52

Brazil China India South Africa Germany UnitedStates

France UnitedKingdom

Sweden Canada

The Reputation Core score ofAstraZeneca in different countries

The Study

32

Use it, Like it, Recommend it: The Drivers of Recommendation (NPS)• Reputation drivers linked to actual

consumer experience are more important for driving NPS than they are for corporate reputation.

• There are some differences between industries, but those differences are not as distinct as for the drivers of reputation.

Some have called it ‘the ultimate question’: Would you recommend a company to a friend or a colleague? Our survey attempted to answer this question by asking respondents to tell us how likely they were to indeed recommend the companies surveyed.

Respondents were asked to rate a company from 0 (‘not at all likely’) to 10 (‘very likely’). By looking at the number of ‘9’ or ‘10’ answers and subtracting them from the 0–6 answers, the survey produced an NPS. While an NPS can be negative, most successful companies have a number of dedicated promoters or fans and therefore a high NPS score (more than +50). Independent research2

2.Marsden, P, Alain Samson and Neville Upton (2005), ‘Advocacy Drives Growth’, Brand Strategy (198), pp.45–47.

7

has shown a link between a high NPS score and business success in terms of sales.

In this study we correlated high NPS scores (where respondents indicated either 9–10) with the Reputation Core. In all countries, there was a clear correlation between a strong reputation and a high NPS score. While this conclusion in itself won’t raise many eyebrows, we were able to further analyze the factors behind this correlation and uncover precisely which reputational elements have the strongest impact on NPS. What we discovered is that the area of reputation that is most strongly linked to a high NPS score is the perception of products and services. As was the case with overall reputation, the dimension with the least impact on NPS among the general public is a company’s financial performance.

Reputation dimensions asdrivers of NPS

Financialperformance

Relationship Corporate behavior Products and services

0

–

+

FINDING

The Study

33

As for any differences between markets with regard to what drives NPS, we found none. In all markets, being good at delivering your offering builds recommendation levels the most.

At the industry level, we did see some differences with regard to what drives NPS, but those differences are not as significant as for the reputation drivers. One interesting variation is that a company’s financial performance is a positive factor for NPS in the consumer electronics, FMCG, and particularly the internet industries. Only where the pharmaceuticals industry is concerned do we see a negative impact. One further difference is that the relationship dimension is more important, and will become even more important, when compared to ethical business behavior as a driver of NPS within the consumer electronics industry.

While the importance of the different dimensions where NPS is concerned is much the same as it is for the Reputation Core Index, the ranking of the specific drivers is slightly different. ‘Offers high-quality products and services’ still has the largest impact, but ‘produces its products in a sustainable way’ has a bigger impact on NPS than

products being seen as value for money and meeting customer needs.

To have a ‘positive impact on society’ is more important for NPS than to ‘act ethically’, which is similar to the impact of this dimension on corporate reputation. ‘Caring for employees’ has the third largest impact in the category for NPS, but this piece is of low significance when it comes to building corporate reputation.

With regard to the relationship dimension, the ranking is also different. ‘Delivering on promises’ is the most impactful question for NPS, followed by ‘delivering good customer service’ and ‘communicating in an honest and sincere way’. This is also the inverse of the ranking where impact on reputation is concerned.

Not surprisingly, from the observations above we can see that the drivers linked to actual consumer experience are more important for driving NPS than for corporate reputation. This underlines the need to carefully evaluate and balance the message depending on the purpose of, and audience for communication.

The area of reputation that is most strongly linked to a high NPS score is the perception of products and services.

NPS Driver Strength by Industry Financial performance

Relationshiip

Corporate behavior

Products and services

0

– Consumer electronics Internet FMCG Pharma

+

The Study

34

The importance of perception of products and services is supported by our analysis of online content from the 10 sample companies.

Social Media Discussions Reflect the Relative Impact of the Reputation Dimension on Corporate ReputationThe Reputation Impact Indicator includes an analysis of the relationship between corporate reputation and discussions on social media.

The importance of perception of products and services is supported by our analysis of online content from the 10 sample companies. For companies selling products directly to consumers, the proportion of social media content related to the products and services varied between 50–90%. Products and services is also the reputation area where we observed the most ‘organic’ posts, i.e. content and conversations that

8

are sustained without active involvement from the companies in question. A majority of the conversations relating to the company products and services were positive.

Also in line with the importance of the reputation drivers, the other area where we observed a number of ‘organic’ posts was topics relating to a company’s corporate behavior. These topics created a high degree of engagement, with conversations focused on ethical conduct, transparency, and consumer rights. In contrast with conversations around core business, most of the conversations around corporate behavior were negative. Linking this to the main area of research, we noticed, perhaps unsurprisingly, that companies with a poor corporate reputation, evidenced by a low Reputation Core Index, appeared so largely due to negative perceptions of their position on corporate behavior.

FINDING

Online content classified into the three dimensions of corporate reputation

1. McDonald’s

2. BP

3. GoldmanSachs

4. Citibank

5. Shell

6. PayPal

7. Microsoft

8. Johnson & Johnson

9. Samsung

10. Google

Perception of products and services

Perception of corporate behavior/CSR

Perception of financial performance

10 20 30 40 50 60 70 80 90 100

Values in percentage points, from data derived through a qualitative and quantative analysis of a sample of content for each company in each of the 10 countries.

The Study

35

36% of the respondents in the study said that online channels are their main source of information about companies.

Demographics andMedia Habits MatterThe development of the Reputation Core Index among different age groups in China follows a different pattern in each of the four industries. Where Internet companies are concerned, reputation is highest in the years immediately after university and lowers among middle-aged respondents but rises again at 51-55 years. The FMCG and consumer electronics industries follow each other closely until about 36 years where they start diverging – FMCG reputation is highest among the 46-50 year olds.

The reputation of pharmaceutical companies is the most striking – the reputation score peaks among 51-55 year olds but are the lowest in the age groups before and after. This differs widely from other industries where scores generally weaken after 50 years.

This reveals a remarkable picture of Chinese consumers whose perceptions about corporate reputation shift widely in old age. It’s reasonable to expect strong reputation scores for pharmaceutical companies for older respondents– there’s an increasing need for medicines and other health services when we age. But the dramatic rise and

9

slope suggests some groups may be targeted.

We also see a link between reputation scores and the educational level of the respondents with the highest reputation scores emerging from respondents with college or university degrees among all industries. We also found high reputation scores among respondents with secondary education levels in the FMCG and pharmaceutical industries. Students seem to be generally skeptical in the study with lower reputation scores overall, except for the consumer electronics industry where it rated high. This suggests that more education increases knowledge and improves understanding about companies, thus helping them form positive opinions about reputation.

The study also reveals a relationship between online habits and the Reputation Core Index: more time spent online results in a higher reputation score. This is particularly evident in the pharmaceutical industry followed by FMCG and consumer electronics. Surprisingly, those who spent less than one hour online scored consumer electronics companies higher.

The research highlights the increasing importance of digital channels as a source of company information. Whether it comes from corporate websites or social media, online content is critical to reputation management.

FINDING

Secondary

College, university

Still studying

Reputation Core Index and education level*

Prescription drugs FMCG Internet Consumer electronics

0

–

+

* Primary school were excluded due to the low number of respondents

The Study

36

Industry ReputationCore Index by age group in Global

Pharma

Consumer electronics

FMCG

Internet

80

0

16–17 18–22 23–26 27–32 33–35 36–40 41–45 46–50 51–55 56–60 61–65 65+

Industry ReputationCore Index by age group* in China

Prescription drugs

FMCG

Internet

Consumer electronics

100

0

16–17 18–22 23–26 27–32 33–35 36–40 41–45 46–50 51–55 56–60

* Age 16-17 and 56- were excluded due to the low number of respondents

The Study

37

Where do you mainly get your information about companies?

Breakdown:

1. Company websites 16% 2. Twitter 1%3. Facebook 5% 4. Other online source 14%

5. Other 1%6. Newspaper ads 10%7. Newspaper stories 10%8. TV ads 13%9. TV news 17% 10. Radio ads 2% 11. Radio news 3%12. Magazine ads 1% 13. Friends or family 7%

The rest:

36%online

6 7 8 9 10 11 12

13

1

2

3

4

5

The Study

38

Reputation Core Index andonline usage

80

Less than 1 hour

1–3 hours

3–6 hours

More than 6 hours


0

40

Reputation Core Index and education level

Primary

Secondary

College, university

Still studying

80


0

40

More time spent online results in a higherreputation score

The Study

39

The Observation

40

The Observations

Lusha NiuDirector

“...A company that is lit up from the inside and committed to use its influence for the betterment of

individuals or society speaks to the heart of Chinese people, thus

earning unconditionaltrust – and strengthening "Mind

Space” – from stakeholders.”

Lusha NiuDirector for MSLGROUP China

In the Age of Earned Trust, is Your Corporate Reputation Reputable?The meaning of reputation differs around the world – the meanings aren’t always precise but they’re also not incorrect. The MSLGROUP Reputation Impact Indicator study is our attempt to fill in the gaps and present a logical, reasonable, and actionable solution to the reputation puzzle. We now understand three important conclusions from this research:

1) While brands can be global, a company’s reputation is very much shaped at a local level;

2) The ‘Mind Space’ of stakeholders has significant influence over a company’s reputation;

3) To develop reputation-enhancing content for a company, we need to identify specific reputation drivers and address the reputation core.

Armed with this knowledge, how can I build, re-build, maintain or improve the reputation of the company I work for or own?

Trust at first sight does exist in China

Chinese people are characteristically suspicious – we have been ingrained to cast doubt on everything in our lives. So when we learned that China is more optimistic about the reputations of companies, we didn’t believe it. Yet the results spoke for themselves: Chinese respondents on average gave higher reputation scores to the 41 companies in the study, and respondents from Sweden, France, Germany and the United Kingdom are comparably more skeptical. We are actually living in a less ‘harsh’ part of the world and we don't realize it.

Great news but what can or should we do with this new information?

Develop trusting relationships with our stakeholders by delivering on our promises

Our study shows that among four industry clusters (Pharma, FMCG, Internet, and Consumer Electronics), Chinese respondents rank ‘delivers on its promises’ as the number one driver of a company’s reputation when looking at the strength of its relationships with customers. This aspect doesn’t even register on some industries at the global level. Why is that?

41

The Observations

Just as the oxytocin hormone in the human brain could increase trust, ‘Mind Space’ is your corporate oxytocin. If we can build a stronger ‘Mind Space’ in people, we can move the needles of corporate reputation to make it more trustworthy.

The answer lies in Wuchang (‘五常’) or the Five Constant Virtues of Confucius. He regarded Xin (信) as one of the five most important values of humanity, which had become compromised during the last four decades of China’s opening up. It’s inevitable that some areas are overlooked to allow a nation to prosper economically. However, individuals, businesses and the government suffer in various ways.

Now we are beginning the process of restoring that trust and people are quickly valuing trust more than ever before. Before, Internet start-ups could excel in business with a star CEO, but now, they have to deliver on their promises just to stay in the competition. Consumer electronics companies can no longer rely on the clout of brand names and fancy new product launches to keep market share – they have to deliver on their promises. Companies in the FMCG and pharmaceutical industries must also change to preserve their reputations in China.

Reputation-enhancing content is not what it is, but what it can be

Companies need to do more than just grab attention, it needs to create an impression that allows stakeholders to easily think about it thus increasing the chances of making it the brand of choice. We call this ‘Mind Space’ - the strength or quality of brand awareness – and there is a positive correlation between ‘Mind Space’ and a company’s reputation. Just as the oxytocin hormone in the human brain could increase trust, ‘Mind Space’ is your corporate oxytocin. If we can build a stronger ‘Mind Space’ in people, we can move the needles of corporate reputation to make it more trustworthy.

So how exactly does that work?

Move away from ‘we know best’ and move into ‘we know how to make it best for you’

This is not easy. It requires a 180-degree change in mindset, but this should be the guiding principle of any business that wants to succeed in China today. When describing corporate behavior, both Chinese and global respondents rank ‘has a positive influence on society’ top of the list across all industry clusters. But what does ‘positive influence on society’ mean in today’s China context?

Our study shows that China values an inspiring and uplifting company vision more than other countries. A company that is lit up from the inside and committed to use its influence for the betterment of individuals or society speaks to the heart of Chinese people, thus earning unconditional trust – and strengthening ‘Mind Space’ – from stakeholders.

Companies, large or small, are in great need – more than ever before – of defining and presenting its own vision to local audiences and ensuring all actions and operations support this locally. Some of the most successful global companies failed our reputation test in China because they never spoke to the ‘Mind Space’ of Chinese consumers. Companies that rely on Hong Kong or Singapore as their gateway to mainland China today limit their chances to go through that gate in the future. As our study proves, reputation is your license to operate and it definitely is local.

42

The Observations

Mastering the balancing act between the court of law and the court of public opinion can help build a reputable local operation

We have seen too many examples of companies succeeding in the rule of law but failing miserably in the court of public opinion in China. As we operate in the age of earned trust, even courts are sometimes constrained by public opinion. With the absence of any formal government lobbying mechanism in China, the only effective channel left for companies to change public perceptions is by having a direct conversation with the public and the respected elite.

Make communication strategy part of your China business strategy

Parachuting a US or European-centric communication framework to China does not increase your company’s reputation locally. China no longer admires other people or other countries for their qualities or traits. China admires companies that are truly improving the lives of its people, leaders for inspiring employee excellence, and behaviors that are full of care and respect.

As communications becomes even more fragmented and digitized by the second, a sound reputation is no longer a life-long goal. How can we communicators seize that high reputation moment and maximize it before the next trend or moment arrives? Money and effort aside, it takes wisdom and knowledge to transform that what it is today to what it can be tomorrow.

At MSLGROUP, we believe the journey to help businesses succeed in the age of earned trust is just beginning: A reputation in China is your relationship with China.

43

The Observations

About the Editor:

Pär Uhlin is a consultant in theCorporate Communications practiceat MSLGROUP in Stockholm. He hasa rich experience from communicationin a global environment, and has spent15 years in Asia working at MSLGROUPoffices in Beijing, Hong Kong, andShanghai. Pär has been a senior advisorto several large multinationals in Asiaand has considerable experience inboth crisis and reputation management.He has a Bachelor’s degree in BusinessAdministration with a Major inInternational Marketing, and a Master’sdegree in Asian Studies, from theUniversity of Stockholm, Sweden.

About the Editor for China Section:

Tzyy Wang applies nearly two decades of corporate advisory and strategic communications expertise in the US and China to enhance MSLGROUP China's reputation-building initiatives. She particularly focuses on producing impactful content for audiences and enriching teams with global viewpoints.

44

AboutMSLGROUP ChinaAs a Business-Driven Communications Consultancy, we’re focused on delivering INTEGRATED, creative programs through data-based INSIGHTS, and driven by making a real IMPACT on business through strategic communications in the digital age.

MSLGROUP China is a full-service strategic communications and social engagement consultancy with more than 200 staff in Beijing, Shanghai, Guangzhou and Chengdu delivering business results for some of the world’s most valuable brands. We were named ‘China Agency of the Year’ twice within four years by The Holmes Report. MSLGROUP also won accolades from SABRE, the International PR Association, the China PR Association, the International Business Awards, and China’s New Media Festival.

AboutMSLGROUP We are Publicis Groupe’s strategic communications and engagement group, advisors in all aspects of communication strategy: from consumer PR to financial communications, from public affairs to reputation management, and from crisis communications to experiential marketing and events.

45

MSLGROUP.CN

Wei WeiMarketing [email protected]