Imagethief

Month: November 2005

  • The Harbin water crisis

    A couple of days ago, in response to a link I posted to his roundup of articles on the Harbin water crisis ESWN put this comment up on my site:

    As you are the PR expert, how would you have managed the situation? Would you have own up to the benzene problem way up front? Alternately, how would you handle the ‘clean-up’ afterwards? This is a serious matter because they were clearly way, way out of their depth in terms of what they believe that they could get away with.

    Well it’s always flattering to be considered a “PR expert”, although it’s probably closer to the truth to say I play a PR expert on TV. But the Chinese government’s response to the Harbin crisis has been a case study in bad PR management, and, with ESWN’s prodding, I’d like to explain why.

    But first the disclaimers: I am not a crisis specialist. We have hard-core people in my company who do that sort of thing. However, I’ve been doing PR for a while and there are some generally applicable rules of crisis PR that most of us in the industry know. Also, I am basing my analysis on China’s English language press coverage and on foreign press coverage. My Chinese isn’t good enough to get past headlines most of the time, so I can’t comb through Chinese-language press in any depth. Finally, I was not directly involved in this event and, therefore, do not have full information. Bear all of that in mind.

    With that out of the way, let’s have some fun.

    The Event and Coverage
    There are some basic facts that should be reviewed first, along with the history of the press coverage. The explosion in Jilin first happened on Sunday, November 13th. While there was some agonizing about the immediate casualties and the potential for major toxic events posed by shoddy chemical plant construction, there was no hint that this event had resulted in a severe toxic release.

    A China Daily report from November 14, the day after the explosion, said this:

    The local government has kept monitoring the air and water quality in the area, and further investigation into the blast is being made.

    So from nearly immediately after the explosion, representations were being made that the potential toxic fallout from the explosion was being monitored.

    A China Daily search for Jilin + Explosion, which I will use as an inexact proxy for press coverage as it should catch most articles, yields zero results from November 15 through November 22, when the announcement of Harbin’s water cutoff was made. A Xinhua search turns up a similar gap over those dates, except for one story from November 16, which carries the following headline:

    Chemical plant blasts releases no toxic substances [sic]

    The headline is based on an assertion by the Jilin provincial government that there is no problem with air quality. The story makes no mention of water. With the benefit of hindsight, this omission looks suspicious.

    So that’s a one-week gap –at least in English press– when there are no newsworthy public announcements about the potential aftermath of a chemical plant explosion next to a major river that flows through densely populated urban areas and into a neighboring country, except for a patently incorrect or deceptive one.

    On November 22, the announcement of the interruption of Harbin’s water supply is made. Initial reports specifically deny any link between the shut off and the Jilin explosion, as is clear from this China Daily article, the first in English language press to report on the stoppage. The article implausibly cites “maintenance and repair” as the official reasons for a previously unannounced stoppage. Although there is vague mention of the Jilin explosions in official statements cited in the article, any connection is vociferously denied by the authorities:

    The common refrain was that the explosion at Jilin city of neighbouring Jilin Province on the upper reaches of Songhua River may have caused a leakage of poisonous substances into the river as it is only a few hundred metres away from the plant. Harbin is located at the middle reaches of the river.

    But an official with the Harbin municipal government, who did not want to be named, dismissed the assumption as “just a rumour.”

    Harbin Water Supply Company refused to comment but sources at the municipal environment bureau said that there was nothing abnormal with the quality of water in the river.

    In corroboration, Jilin said that the local environment bureau found that the water quality was barely affected after the blast.

    In the absence of hard information, rumors flew through Harbin, stoking public anxiety and leading to a run on stores, as reported in that same article. As reported in foreign press, there was a large, voluntary evacuation of the city. Wells had to be dug quickly in Harbin and massive amounts of water shipped in rapidly.

    Only on the next day was there a Xinhua report confirming that the explosion had polluted the river. Interestingly, the admission is made by a central government agency, the State Environmental Protection Agency (SEPA). This article makes several interesting statements:

    “After the explosion at the Jilin Petrochemical Company under China National Petroleum Corporation, our observation showed pollutants containing benzene had flown into the Songhua River and caused water pollution,” said an official with SEPA.

    Benzene is a substance harmful to human health.

    The official said upon receiving the report, the administration immediately sent experts to Heilongjiang Province to assist local pollution-control efforts. Quality of the river water is under close observation for 24 hours every day.

    The Jilin and Heilongjiang provincial governments have activated their contingency programs for environmental incidents, and have taken measures to ensure the safety of potable water, said the official.

    He said Jilin had quickly blocked entry of the pollutants into the river and discharged water from a reservoir to dilute pollutants in the river. It also organized environmental, water conservancy and chemical experts to discuss pollution control plans, and beefed up monitoring work.

    Most interesting is the assertion that Jilin had “quickly blocked entry of the pollutants into the river and discharged water from a reservoir to dilute pollutants in the river”. This suggests that the Jilin government knew exactly what was going on. Bear that in mind for later.

    Then the inevitable consequences began to unfold. Public erosion of trust in government was one casualty, as reported by the Financial Times:

    “I am fleeing,” said Pang Shijun, a 50-year-old man among the crowds at the central railway station. He said his wife had already left the night before to go to the nearby city of Jixi. “I just do not trust the government to provide true information on this.”

    Whoops. More from Reuters:

    “It’s worrying, because it may not have a strong smell or colour, so you can’t tell when it’s gone,” said Hong Shan, a retired official exercising beside the river. “It’s up to the government to keep us informed. We can’t tell ourselves.”

    Commentators in Beijing and further afield condemned the “lies” told before the authorities revealed what had really happened. A paper in Harbin itself tried to play down the crisis.

    And, of course, there were recriminations. CNPC and the Jilin provincial government have emerged as the principle villains for running the plant and covering up the benzene release, respectively. Here the New York Times reports:

    “We will be very clear about who’s responsible,” said Zhang Lijun, deputy director of the State Environmental Protection Administration, at a news conference in Beijing. “It is the chemical plant of the C.N.P.C. in Jilin Province,” he said, referring to China National Petroleum.

    Mr. Zhang said the investigation would consider whether there was any criminal liability for the spill.

    PetroChina Company, a subsidiary of the state-owned China National Petroleum listed in New York and Hong Kong, is responsible for the company’s domestic petrochemical production, the China National Petroleum Web site says. China National Petroleum holds 90 percent of PetroChina’s shares.

    The official New China News Agency reported that China National Petroleum had apologized. The company “deeply regrets” the spill and will take responsibility for handling the consequences, the deputy general manager, Zeng Yukang, was quoted as saying. The vice governor of Jilin Province, Jiao Zhengzhong, also apologized to the people of Harbin, The Beijing News reported Thursday.

    Zhang Lijun is no champion of transparency, as we’ll see later. Even the China Dailyweighed in, with an editorial yesterday condemning the actions of the Jilin government. They noticed the same thing I did; that the Jilin government has essentially admitted that it knew all along that there was a problem:

    A spokesman from the State Environmental Protection Administration said yesterday at a news conference that Jilin Province and Jilin Petrochemical Corporation had adopted timely measures to stop the toxic spill from being discharged into the river immediately after the explosion.

    This shows that the corporation knew very clearly about the contamination and its possible result but still wanted to keep the secret to itself.

    Leaders from the Jilin provincial government and Daqing Petroleum Administration apologized for the contamination of river water and for the inconvenience and losses the pollution has inflicted on Harbin’s residents. But they never apologized for the hiding of truth.

    We do not know what is behind the cover-up. It might be because they were afraid that they would have to pay money for the losses the pollution has incurred in Harbin, and it might be because they were afraid of losing face.

    But the fact is they have brought shame on themselves by covering up the truth.

    So there is the chronology. Now the fun bit.

    Where They Went Wrong
    No matter how much you prepare and plan, shit happens. That the Jilin chemical plant exploded and released tons of benzene was bad. It could have been incompetence or it could have been plain bad luck. But the actions of CNPC and the Jilin and Harbin governments after the disaster have tarred them with the stink of incompetence and untrustworthiness regardless of the reasons for the original disaster. They were caught in an enormous lie, and that makes everything else they have to say about the disaster untrustworthy. And people will remember.

    Without having been in the boardroom, it is hard to say why the decision to cover up the disaster was made. It may be that Chinese doesn’t provide and incentive for openness about these sorts of things; this is an area where I don’t have enough information to make an informed judgment. Certainly neither the Chinese government nor Chinese business has a great reputation for transparency. The explosion would already be subjecting the plant to scrutiny for safety and operational standards. Perhaps a toxic release would have brought a different level of scrutiny, say from central government as opposed to malleable provincial authorities. And perhaps that level of scrutiny would have turned up some unpleasant truths surrounding CNPC, the plant and the Jilin government.

    All of this is complete speculation. But, of course, that is kind of speculation a cover-up provokes, and why cover-ups are almost always bad PR decisions. I use the phrase “spin doctor” in gentle self-mockery in the subtitle of my blog. Perhaps that’s a mistake, because it perpetuates a myth about PR, which is that it is all about twisting the truth about these kinds of situations. It’s a shame people see PR that way, because a surprising amount of the time, our advice in crises is to be completely honest. And when lives are at stake there is simply no other choice.

    Lives were at stake in this case. The moment CNPC and the Jilin government knew they had a chemical release on their hands they should have first informed the central government (which, scarily, perhaps they did) in order to motivate the appropriate support, and then informed the public. Harbin isn’t the only city along the Songhua river, and every other town along the same way deserved to know what was flowing past their riverbanks.

    How much benzene was released? What are the potential effects? How long will it take to reach key population centers, and how diluted will it be at each stage? What will need to be done to protect those population centers? What help is being offered?

    No doubt people would have panicked anyway, just as they did in Harbin. But after the supermarket shelves emptied out, there still would have been several days in which to prepare alternative water supplies and take other protective measures before the taps had to be turned off in Harbin. And the Jilin provincial government and CNPC, a major government-owned corporation (and, to a lesser extent, the Harbin and Heilongjiang governments), would not have squandered whatever trust people had in them.

    Now, I am applying western PR standards to China, which has a completely different tradition of openness and public communication than developed, western countries. As ESWN pointed out in his comment, the Jilin authorities were clearly way out of their depth in dealing with the crisis and in evaluating what they could get away with. That’s true. And it is a serious problem that the Chinese government needs to solve if it wants development to continue smoothly.

    Government is a Brand, Whether You Like it or Not
    Let’s think of the Chinese government as a brand. This is an oversimplification, but the comparison holds true in many ways. Like all brands, government, in this case Chinese Government (new and improved!), possesses or seeks certain attributes that it believes will help it in the execution of its business. Competence, compassion, pragmatism, security, and so on. For most governments, trust is an essential attribute. The job of governing is easier when people trust what the government tells them and trust that the government will provide essential services and intervene in times of stress or disaster.

    To see how erosion of trust can affect a government badly, look at the current US administration, which has two trust serious issues right now. First, many people saw Katrina as a huge abrogation of trust, and it severely damaged government credibility at municipal, state and federal levels by undermining the compact that the government will help to mitigate severe crisis. Second, a majority of the US public now believes that it was misled about the reasons for launching the war in Iraq. That is eroding public support and making it much harder for the administration to prosecute its plans in Iraq.

    With regards to China, the foreign knee-jerk reaction is to say, “The Chinese government is authoritarian! Why should they give a damn about trust?” But I would wager that most Chinese people trust their government on a fundamental level, or at least want to trust it, and that the Chinese central government places a fairly high priority on maintaining that trust. You can see aspects of this in many of the initiatives the CCP is prioritizing right now. Programs to control corruption and help the rural poor to climb out of miserable poverties are all part of building and maintaining trust. Even propaganda is designed to foster trust in the government. Power may flow from the barrel of a gun, but it is significantly easier to hold onto that power and exercise it effectively when people trust you. The Chinese government is executing several simultaneous, tricky balancing acts. I think they realize that their jobs will be much easier the more people trust them. Unfortunately, they seem unable to break their bad, Stalinist habits.

    Credibility engenders trust, and goes hand-in-hand with it. And credibility is a really serious issue for the Chinese government. Just today, the Chinese government was busyrefuting a report in New Scientist that bird flu deaths in China total over 300. (The Horse’s Mouth blogged the Boxun report that also covered this a couple of days ago – it’s blocked in China.) But people will continue to be suspicious of Chinese government protestations because the track record is bad. If the Chinese government expects to maintain credibility and trust it has to come up with the goods. Statements like this,reported in today’s FT in a good story on Chinese media reaction to the disaster, will not help:

    “There are many ways to release information. Making it public is one way and only informing the local governments and enterprises along the route of the contamination is another,” said Zhang Lijun, a vice-director of the State Environmental Protection Agency.

    The South China Morning Post summed up the Chinese government’s credibility gap (via Howard French’s “A Glimpse of the World”) blog:

    The way in which the affair has been handled raises fresh concerns about the willingness of mainland officials to disclose bad news.

    The PR aphorism is that trust is easy to lose and, once lost, fiendishly hard to regain. That’s why we so often counsel honesty and direct action in crisis situations. So here is Imagethief’s free PR advice to the Chinese government: what works in a closed, Stalinist state does not fly in a modern, open economy. There is no having it both ways. CNPC is a publicly listed company traded in Hong Kong and New York and need to behave like one, even with regards to its operations in China.  The expectations upon you are changing. That is the inevitable price of success, development and integration with the rest of the world. If you expect to continue that success, you will have to learn how you want to communicate around these kinds of events. In the long run, whatever you it is you think you are achieving by trying to hide your disasters, missteps and calamities, you are almost certainly achieving the exact opposite. Honesty in times of crisis can build your credibility. Infinite successful cover-ups add nothing to it. Every failed cover-up destroys it that much more.

    You can only get caught in so many lies before people stop listening.

    Update: Two good roundups of foreign press articles from the Peking Duck, here andhere.

    Also, tough luck if you live in the small villages along the Songhua, as reported by the New York Times here.

    Update 2: This, in particular, is  a good story to read. From the Washington Post’s Philip Pan, it discusses how local journalists broke the coverup story. That’s Chinese media doing its job well. What will be telling is how the Chinese government –especially the central government– reacts. If it is used as an excuse to crack down further on the ability of media to report such things, or if the journalists responsible are punished, it will be a very bad sign indeed.

  • How to write a generic China bird flu story

    Bird flu may not be sweeping through the human population, but it’s sure sweeping through the media. It seems that every newspaper and wire service has packed their Beijing reporter off to the poultry-infested boonies of China (which begin right outside Beijing’s fifth ring road) to report on the dire and pox-ridden scene in the Chinese countryside. As a result, the stories have begun to take on a certain formulaic feeling.

    As a public service to my readership, I’d like to present Imagethief’s handy, paragraph-by-paragraph guide to the standard China bird flu feature story. When it finally achieves Enlightenment and begins recognizing bloggers, the Pulitzer committee knows where to reach me.

    1) Alarmist headline:

    Rural Chinese farms perfect incubators for planet-destroying superbug!

    2) Rustic introductory scene to demonstrate China’s backwardness and ignorance:

    November 8, Choukeng, China: In the remote village of Choukeng, chicken farmer Shen Jifen wades through a veritable lake of chickenshit.

    “Chickens, chickens, chickens. It’s all we know in this village,” said the 103 year old, dirt-poor illiterate farmer as he lazily swatted a wheezing, mortally ill chicken off of his head. “We raise chickens, we eat chickens, we wear chickens. I treat these chickens like my own children. Except for the slaughtering.”

    3) Inducement of disgust to drive home backwardness and ignorance:

    So numerous are the chickens in Choukeng that the entire village is three feet deep in warm chickenshit. To get to market or visit neigbors, villagers pole small, flat-bottomed boats through the fetid chickenshit. The flimsy houses are built on stilts, and anything heavier than a chicken rapidly sinks.

    “Last year three people drowned in chickenshit,” said Shen. “We buried them in coffins of baked chickenshit. It’s our primitive and destitute way.”

    4) Sinister hint of biological menace, amplified by rural backwardness:

    But now the stream of chickenshit is drying up as Choukeng’s once nearly infinite supply of chickens begins to drop dead. Avian flu has arrived here, carried by the Siberian booze-cranes that stop to feed in Choukeng as they follow their migratory route from Smolensk to winter drinking grounds in Lan Kwai Fong.

    Instead of culling their sickening flocks or incinerating the dead birds, the villagers of Choukeng are unwittingly creating an environment ripe for the rise of  pandemic bird flu.

    “When chickens die, we collect the blood and rub it all over our bodies,” said Shen. “The blood of chickens that have died from infection is a well known cure for wind.”

    5) Raise the specter of government incompetence:

    Now the Chinese government has arrived in Choukeng to manage a cull of sick poultry. But instead of helping, they may be making the problem worse. Local officials are using compensation money provided by the central government and intended for farmers to stage bloody, baijiu-lubricated cockfights and to build the world’s largest, free-standing concrete chicken statue in a bid to attract more tourists to the impoverished region.

    6) Gratuitous journalist abuse:

    A journalist who attempted to sneak into one of the cockfighting sessions disguised in a chicken suit was detained by plainclothes police and forced to write ‘I am not a giant chicken’ 1000 times on a blackboard, before he was stripped of all clothing and possessions, sprayed with superglue, rolled in glitter, and turfed out of town with the Chinese words for “dangerous lunatic” written on his forehead in permanent marker.

    7) Alarm bells from the international health bureaucracy:

    “They’re making a righteous screw-job of the whole thing up there,” said Bjorn Neutral-Öbserver, a Beijing-based representative of the World Health Organization. “The Ministry of Health would cover up news of acne if it could get away with it.”

    Mr. Neutral-Öbserver stressed, however, that bird flu remains confined to poultry and migratory birds.

    “For the moment, it’s still perfectly safe to visit remote, unsanitary shitholes infested with thuggish police,” he said before boarding a plane bound for his apocalypse bunker buried deep in the Swiss Alps.

    8) Vox populi:

    Foreigners living in China are paying little heed to the brewing health crisis in the hinterlands.

    “What? What are you talking about? What’s this about chickenshit? And why do you have ‘dangerous lunatic’ written on your forehead?” commented a Beijing based PR consultant and blogger who gave his name only as ‘Imagethief’.

    9) Tear-jerking rural finale:

    But in remote and smelly Choukeng village, the crisis is already all too real.

    “When all the chickens die, the lake of chickenshit will dry up and become hard,” said a wistful Shen. “Our way of life will come to an end. And it will be really hard to pole those little boats around.”

    Bonus prediction: The bird flu story du jour is the closure of live poultry markets in Beijing. Later this week, we’ll hear about black-market sales of live poultry. You heard it here first.

  • American Internet firms in Chinese peril

    I like talking with journalists because, naturally, they have a way of asking interesting questions. The same journalist who got me thinking about corruption in PR hit me with a poser while we were talking:

    “Name a successful American Internet firm in China,” he said.
    “Well,” I answered, “there’s always…er.” And I thought about a bit.
    “What about…nah, they’re not doing so hot.” And I thought about it a bit more.

    Ok, so there isn’t one. American Internet firms are, by and large, doing badly in China. The whys and wherefores of this could fill a few posts, but a few reasons come to mind:

    • Arrogance
    • Poor communication
    • Lack of understanding of Chinese culture, reflected in interfaces, communication tools and services provided
    • A preference for local products among Chinese Internet users

    The large portals are, of course, media firms, and they have also been victimized by many of the same things that have bedeviled traditional media firms coming into China, such as a strict regulatory regime and a sense that the services offered here are sanitized versions of the real thing. While local Internet firms are subject to the same restrictions, they seem to be able to manage appearances better. I think this is in part because they benefit from the (correct) perception that they serve the Chinese audience first. Every time a foreign Internet firm gets involved in a censorship or other scandal, it reinforces that perception. Plus, a little “root for the home team” nationalism goes a long way in China.

    Two bits of recent corporate communication illustrate the problems of foreign Internet firms in China, in different ways. The first is a statement issued by Yahoo! Hong Kong (not China) in response to the controversy over the turning over of Chinese journalist Shi Tao’s e-mail to the Chinese police, and his subsequent arrest. Here it is:

    Yahoo! Hong Kong Statement
    18 October 2005

    As a company operating in the jurisdiction of the Hong Kong Special Administration Region, Yahoo! Hong Kong adheres to all applicable local laws and regulations in Hong Kong and our privacy policy. The Chinese authorities have never contacted Yahoo! Hong Kong to request any of its user information.  Yahoo! Hong Kong and Yahoo! China are managed and operated separately and independently of one another.  As such, Yahoo! Hong Kong and Yahoo! China have never exchanged or revealed respective user information to one another.

    This is really interesting for several reasons. First, its an attempt by Yahoo! Hong Kong to distance itself from Yahoo! China. Now, checking the bottom of the Yahoo! China website will show you that Yahoo! China is also operated out of Hong Kong, by Yahoo! Holdings, Hong Kong. So it is, indeed, a different operating company from Yahoo! Hong Kong.

    There are a couple of legitimate reasons why Yahoo! Hong Kong would want to do this. First, they were probably getting a lot of misdirected media inquiries and hate mail. Second, as they serve the uppity and more democratically minded Hong Kong audience, the may wish to distance themselves from something they find unpalatable.

    Nevertheless, from an International PR point of view, this makes no difference. The damage done to Yahoo! by the Shi Tao affair was at the international brand level. Yahoo! Hong Kong, Yahoo! China, or Yahoo! Upper Volta, it doesn’t make any difference. Especially to the liberal minded Americans and Europeans who are still Yahoo!’s bread-and-butter customers. And the continued woes in that department can be seen in this recent, very interesting article from the International Herald Tribune. As previously predicted in this space, the “just following local laws” excuse is now coming under wider scrutiny:

    Yahoo, meanwhile, gets to keep its piece of the gigantic China pie, insisting like most Western companies doing business there that it must abide by the laws of countries in which it operates.

    “What if local law required Yahoo to cooperate in strictly separating the races?” asked Max Boot, a senior fellow at the Council on Foreign Relations, in a widely circulated essay for The Los Angeles Times. “Or the rounding up and extermination of a certain race? Or the stoning of homosexuals?”

    Jim Etchison, an information technology management consultant from Pomona, California, created BooYahoo, at booyahoo.blogspot.com, a site dedicated to urging “freedom-loving citizens of the Internet” to stop using Yahoo services “as a result of their oppressive policies.”

    “I was a happy Yahoo user for about nine years and was so offended by the Shi Tao business that I boycotted them,” Etchison said in an e-mail message. “What begins in China will end where I live.”

    Of course, nobody in China can see Jim’s site because it is on Blogspot and, therefore, blocked.

    The Yahoo! Hong Kong statement is also interesting because it suggests that the legal obligations of Yahoo! Holdings, Hong Kong (operator of Yahoo! China) may be conflicted between Hong Kong’s privacy regulations and China’s demands for more-or-less complete fiat over all media firms operating within mainland borders or serving mainland audiences. But I am unschooled on such things, and this is just a wild hare.

    The other interesting announcement was one from online auction juggernaut, eBay, in response to a zero-fee deal from pesky, Chinese competitor Taobao (part of Jack Ma’s Alibaba empire, recently sold to, whaddaya know, Yahoo!):

    eBay (Nasdaq:EBAY)(www.ebay.com) today issued the following statement regarding Taobao’s pricing challenge:

    “Free” is not a business model. It speaks volumes about the strength of eBay’s business in China that Taobao today announced that it is unable to charge for its products for the next three years.

    We’re very proud that eBay is creating a sustainable business in China, while providing Chinese consumers and entrepreneurs with the safest, most professional, and most exciting global trading environment available today.

    An interesting article in Red Herring looks at the competition between Taobao and eBay. It raises industry observers’ doubts about Taobao’s approach. But it also had this to say:

    EachNet founder and Chairman Bo Shao once dismissed the Taobao approach, pronouncing, “Free is not a business model.” Free-at-first, however, does seem to have worked for Taobao’s parent company Alibaba, the business-to-business (B2B) portal Mr. Ma founded in 1999. Hangzhou-based Alibaba, which Mr. Ma claims is the largest global B2B site in the world, did not charge for its first three years, but Mr. Ma asserts that the company has been in the black since the third quarter of 2002. “We know the difference between investing money and burning it,” he says.

    Jack Ma’s success in building Alibaba suggests that he has some idea what he is doing, so it will be interesting to watch how this unfolds. He also claims, in the Red Herring article, that Taobao can make money on advertising alone, although they plan to go to a fee model eventually. There is another issue with auction sites as well. Unlike a news site, the value of an auction site, and hence its power to attract and retain users, grows as the size of its community expands. The network effect creates a more interesting and liquid marketplace. So if you can afford to spend money to build a critical audience, why not? Indeed, as Red Herring points out, this tactic was used successfully against eBay in Japan already.

    But beyond that, there is the tone of eBay’s press statement. This is the kind of thing that peaks a flack’s interest. If eBay’s plan was to project confidence, it failed. Instead, it projected defensiveness. I don’t think many people suspect that Taobao is “unable to charge”. I think most people suspect it simply doesn’t want to charge until it has to. And there is a strategic argument to be made for that. Free can be a business model…for a while. eBay could have found a more constructive way to make its argument.

    If the ultimate test of a press statement is how journalists respond to it, this one didn’t pass muster. The journalist I was speaking to summed it up in one word:

    “Snarky,” he said.

    Note: Thanks to the journalist cited above for turning me on to both of these statements, and for talking through some of this with me.

  • Are PR and MNCs corrupting Chinese media?

    The week before last I had lunch with a foreign correspondent who asked me if there was corruption in PR in China. Although I was only providing background, and not speaking to him on the record, I was, to put it politely, diplomatic in my answer. Ever mindful of the brand that graces my business-card, it’s an issue that I tend to tread lightly upon. I did, however, send him on to a friend who has been here longer than me and who works independently and is, therefore, inclined to be more forthcoming about such things.

    But the topic arose again last week, courtesy of bloggers Bingfeng, of Bingfeng Teahouse, and Myrick, of Asiapundit. Bingfeng fired the first shot in a post telling foreigners who complain about China’s media restrictions to find something better to do with their time. The crux of his argument was the blocking of any individual site affects only a few thousand people. However, a pervasive culture of media corruption fostered by “foreign MNCs” (multinational corporations) affects everyone in China:

    As we all know, the blocking of these web sites, in its worst situation, influence the life of a few thousands in china, while at the same time, the corrupt journalists/media taking money from firms and various organizations and writing misleading articles to fool the public is a everyday story in china, as i know, the norm of taking money from firms to make favorable media exposures was cultivated by many MNCs in china, which bribe chinese journalists in the name of “media PR” or “marketing PR” activities, and bribe them when they have a “PR crisis”. such collusion affects the lives of millions of people and you could do something to change it, especially a lot of them are related with MNCs in china.

    There is some truth in what Bingfeng wrote. On this site I have previously written, tongue somewhat in cheek, of the “transportation claim” commonly paid to journalists who attend press events in China. According to the journalist I had lunch with, foreign technology companies originated this practice about ten years ago. I don’t know the detailed history. Anyone who does is invited to comment.

    So I agree with Bingfeng to some extent. However, before he makes me his “star of the week” again, he needs to read on, because I’m going to bite later.

    Myrick posted a rather interesting response to Bingfeng. First, he pointed out that he, a foreign correspondent by day, was recently offered 500 RMB (about US$60) himself while attending an event sponsored by a nameless European telecommunications firm. He mentioned that, although he refused the money, three Chinese journalists who were present accepted. I suspect that this was vanilla “transportation claim” (车马费) as 500 RMB is the amount typically offered to journalists who attend an event from out of town, while 200 RMB is the going rate for journalists from in town. If Myrick was attending an event in the town he is based in, then there is some inflation happening.

    I would like to point out that whoever offered Myrick the money, even if it was simply transportation claim, was an idiot or badly trained. Foreign correspondents work differently than Chinese ones on many levels. Any PR firm, local or foreign, that doesn’t train their staff on these differences is courting trouble. In my company we often dissuade clients from mixing local and foreign journalists not only because it makes things like the transportation claim awkward, but because we often have different messages for domestic and overseas audiences.

    In a rebuttal to Bingfeng that I agreed with, Myrick wrote the following:

    Bingfeng is correct that this is a serious problem for China – a 2003 study by the Institute for Public Relations [proxy link – WM] puts China dead last in a list of 66 countries in a study on the acceptability of bribery for coverage.

    Still, by citing the existence of this problem as a criticism of free-speech advocates he is making a common fallacy of argument by evading the issue.

    This is also known as the Chewbacca defense.

    That last link is from the blocked-in-China Wikipedia. I regret that readers here won’t be able to access it without a proxy.

    The problems of censorship in and press bribery in China are related issues, both shape the content of news here. But to say that censorship of a website is something that only affects a “few thousand” is a gross understatement. While it may be only a handful of residents who are affected by a block on a single blogspot site, the control of information in China promotes ignorance, retards democratic development and prevents the building of an educated civil society. This affects 1.3 billion.

    The report that Myrick points to is well worth looking at. The reason why I agree with Myrick’s response, besides correctly calling out the “Chewbacca defense”, is that it points out that there is a relationship between corruption of the media and censorship. I think that relationship is quite deep, and has to do with how the media have evolved here and what Chinese societal expectations of the media are. I also think that relationship should be looked at in terms of corruption in general.

    Not to be dissuaded, Bingfeng came back with the following:

    [The] so-called “bribery for coverage” is more than just giving money to get favorable media exposures, thanks to the cultivatons of MNCs in china, the collusion between media and business has evolved into more sophisticated forms that influence/manipulate the public and they are unfortuantely followed by more and more organizations and individuals. khodorkovski-style chinese firms are on the horizons and their agents are already very active. this imposes an immediate threat to the emerging “civil society” in china, not the censorship.

    “free speech/press fighters” could do something to change the media corruptions, but in the short term i don’t see their chant could do anything to reduce the media censorships. MNCs are the one who set the norms of media bribery, government “PR”, media “PR”, marketing “PR”, etc. and our “free speech/press fighters” could do something to ask them to change the norms or even follow a more strict business ethics. this is a more approachable goal.

    like many things in china, the dysfunctional part of the system is not removed directly through a confrontational approach, but through the cultivations of incremental parts of the system. a less corrupt media will forster an environment that leads to less censorship.

    the only disadvantage of a different roadmap is that hte process will be less satisfying for the moral superiority of some westerners and perhaps doesn’t fit into the political agendas of some of them.

    Here again, Bingfeng is half right. There is “collusion between media and business [that] has evolved into more sophisticated forms that influence/manipulate the public.” We call that public relations, and it’s what I do for a living. But no matter how distasteful you might find it, it is not necessarily corrupt, and seems not to have undermined civil society in most of the rest of the world.

    The origins of the transportation claim notwithstanding, blaming MNCs and PR companies for corruption in the Chinese media is absurd. Complicit though they may sometimes be, it’s like blaming vultures for the death of your horse in the desert. This argument is the reframing of a victimization theme I often see wielded against foreigners and multinationals when discussing problems in China. It plays well on nationalist sentiments and often does a really good job of deflecting attention away from serious, underlying issues worthy of scrutiny. The Chewbacca defense, as Myrick pointed out.

    Furthermore, to suggest that a cleaner media will lead to fewer restrictions on free speech is, quite simply, to put the cart before the horse. I believe the exact opposite is true. Free speech and a less fettered press are much more likely to be effective weapons against corruption.

    Who Are You Calling Corrupt?
    Chinese companies and institutions, as anyone who lives here rapidly learns, are quite capable of corruption without any foreign influence whatsoever. Corruption, in the media or anywhere else, isn’t something that springs up spontaneously, or as the result of the wicked influence of foreign MNCs, who are perennial favorite targets of Chinese nationalism. Corruption is like a gas. It’s always there and it expands to fill the shape and volume of the space available for it.

    The volume of space available for corruption is created by lack of transparency and by well established patterns of government and commercial behavior. While many countries, including the United States, have corruption, China leaves a comparatively wide-open space for it. For some details, sift through Transparency International’s website, which ranks China at number 78, alongside such illustrious company as Morocco, Sri Lanka, Senegal and Suriname. Or this more recent article (subscription) by Andrew Yeh, one of the Financial Times’ Beijing-based journalists, on the OECD’s assessment on the impact of widespread corruption in China.

    However, this isn’t to say that some MNCs won’t collude with corruption. MNCs tend to be amoral beasts that adapt themselves superbly to any environment in which they need to operate. Many governments are aware of this, which explains laws like the United States’ Foreign Corrupt Practices Act. Companies like mine often help to clean up the mess when MNCs get caught misbehaving. Bingfeng may be shocked to learn how often those cleanup efforts involve absolutely no bribes.

    For the record, in my time in the PR industry in China, I have never witnessed anything I felt to be corrupt. I have never seen anyone in my company do anything I felt was corrupt. Nor, in the course of their work with me, have any of my clients, all MNCs, done anything I felt was corrupt or even borderline. One of my clients’ policies on separating advertising and paid coverage from PR is so strict that we don’t even help with advertorial copy, something I did all the time in Singapore.

    If I was asked to do something I felt was wrong, I would decline to do it and warn whoever was asking me of the consequences. If necessary, I would resign before compromising myself, my colleagues or my company. I don’t think this is likely to happen, so it doesn’t keep me up nights. Our (Chinese) finance director is one of the most scrupulous and careful men I have ever met. He is constantly reminding us of our financial disclosure and probity obligations as part of a listed, international media conglomerate. Furthermore, despite the occasional ghastly scandal, there is no company as aware of the value of its reputation as a global PR company.

    None of this, however, means that Bingfeng is wrong about there being corruption in the media or in PR in China. Within our office, it’s the local, Chinese PR firms that take the most flack for corruption. Chinese consultants in my office have spoken to me many times of what they perceive as the distinctly lower ethical standards of local firms. This may simply be their pride talking, or just empty gossip. Although given how close many of our Chinese consultants are to Chinese journalists, they’d be in a position to hear about anything that happens.

    Now, allow me to pose a hypothetical scenario. If you’re MNC X, and you want to buy some coverage savaging your bitter competitor, MNC Y, in the China market, which of the two following PR firms would you use to arrange it?

    1. The SOX compliant multinational PR firm with public company accounting requirements and an international reputation to protect or,
    2. The privately held, locally owned firm with no international reputation or financial disclosure obligations.

    Simple risk management suggests the latter would be a better choice. Now perhaps, was this to actually happen, it would be a case of a wicked MNC leading an otherwise chaste Chinese PR company down the dark path of corruption. More likely, it would be willing buyer/willing seller. Furthermore, I’d be shocked Smurf blue to hear that Chinese companies, forever battling their own corruption demons, would turn up their noses at these methods. I don’t think they’d need to learn the trick from foreign MNCs.

    In case you are wondering, although I think it’s a bad idea, I don’t feel that the transportation claim is corrupt. Media corruption thrives in the dark, when its influence is hidden. The transportation claim is completely matter-of-fact and auditable. You can follow the trail, from our cost estimate for events to our invoices to clients to the list of exactly which journalists showed up at a press event, and their sign-in signatures. It’s never guaranteed us good coverage, or even attendance at events. Frankly, I think it’s a desperate waste of money, and it will be a good day for the maturity of Chinese media when it is abolished. But that will only happen when the Chinese media decide for themselves to abolish it, or when all companies with PR efforts in China, both local and foreign, decide to abolish it together. It would take a company with a large risk appetite indeed to unilaterally decide no longer offer the transportation claim, especially while their competitors still did.

    Is my position hypocrisy? Or rationalization? Maybe.

    What is this Media of which You Speak?
    I have been working in China for just over a year, and I, as an individual, am not an expert on the Chinese media. But I have been involved in media-related work, one way or another, for thirteen years, my graduate degree is in media studies, and I work in an industry whose stock in trade is an understanding of media. With that disclosure, you may take the following observations as you will.

    The problem with Chinese media is not that it is being corrupted by ne’er-do-well foreign MNCs or PR firms. Rather, it is that the Chinese media are in transition from explicit state control to something subtler and more reflective of modern Chinese society. It has become something that isn’t developed country media, but which looks like it from a distance. Bound up in this transition are the ongoing changes in China’s media regulations as the government tries to figure out what it wants Chinese media to be, and shifting public expectations of what role the media should play in Chinese society. The tremors of this transition have been documented in Chinese media, overseas media and, not least, by the China blogging community. An interesting recent example includes ESWN’s post on fraudsters representing themselves as journalists.

    If all this seems like a recipe for confusion…it is. This shows in, yes, the opportunities for corruption and, more mundanely, in how the media relate to authority, to multinationals and, of course, to PR firms.

    There is a relationship aspect to PR work everywhere. It’s formalized. We call it, surprisingly enough, “media relations”. An ability to build good relationships with journalists is one of our marketable skills. Here in China, our relationships with journalists are especially cozy. Not corrupt, mind you, just cozy.

    This coziness isn’t unique to China any more than media corruption or the influence of corporate or state parent organizations. Anyone who thinks that the US, for example, is immune to this hasn’t been following the salacious Plamegate affair. This has done wonders to illuminate the shameful coziness that greases the operations of both the Washington DC press corps and the spin-obsessed White House. But in China this coziness is more pervasive.

    Although I never did PR in the US, I did do it in Singapore, which also has state-controlled media often accused of pliancy. Even in Singapore, no matter how good my personal relationships with journalists were (and they were pretty good), there was often an adversarial quality to the professional relationship. That wasn’t necessarily expressed in hostility or bad press, but in healthy skepticism, tough questions, and wariness of spin. All qualities of a decent press corps.

    Here in China I find, on average, that it is much easier for us to control a line of questioning or set it in advance, review coverage and quotes before they go to press, suggest themes and anticipate the tone of stories. Journalists here often expect us to package stories quite completely for them, giving us yet more room to set the agenda. We have stenographers at most media events, and send complete transcripts of press conferences and round tables to the journalists who attend them, often on the same day. It is expected that we will do this. When we can package a story more completely, we can dictate its tone more effectively. Among my Chinese team members, the nickname for pliant journalists is “rabbits”. Not the image of ferocity.

    Now, I want to stress two important things. First, relationships are not a red carpet. We flacks in China are not excused from having to come up with good pitches and interesting events. And we’re not immune to bad press, by any stretch of the imagination. We also have real PR challenges that are unique to doing business in China. It’s just that the relationships are more central to how we work. In the land of guanxi, this is not so surprising.

    Second, and most important, my observations above are industry generalizations. I know many extremely bright and motivated Chinese journalists who take real pride in their work. They are capable of asking dynamite questions, picking up killer angles, and writing hard-hitting and intelligent stories. Chinese journalists have suffered and died for their commitment to their work, and for their integrity and many are worthy of the highest respect. (Contrary to what you might think, most PR people are news junkies and really appreciate dynamite journalism, as long as it isn’t causing trouble for our own clients.) Even many of the “rabbits” are good, smart people working in an established system. Please do not interpret my observations as a condemnation of Chinese journalists.

    Some Chinese media pliancy may simply be a result of a wildly booming industry that is hungry for content. The seller of a product that is in high demand, such as particular content, exerts more control. That’s why Hollywood publicists can dictate question lists for stars, whereas corporate flacks like me seldom can. But I think some of it also descends from the Chinese media’s recent legacy of control and management from above. Chinese media are still evolving their editorial standards and modes of operation. PR firms, multinationals and Chinese firms will all figure out how best to operate and achieve their goals in this environment. That might be cynical, and you don’t have to like it, but it isn’t corrupt. Ruthlessly separating my preferences as a media consumer from my objectives as a PR pro, I am under no obligation to tell a journalist to ask tougher questions of my client.

    Mouthpieces or Watchdogs?
    What does China want from its media? Let me return to the idea that started it all off: the relationship between free speech and corruption. The media can be a potent weapon in fighting corruption, given the space to do so. A few years ago, Jiang Zemin appeared to recognize this when he cited media as one of the country’s great tools in its perennial war against corruption. Of course the media themselves were fighting their own corruption demons in ways that went far beyond low-rent payola for good coverage, as 2004 busts of senior editorial staff from the well known Southern Metropolis News and Nanfang Daily Group showed.

    But beyond media’s own corruption problems, counting on them to help unmask corruption demands independence and a culture of enterprise that needs room to grow. The current government seems to have different ideas, as this recent article from The Economist (subscription) reports:

    The Chinese government’s increasingly hardline stance is encapsulated in Document 16, promulgated this spring. Among other things, this banned the practice of yidi baodao, or “reports from non-local places”, with journalists travelling to distant cities where, free of their local minders, they could write harder-hitting stories about corrupt local officials or social unrest. “This was the best hope for China developing an open press,” says Mr [Nicolas] Becquelin [of human-rights group HRIC]. In Hong Kong, papers critical of China, like Apple Daily, are complaining that advertisers are fleeing because of threats to their mainland businesses. Journalists there are suddenly finding it harder to get visas for travel to the mainland.

    These regulations were also covered nicely by the invaluable Chinese media blog, Danwei.

    Even more worrying, some suggest that anti-corruption drives in China are simply tools to clean out the lingering remnants of the previous power structure and, bizarrely, to implement monetary policy, as suggested by this Asia Times Online article. So, even in their role as corruption fighters, the Chinese media face the specter of being cynically deployed tools of state policy.

    Media can, of course, be effective weapons against corruption, whether that’s corruption in government, business or within their own industry. Even if, for no other reason than fulfilling their own business objectives by attracting eyeballs, most publications love nothing more than to break a big scandal wide open.

    But that will never happen here unless the government can decide what role the media should fill in society: mouthpieces or watchdogs. They can’t be both. You can’t state-manage a media industry to effectiveness as anti-corruption crusaders, and keep it muzzled at the same time. You have to do the opposite. Give them space, in the form of freedom of the press, which is just another way of saying freedom of speech. That will help to lift the veil on corruption everywhere including, yes, in the media itself.

    So when we arrogant foreigners rail against the restrictions on the Chinese media, we aren’t ignoring the problem of corruption in the media, or anywhere else. In fact, we are advocating for the unleashing of China’s most potent weapon against corruption.

    A truly free media.