Corporates' crisis communications evolve in the age of social media

Soon after the celebrations of the 70th anniversary of the founding of the People's Republic of China, where basketball is heading for the big time, the NBA crisis quickly reached the Top Hot-Search Index.

Politically sensitive remarks by Daryl Morey, Houston Rockets' general manager, deeply offended Chinese fans. Worse, Adam Silver, president of the NBA, added fuel to the fire by appearing to back Morey.

In a swift response, CCTV, Tencent and some other NBA partners announced they will stop working with NBA. One Chinese NBA fan and netizen commented online: "Morey closed NBA's door to China, Silver locked it and tossed away the key."

NBA is not alone－some foreign brands that have a presence in China have also failed to conduct themselves responsibly in public affairs over the years.

To many Chinese, the root cause of the NBA row in China is the former's perceived value system, which is seen as being against China's. "On the one hand, they care about the money from China's mass market. But on the other, they really don't care about the feelings of Chinese people," one NBA fan said. "NBA supported the violence in Hong Kong. That kind of violence will be labeled terrorism back in their own homeland. So, that is double standards," said another.

Foreign brands like NBA and other foreign companies have impressed the Chinese people over the decades by exuding an aura of superiority. This helped them to expand rapidly in China. It was their heyday.

But, since 2010, Chinese brands outshone their foreign counterparts, robbing the latter of their mystique. Meanwhile, a series of scandals overseas have disgraced many famous brands, including airlines, auto giants, hospitality majors and quick service restaurants.

Experts attributed this trend to weak links between new generations of company managements and evolving corporate values, which eroded the credibility of brands built over several decades.

No more are parent companies of some hitherto famous brands seen as responsible, law-abiding, culture-sensitive legal entities. Poor crisis management skills have led to besmirched reputations, costing billions of dollars eventually.

That underlines the highly specialized nature of crisis communications in the digital age. No more can the task of crisis communications be made integral to the responsibilities of the public relations department.

Crisis communication has evolved into a management mechanism requiring efforts across the enterprise. Crises are often caused by management loopholes or social value problems. A growing number of internal problems can be compared to magma that accumulates negative energy－it is only a matter of time before they explode into a crisis, much like a volcano.

So, enterprises should align their crisis management function with the constant pursuit of self-improvement, rather than making efforts to take off negative news articles online. Such attempts could savage their reputation in a way worse than the crisis itself.

Having worked with several MNCs in China, the UK and the US for over two decades, I think there are several reasons why foreign enterprises behave improperly in local markets and create a crisis for themselves.

Every management model is a double-edged sword, as evidenced by the seemingly democratic management mode adopted by foreign enterprises where every individual voice is respected, but it may result in low efficiency, especially slow decision-making during a crisis.

The current media landscape is no longer the kind of environment that characterized the age of traditional media. In the age of social media, the "golden response period" of crisis management has shifted from 24 hours to eight hours, then six, then three. Soon, it could be almost real time. Some companies may even stress on pre-emptive measures as better than creating a crisis, even if unwittingly, and then fire-fighting.

Some crises call for a faster response. When "China speed" encounters "European speed" in crises, it can create a problem.

This problem, plus the time zone difference, creates the odds that the three golden hours may be wasted more often than not.

Take, for example, the oil leak controversy involving an auto MNC in China. It could have been due to poor coordination between itself and its joint venture partner in China, or poor communication between itself and its global parent. Whatever the cause, the brand stood diminished because of poor crisis management.

It takes years, decades, or even hundreds of years to build a reputable brand, but its equity could be destroyed overnight.

Also, many PR departments of foreign companies report directly to their global headquarters. When standardized crisis management systems developed by a global team are used in a local market without much localization, there is high chance of failure, especially in a market like China where social media environment is a big factor.

A short video clip online could have the potential to cause irreparable damage to a brand in a market like China. The media landscape has changed dramatically.

Today, China has 17 million apps, 25 million WeChat public accounts, 1,000 live-streaming platforms, 130 million daily active users on microblog destinations, 780 million daily active users on WeChat, 250 million daily active users on Douyin, and over 3 million "self media" operators.

Plus, different from companies in Europe and the US, Chinese enterprises are at early stages of integrating crisis management into their mainstream management.

The shortage of specialist crisis management professionals is a common problem. Most of those holding such positions are not experienced in crisis management. Additionally, the power and influence of the PR department in a company are generally limited.

Some PR personnel have to report to HR vice-president, who is obviously not the professional manager of PR. As a result, when a company is in a crisis, most of the PR departments just execute orders from above. Their professional opinions have little influence on decision-making in a crisis situation.

According to a study by Penguin Research, a think tank, the proportion of Chinese consumers who put up with fraud dropped sharply from 41.3 percent in 2017 to 16.9 percent in 2018, and therefore posed a great challenge for enterprises to manage complaints, community relations, and personnel disputes.

Recently, the 2019 Market Regulation Forum announced the launch of the nationwide 12315 complaint reporting platform, making it easier for consumers to safeguard their legal rights in the future.

Six suggestions on crisis management for foreign companies in China were made:

1) Do risk prevention first. Conduct internal cross-departmental risk self-assessments and investigations on a regular basis, to promptly remove loopholes. When in a serious crisis, leverage external experts, if necessary, to handle the crisis properly and efficiently.

2) Establish a customized and localized crisis alert system to fit China's rapidly changing social media environment.

3) Upgrade the internal positioning of the crisis communication and PR departments, and allow them to report directly to the head of operations in China.

4) Constantly improve the crisis awareness and crisis management ability of all staff, provide regular crisis management training, simulation exercises, and crisis communications audits.

5) Establish spokesperson policy and provide spokesperson training on yearly basis, to improve the critical skills of a spokesperson, a kind of corporate soft skills, given their growing importance today in China.

6) Management issues can be fixed, but value problems are more challenging. It suffices not for corporate culture and values to be stuck on the wall; such values should take root in the hearts and minds of employees, and be reflected in their behavior, performance and hence customer experience.

Crises are everywhere in the era of social media. Therefore, the underlying causes of many crises are mostly not pure PR problems, but deep-rooted management and social value problems.

According to a US survey, 80 per cent of CEOs believe that crises are as inevitable as taxes and deaths, and that professional prevention and professional management are what enterprises are expected to do.

Crisis communication in the age of social media has gone from 1.0 (cognition) to 2.0 (perception) to 3.0(identification) today. Against this backdrop, success comes only by winning people's hearts.

Wang Lili is the CEO of YiJian Communications and former chief marketing officer of GE Consumer& Industrial Asia-Pacific.