It pays to engage with the locals

Chinese firms investing in the UK must be more proactive in raising their profiles and brand awareness

Chinese companies investing in the United Kingdom face a multitude of challenges and opportunities, not least due to the fact that these corporations, who are household names in China, are unknown to the vast majority of people in the UK.

Chinese firms that go global via mergers and acquisitions, direct investment or initial public offerings on the London Stock Exchange should carefully consider their public relations, marketing and branding strategies so they best fit their corporate objectives. Some companies will have to invest more time, effort and money in protectively raising their profiles and brand awareness, while other companies may choose to remain out of the limelight. It typically depends on the sector and strategic intent.

Though the UK does not have the same level of skepticism or mistrust toward Chinese companies that is pervasive in the United States, there are millions of people who do not know China, understand its business culture, have any interest in the country or indeed trust its corporate champions.

This sentiment is often echoed in the media and in investment circles in London, where Chinese firms are often given a rough reception and are not given the benefit of the doubt.

For companies such as Lenovo, Huawei and Bank of China that serve two customer groups - corporate clients and a retail, consumer base - there has been the need to raise their brand and profiles in what are very competitive industries.

For other firms such as state-owned Shanghai Bright Food Group, which bought a 60 percent stake in UK cereal business Weetabix in 2012, its participation in the UK media before and after the transaction has been minimal. This may seem surprising given Weetabix is such a well-known brand, but for Bright Food the deal was primarily driven by attractive financial fundamentals and the fact that it provided the opportunity for Bright Food to learn production, distribution and marketing skills from a well-established global leader. It also recognized the potential to roll out Weetabix's various products to the Chinese consumer. As such, Bright Food has not yet felt the need to publicly engage with stakeholders in the UK besides at the time of the Weetabix deal.

This is in stark contrast to Lenovo or Huawei, which are selling their branded goods in the UK and have effective and efficient PR and marketing machines. Huawei has over the years employed various UK public relations agencies and has retained a financial and corporate communications agency in the UK and in other key markets. This is in addition to its in-house team of PR professionals. Huawei has also signed sponsorship deals with football clubs Arsenal of the UK and Atletico Madrid of Spain, and it clearly recognizes the importance of raising its corporate and brand profile.

Lenovo has adopted equally high-profile sponsorship deals with actor Ashton Kutcher, basketball star Kobe Bryant and the US National Football League, and it was an official sponsor for the 2006 Winter Olympics in Turin, Italy, and the 2008 Summer Olympics in Beijing.

One might ask how Chinese corporations benefit by engaging in a structured communications plan in Europe. The upside, albeit not initially tangible, can manifest itself in a variety of ways. First and foremost, by adopting an open dialogue with the media it will demonstrate that you not only take communications seriously but that, unlike so many domestic Chinese companies, you want to be known as trustworthy and transparent. Being secretive, evasive and not answering media inquiries will simply undermine any trust observers have in the business and is likely to damage your corporate reputation. When perceptions are reality, getting it wrong can be very damaging.

The other benefit of telling the corporate narrative is that it presents the opportunity to answer why the Chinese company is bothering to go global, which helps establish credibility and profile with key stakeholders such as politicians, customers, suppliers, partners and potential investment targets. At a time when Chinese firms have either delisted from the London Stock Exchange or significantly undelivered on market expectations or, even worse, been embroiled in corporate governance and corruption scandals at home, the backdrop for Chinese firms in the UK can be challenging.

In addition, cementing a quality reputation in the market helps attract and retain talent. Getting the right people in the nascent stages of a company's evolution in a new overseas market is crucial for long-term success. Moreover, Chinese firms investing in the West, depending on their size and investment proposition, should not forget how they look to observers back in Beijing. Negative media sentiment and critical comment will be closely scrutinized by vested interests in Chinese government departments.

There is only merit to be had for Chinese companies that commit to a strategic communications program or marketing campaign designed to bolster their local commercial objectives. The recent wave of Chinese property developers in the UK, including Dalian Wanda, Reignwood, Greenland and ABP, have all seen the value in embracing a proactive stance with the media and should in turn benefit from the UK's openness in doing business with China.

The author is a managing director of strategic communications at FTI Consulting, which is based in London.

(China Daily European Weekly 12/12/2014 page11)