from Eurobiz Magazine

October 2009 issue

by Bill Dodson

A British friend’s warehouse in China recently burned down. Jim (not his real name) hadn’t been off work more than an hour or so when one of his employees called him on his mobile phone to tell him the news. Jim was the number two in the company; the General Manager had returned to his home country for a bit of rest and relaxation. The company’s entire stock of components and chemical reagents had just a couple weeks before been moved into the detached building. When Jim arrived the large and still-gathering crowd was told to stand back from the conflagration, at least a hundred yards back. The fire was intensely hot, melting the corrugated metal walls like slabs of butter under a blow-torch. Some in the crowd recorded the drama on their mobile phones, held high above their heads. The local TV news station had already arrived on the scene. A reporter was looking for employees to talk to about the blaze.

Jim was quick to tell any staff on location to remain mute about the fire and its possible causes: no one knew how it had started or what impact it would have on the business, so it was best that all remain mum instead of tossing out half-baked theories on the inferno’s origin. Jim sought out staff on the scene and encouraged them one by one not to talk to any strangers about the blaze, and to be careful about phone calls from individuals they did not know who might show interest in the fire. The following week the factory was busy with police and fire investigators piecing together a forensic pastiche that might deliver clues as to the cause of the fire. The police reiterated what Jim had already told coworkers: don’t talk with anyone about the fire. Jim had to visit the local police station several times as well, to describe in detail the manufacturing processes involved in making their product; sometimes he had to take along specialist engineers to make the explanations clearer to investigators.

In China, the court of first hearing is the local TV news. Watch any local news program around dinner time (though be forewarned you may suffer stomach upset from some of the images) and then again around 10pm. Most of the time the reports are of complaints being aired: car accidents – automobile drivers and cyclists alike – corrupt or bullying police, vapor-bargains that disappear when unwary customers present fake coupons to store clerks, husbands who find themselves victims of bigamy, wives who find themselves scorned. Many times the camera crew is at the scene even before the police arrive, a reporter interviewing the aggrieved before the police have made their official report. In most instances the local TV reporter becomes an on-the-spot investigator and the broadcast becomes the court and jury meting out judgements that are more a salve to the aggrieved than a genuine and objective inquiry into the root of the situation. Much of the theatrics involved in such “journalism” has a great deal to do with a deeply ingrained distrust the public has of local judiciaries, which they believe to be capricious and collusive in their decisions . The aggrieved believe the court of public opinion is the fastest most effective way to get their hearing and their award. They hold out little hope they’ll get a fair hearing or any enforcement of compensation payment should they go through government channels.

I had written several months ago in my column on Black Dragons in business about Fonterra and its joint venture stake in Sanlu, one of the largest domestic producers of dairy in China. It was as much a credit to Fonterra’s handling of the situation before the news broke of the tainted milk products its partner was selling on the market as it was “luck” that the entire industry was colluding to hide a dangerous secret. Fonterra had silently worked government channels weeks before the scandal became public, so that it appeared to most media channels that Fonterra was just as much a victim of the scheme as the families who suffered poisoning. Then, once the news had broken, Fonterra came forward and provided interviewers and investigators with any information they required to clarify the scope of the conspiracy and the extent of the damage. Meanwhile, Chinese companies did exactly the opposite as Fonterra at the height of media coverage, at first denying culpability, and at times bullying consumers. Less than a year after the scandal broke, Fonterra expected to triple its exports to China as consumer confidence in domestic brands collapsed while Fonterra gained credibility as a company operating in the consumer’s best interest.

Fonterra skated through China’s court of public opinion without opprobium; and my friend’s company should not suffer any negative publicity from the fire due to a similarly prudent approach to corporate communications. Silence, when strategically applied, can pay large dividends in China when the unexpected becomes the unreal.

Copyright ©William R. Dodson, 2009