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Public Affairs Dialogues Roundtable
Today’s Discussion
I.     Welcome & Introduction: Craig Hoy, Executive
       Director, PublicAffairsAsia
II.    Today’s Objectives
III.   Moderator’s Overview: Alan VanderMolen, President,
       Asia Pacific, Edelman
IV.    Survey Results & Discussion
V.     Break
VI.    Social Media/PA Case Studies & Discussion
VII.   Conclusion: What does this mean for public affairs in China:
       Foreign MNCs, SOEs, Government, Civil Society
VIII.Cocktail Reception
Introductions
• VIPS:
    –   Mr. Liu Hang, Acting Director, Ministry of Foreign Affairs
    –   Ms. Zhang Xin, SCIO
    –   Mr. Zheng Yannong, Vice President, CIPRA
    –   Mr. Xue Lan, Dean, School of Public Policy & Management,
        Tsing Hua University
•   Craig Hoy, PublicAffairsAsia
•   Alan VanderMolen, Edelman
•   Frank Lavin, Edelman
•   Steven Cao, Pegasus
Today’s Objective
1. Discuss impact of social media on public
   affairs in Mainland China
  –   Review survey results and case studies


2. Discuss the future of public affairs given the
   new role of social media
  –   Foreign MNCs, SOEs, Government, Civil Society
Public Affairs Dialogues Roundtable
Moderator’s Overview:

  Social Media Landscape
What is Social Media?
• Internet-linked
• Many-to-many, user generated content
• A keyboard and a point-of-view gets you into
  the discussion
• Governments, companies and citizens are
  becoming their own media companies
What Does It Look Like?

  OLD:                          NEW:
Pyramid Model         Sphere of Cross-influence

  Organization                  Businesses

                        Media                Employees



                 Regulators                     Investors



                         NGOs                Trade
                                             Bodies
 Mass Audience                  Consumers
• Conversations can start
                                        anywhere within a network

producers              commenters
                                     • Influence flows from multiple
                                        sources – no longer the sole
                                        domain of mass media
                                     • Influence can spread in any
                                        direction
            curators
                                     • Real people can be
                                        influencers and/ or amplifiers
                                     • Different pyschographics:
 sharers                 watchers       Watchers, Sharers,
                                        Commenters, Producers,
                                        Curators

                               conversations start anywhere
                       – and involve influencers of all stripes
China Internet: The Numbers
•   338 million Internet users
•   181 million bloggers, 119 million regularly update
•   155 million people use mobile phone for Internet
•   124 million social network (SNS) users
•   102 million BBS users
•   62.8% of Internet users are aged 10 - 29
                         Data source CNNIC reports June and November 2009
China’s Major Websites All Have
    Social Media Components
• QQ /Tencent from IM to gaming to blogs
• BBS: from tianya.cn to People’s Daily to
  Baidu.com to tiexue.net…
• SNS: Kaixin001.com, Renren.com, 51.com
• Blogs and news commentary: Sina.com,
  Sohu.com
• Video: Youku.com, Tudou.com
• Microblogging: Sina, QQ
• Auction/e-commerce: Taobao.com
Trust in the Internet
• 84.3% of Chinese Internet users believe that the
  Internet is their most important source of
  information.
                                     Data source CNNIC June 2009
Trust wanes for most traditional information sources;
                                     Word-of-mouth on par with media

               100%
                90%
                80%              70%                    2008                                                       2009
                70%
                60%                                                                          50%                                                         53%
                                          47%                                                                              49%                                    49%
                50%                                                                                                                 44%
                                                               39%
                40%                                                                                   34%                                                                         34%
                30%                                                     22%
                20%
                10%
                 0%
                          Television news                    Articles in                   Articles in               News coverage Conversations Conversations
                             coverage                        business                     newspapers                  on the radio with your friends with company
                                                             magazines                                                                and peers       employees


                                                                                                                                                                            N/A




C95-98,103. [TRACKING] Now I’m going to read you a list of places where you might get information about a company. Please tell me how credible you believe each one
of them is as a source of information about the company—is it extremely credible, very credible, somewhat credible, or not credible at all? (Top 2 Box), Informed publics
ages 25-64 in China.




                                                                                                                                                                                    13
The Unwritten Rules
• National pride
• Anti-establishment: Chinese Netizens love
  challenging authority
• Sensational: Chaozuo 炒作 approach
• Replicable: Zhuanzai 转载 culture
A View From The Government
The characteristics of online public opinion crises …
    suddenness 突发性
    destructiveness 破坏性
    urgency 紧迫性 …

In the Internet age, many of the means of news control that were effective in
    the past are no longer useful, and many in fact bind our own feet and
    hands, creating passivity in the handling of crises by the party and the
    government.
在网络时代,许多过去行之有效的新闻管理办法有的已经不起作用,有的
    反而束缚我们自己的手脚,造成党和政府处理事件的被动。

From government document: ‘How public prosecutors can neutralize online
   opinion crises’ — August 2009
   http://media.nfdaily.cn/content/2009-08/13/content_5553979.htm
Public Affairs Dialogues Roundtable
Edelman/PublicAffairsAsia Social
Media Survey: November 17, 2009

        Online Survey Results
Methods
• This survey was conducted over the Internet
  beginning November 6 and ending November 13.
• A total of 132 interviews were submitted by the
  end of active data collection.
Respondent Profile
• One out of three respondents are communications specialists
  with MNCs or SOEs. One in five work with consultancies.
  Approximately one in 10 are employed by government or
  NGOs.
• Six out of ten claim to be decision makers for government or
  public affairs strategy in China. The remainder are mostly
  involved in the implementation of government or public
  affairs strategies.
• More than six out of ten respondents are residents of China
  or Hong Kong.
Importance of “Social Media” to
   Overall Public Affairs Strategy in
                China
How important is social media to your
broader public affairs strategy in China?
Extremely important                         17%
Very important                              28%   74%
Somewhat important                          29%
Not particularly important                  14%
Not at all important                        13%
Social Media’s Influence Over
              Public Policy
To what extent do you believe opinions
expressed in online and digital social
media channels influence
contemporary public policy in China?
The most influential media               10%
channel available
                                               67%
Often more influential than              57%
other media channels
No more influential than other           24%
media
Less influential than other media        9%
channels
How the “Social Media” are Used
        by Respondents
                           How often do you conduct    And how often do you
                           a systematic search of      communicate news and
Answers                    social media for news and   information about your
                           information about your      business via social media?
                           business?
Many Times a day                     11%                          5%
At least once a day                  27%         59%              16%
Several times during the             21%                          16%
week
At least once a week                 12%                          17%
Less than once a week                29%                          46%
How Social Media is Used in
               Organizations
         Represented in this Survey
Which of the following statements best
reflects your organization’s use of social media
in a public affairs context in China?
We fully utilize social media platforms as part    17%
of our public affairs strategy and have
evaluated its impact                                     60%
We have started to use social media platforms      43%
as part of our public affairs strategy but have
not yet evaluated its impact
We do not utilize social media platforms as part   32%
of our public affairs strategy
We avoid social media platforms as part of our     8%
public affairs strategy
Department or Function
                Responsible for
              Social Media in China
In your organization, which department
(function) is responsible for strategic
social media communications in China?
Marketing department                      11%
Corporate communication / Corporate       23%
affairs
Public relations department               16%
Public affairs department                 8%
No particular department assigned         42%
Statements About
   Social Media
Statements About
   Social Media
Public Affairs Dialogues Roundtable
Online Public Affairs
   Case Studies in China
• The Coca-Cola Company - Huiyuan
• Tengzhong- Hummer
• Hangzhou 70kph
• Mineralized water
The Coca-Cola Company
failed bid to buy Huiyuan
How Story Broke
Media breaks story
September 3, 2008 — Huiyuan reports Coke takeover bid to
  Hong Kong market regulators, HK media pick it up

Social media reacts
September 5 — Sina.com video interview* that says Coke's
  acquisition of Huiyuan would violate anti-trust law

Further reaction from social media
September 8 — Sina video transcript taken down — netizens call
  it 封口门 (hush-gate), alleging that Coke attempted to
  manipulate public opinion              * With lawyer Qian Weiqing, trade analyst
                                                     Mei Yuxin, and consultant Li Su
How Story Played Out
National pride issues
September 5 - 12 — Internet discussion focuses on allegations of
  quid pro quo for Coke Olympic sponsorship, national pride,
  sale of national jewel to foreign company, criticism of
  Huiyuan CEO Zhu Xinli
— Mainstream media follows tone of Internet debate

Slow reaction
September 12 —Coca Cola Company denies cover-up charges

Deal is rejected
March 18 2009 — Regulators finally turn down the deal; netizens
  claim victory
Lessons Learned
• Buyer and seller treated this as “transaction
  communication” - top down

• Completely ignored grassroots / digital
Tengzhong - Hummer Deal




        Image from
        http://www.dongying.com.cn/qcpd/xwzx/sdpl/42041.shtml
How Story Broke
Unstructured announcement by GM / Tengzhong
June 1, 2009 — GM Chapter 11 announcement says Hummer brand will be
   discontinued
June 2 —GM says MOU signed with Chinese buyer for Hummer; later that day
   CNN and NY Times identify it as Tengzhong, Tengzhong then confirms

Social media reaction
June 3 through August — Blog posts criticize the deal, saying Tengzhong will
   get only a brand name not any technology, and alleging that the deal is for
   money laundering or a way to export capital from China. Such online
   criticism continues throughout June. Bloggers suggest that the
   government may not approve the deal

Announcement of deal confirmation
October 9 — Tengzhong and GM announce deal is finalized
How Story Played Out
Government reaction to new announcement
October 10 — In a Xinhua report, the Ministry of Commerce states that it has not received
    the required applications from Tengzhong.

Further social media reaction
October 12 — Bloggers say Tengzhong may have set up a offshore company to circumvent
    regulations; CCTV news anchor and blogger Rui Chenggang criticizes the takeover on his
    blog as "against the Chinese government's commitment to low-carbon economy
    development and environmental laws“.

Widespread negative speculation and further online criticism of the deal continue. Still in
   play…
Lessons Learned
• No communication co-ordination between buyer and seller
• As with Coke / Huiyuan: this treated as “transaction
  communication” - top down, ignoring grass roots / digital
• Buy-side and sell-side vulnerable to nationalistic commentary
• National pride issues can attract celebrity bloggers who have
  clout of mainstream media with strong digital / grass roots
  following
Hangzhou 70kph
How Story Broke
Media report fatal car accident
May 7, 2009— Hu Bin (20) driving souped-up car, hit and killed Tan Zhuo, a
   "working class" man (25) while crossing a street.
Witnesses said that Hu's speed was enough to send Tan flying, but media
   reported police gave him a minor citation for driving at 70 kph.

Social media reaction — “human flesh search engine” 人肉搜索
May 7 - 14 — Netizens outraged at apparent deference to Hu's wealthy
   background, and his nonchalance — photo of he and friends smoking and
   laughing near scene of fatal accident
”Human flesh search engine" uncovers Hu's driving record and other personal
   information and attempts to find out his family connections. "70 kph"
   becomes online catch-phrase.
How Story Played Out
Police reaction to controversy
May 15 — Hangzhou police released update estimating Hu's speed between
   84 and 101 kph.

Resolution
July 20 — Hu Bin appeared in court and is sentenced to three years in prison.
Netizens compare photos released to the press against photos taken at the
    scene of crime and suggest that Hu paid someone to take his place in jail.
A week later Hu expressed regret and offered proof of his identity.
Lessons Learned
• Authorities are subject to same online forces as
  companies
• Chinese netizens are sensitive about cases of
  apparent abuses by the rich and well-connected
• Slow police reaction to online criticism enhanced
  netizen suspicions
• Once “human flesh search engine” behavior starts,
  even baseless rumors are credible to netizens
Mineralized Water
How the Story Broke
Story broke on BBS website
Late July 2008 — BBS post “Master Kong, where is your water source?”
   appears, accusing Master Kong (康师傅) of quality problems, foremost
   that their mineral water is merely tap water.
Huge response from netizens, who accuse the company of false advertising.

Traditional media picks up story
August 6, 2008 — National Business Daily picks up the story, noting that
   bottling plant is located in an area without natural springs.
Reporter speaks to Master Kong representative, who says: "Everyone does it.
   A one or two kuai bottle of water can't be natural spring water."
How Story Played Out
Regulators react
Mid August — government regulators get involved, review bottled water
   standards.
Corporate response
September 2 — Master Kong apologizes for creating the "gap in
   understanding" by not adequately explaining its "superior source”. Water
   is now labelled as “distilled”, “mineral” or mineralized”.
Reputational fallout
September 9 — Results of an online poll conducted by China Youth Daily
   reveal: 57.3% of respondents will no longer buy Master Kong water;
   72.9% believe that supervision of the water industry needs to be
   strengthened
Lessons Learned
• Social media is the world’s biggest fact-checker and
  can rapidly expose false advertising
• Traditional media now feeds off social media
Public Affairs Dialogues Roundtable

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Public Affairs Dialogues Roundtable

  • 2. Today’s Discussion I. Welcome & Introduction: Craig Hoy, Executive Director, PublicAffairsAsia II. Today’s Objectives III. Moderator’s Overview: Alan VanderMolen, President, Asia Pacific, Edelman IV. Survey Results & Discussion V. Break VI. Social Media/PA Case Studies & Discussion VII. Conclusion: What does this mean for public affairs in China: Foreign MNCs, SOEs, Government, Civil Society VIII.Cocktail Reception
  • 3. Introductions • VIPS: – Mr. Liu Hang, Acting Director, Ministry of Foreign Affairs – Ms. Zhang Xin, SCIO – Mr. Zheng Yannong, Vice President, CIPRA – Mr. Xue Lan, Dean, School of Public Policy & Management, Tsing Hua University • Craig Hoy, PublicAffairsAsia • Alan VanderMolen, Edelman • Frank Lavin, Edelman • Steven Cao, Pegasus
  • 4. Today’s Objective 1. Discuss impact of social media on public affairs in Mainland China – Review survey results and case studies 2. Discuss the future of public affairs given the new role of social media – Foreign MNCs, SOEs, Government, Civil Society
  • 6. Moderator’s Overview: Social Media Landscape
  • 7. What is Social Media? • Internet-linked • Many-to-many, user generated content • A keyboard and a point-of-view gets you into the discussion • Governments, companies and citizens are becoming their own media companies
  • 8. What Does It Look Like? OLD: NEW: Pyramid Model Sphere of Cross-influence Organization Businesses Media Employees Regulators Investors NGOs Trade Bodies Mass Audience Consumers
  • 9. • Conversations can start anywhere within a network producers commenters • Influence flows from multiple sources – no longer the sole domain of mass media • Influence can spread in any direction curators • Real people can be influencers and/ or amplifiers • Different pyschographics: sharers watchers Watchers, Sharers, Commenters, Producers, Curators conversations start anywhere – and involve influencers of all stripes
  • 10. China Internet: The Numbers • 338 million Internet users • 181 million bloggers, 119 million regularly update • 155 million people use mobile phone for Internet • 124 million social network (SNS) users • 102 million BBS users • 62.8% of Internet users are aged 10 - 29 Data source CNNIC reports June and November 2009
  • 11. China’s Major Websites All Have Social Media Components • QQ /Tencent from IM to gaming to blogs • BBS: from tianya.cn to People’s Daily to Baidu.com to tiexue.net… • SNS: Kaixin001.com, Renren.com, 51.com • Blogs and news commentary: Sina.com, Sohu.com • Video: Youku.com, Tudou.com • Microblogging: Sina, QQ • Auction/e-commerce: Taobao.com
  • 12. Trust in the Internet • 84.3% of Chinese Internet users believe that the Internet is their most important source of information. Data source CNNIC June 2009
  • 13. Trust wanes for most traditional information sources; Word-of-mouth on par with media 100% 90% 80% 70% 2008 2009 70% 60% 50% 53% 47% 49% 49% 50% 44% 39% 40% 34% 34% 30% 22% 20% 10% 0% Television news Articles in Articles in News coverage Conversations Conversations coverage business newspapers on the radio with your friends with company magazines and peers employees N/A C95-98,103. [TRACKING] Now I’m going to read you a list of places where you might get information about a company. Please tell me how credible you believe each one of them is as a source of information about the company—is it extremely credible, very credible, somewhat credible, or not credible at all? (Top 2 Box), Informed publics ages 25-64 in China. 13
  • 14. The Unwritten Rules • National pride • Anti-establishment: Chinese Netizens love challenging authority • Sensational: Chaozuo 炒作 approach • Replicable: Zhuanzai 转载 culture
  • 15. A View From The Government The characteristics of online public opinion crises … suddenness 突发性 destructiveness 破坏性 urgency 紧迫性 … In the Internet age, many of the means of news control that were effective in the past are no longer useful, and many in fact bind our own feet and hands, creating passivity in the handling of crises by the party and the government. 在网络时代,许多过去行之有效的新闻管理办法有的已经不起作用,有的 反而束缚我们自己的手脚,造成党和政府处理事件的被动。 From government document: ‘How public prosecutors can neutralize online opinion crises’ — August 2009 http://media.nfdaily.cn/content/2009-08/13/content_5553979.htm
  • 17. Edelman/PublicAffairsAsia Social Media Survey: November 17, 2009 Online Survey Results
  • 18. Methods • This survey was conducted over the Internet beginning November 6 and ending November 13. • A total of 132 interviews were submitted by the end of active data collection.
  • 19. Respondent Profile • One out of three respondents are communications specialists with MNCs or SOEs. One in five work with consultancies. Approximately one in 10 are employed by government or NGOs. • Six out of ten claim to be decision makers for government or public affairs strategy in China. The remainder are mostly involved in the implementation of government or public affairs strategies. • More than six out of ten respondents are residents of China or Hong Kong.
  • 20. Importance of “Social Media” to Overall Public Affairs Strategy in China How important is social media to your broader public affairs strategy in China? Extremely important 17% Very important 28% 74% Somewhat important 29% Not particularly important 14% Not at all important 13%
  • 21. Social Media’s Influence Over Public Policy To what extent do you believe opinions expressed in online and digital social media channels influence contemporary public policy in China? The most influential media 10% channel available 67% Often more influential than 57% other media channels No more influential than other 24% media Less influential than other media 9% channels
  • 22. How the “Social Media” are Used by Respondents How often do you conduct And how often do you a systematic search of communicate news and Answers social media for news and information about your information about your business via social media? business? Many Times a day 11% 5% At least once a day 27% 59% 16% Several times during the 21% 16% week At least once a week 12% 17% Less than once a week 29% 46%
  • 23. How Social Media is Used in Organizations Represented in this Survey Which of the following statements best reflects your organization’s use of social media in a public affairs context in China? We fully utilize social media platforms as part 17% of our public affairs strategy and have evaluated its impact 60% We have started to use social media platforms 43% as part of our public affairs strategy but have not yet evaluated its impact We do not utilize social media platforms as part 32% of our public affairs strategy We avoid social media platforms as part of our 8% public affairs strategy
  • 24. Department or Function Responsible for Social Media in China In your organization, which department (function) is responsible for strategic social media communications in China? Marketing department 11% Corporate communication / Corporate 23% affairs Public relations department 16% Public affairs department 8% No particular department assigned 42%
  • 25. Statements About Social Media
  • 26. Statements About Social Media
  • 28. Online Public Affairs Case Studies in China • The Coca-Cola Company - Huiyuan • Tengzhong- Hummer • Hangzhou 70kph • Mineralized water
  • 29. The Coca-Cola Company failed bid to buy Huiyuan
  • 30. How Story Broke Media breaks story September 3, 2008 — Huiyuan reports Coke takeover bid to Hong Kong market regulators, HK media pick it up Social media reacts September 5 — Sina.com video interview* that says Coke's acquisition of Huiyuan would violate anti-trust law Further reaction from social media September 8 — Sina video transcript taken down — netizens call it 封口门 (hush-gate), alleging that Coke attempted to manipulate public opinion * With lawyer Qian Weiqing, trade analyst Mei Yuxin, and consultant Li Su
  • 31. How Story Played Out National pride issues September 5 - 12 — Internet discussion focuses on allegations of quid pro quo for Coke Olympic sponsorship, national pride, sale of national jewel to foreign company, criticism of Huiyuan CEO Zhu Xinli — Mainstream media follows tone of Internet debate Slow reaction September 12 —Coca Cola Company denies cover-up charges Deal is rejected March 18 2009 — Regulators finally turn down the deal; netizens claim victory
  • 32. Lessons Learned • Buyer and seller treated this as “transaction communication” - top down • Completely ignored grassroots / digital
  • 33. Tengzhong - Hummer Deal Image from http://www.dongying.com.cn/qcpd/xwzx/sdpl/42041.shtml
  • 34. How Story Broke Unstructured announcement by GM / Tengzhong June 1, 2009 — GM Chapter 11 announcement says Hummer brand will be discontinued June 2 —GM says MOU signed with Chinese buyer for Hummer; later that day CNN and NY Times identify it as Tengzhong, Tengzhong then confirms Social media reaction June 3 through August — Blog posts criticize the deal, saying Tengzhong will get only a brand name not any technology, and alleging that the deal is for money laundering or a way to export capital from China. Such online criticism continues throughout June. Bloggers suggest that the government may not approve the deal Announcement of deal confirmation October 9 — Tengzhong and GM announce deal is finalized
  • 35. How Story Played Out Government reaction to new announcement October 10 — In a Xinhua report, the Ministry of Commerce states that it has not received the required applications from Tengzhong. Further social media reaction October 12 — Bloggers say Tengzhong may have set up a offshore company to circumvent regulations; CCTV news anchor and blogger Rui Chenggang criticizes the takeover on his blog as "against the Chinese government's commitment to low-carbon economy development and environmental laws“. Widespread negative speculation and further online criticism of the deal continue. Still in play…
  • 36. Lessons Learned • No communication co-ordination between buyer and seller • As with Coke / Huiyuan: this treated as “transaction communication” - top down, ignoring grass roots / digital • Buy-side and sell-side vulnerable to nationalistic commentary • National pride issues can attract celebrity bloggers who have clout of mainstream media with strong digital / grass roots following
  • 38. How Story Broke Media report fatal car accident May 7, 2009— Hu Bin (20) driving souped-up car, hit and killed Tan Zhuo, a "working class" man (25) while crossing a street. Witnesses said that Hu's speed was enough to send Tan flying, but media reported police gave him a minor citation for driving at 70 kph. Social media reaction — “human flesh search engine” 人肉搜索 May 7 - 14 — Netizens outraged at apparent deference to Hu's wealthy background, and his nonchalance — photo of he and friends smoking and laughing near scene of fatal accident ”Human flesh search engine" uncovers Hu's driving record and other personal information and attempts to find out his family connections. "70 kph" becomes online catch-phrase.
  • 39. How Story Played Out Police reaction to controversy May 15 — Hangzhou police released update estimating Hu's speed between 84 and 101 kph. Resolution July 20 — Hu Bin appeared in court and is sentenced to three years in prison. Netizens compare photos released to the press against photos taken at the scene of crime and suggest that Hu paid someone to take his place in jail. A week later Hu expressed regret and offered proof of his identity.
  • 40. Lessons Learned • Authorities are subject to same online forces as companies • Chinese netizens are sensitive about cases of apparent abuses by the rich and well-connected • Slow police reaction to online criticism enhanced netizen suspicions • Once “human flesh search engine” behavior starts, even baseless rumors are credible to netizens
  • 42. How the Story Broke Story broke on BBS website Late July 2008 — BBS post “Master Kong, where is your water source?” appears, accusing Master Kong (康师傅) of quality problems, foremost that their mineral water is merely tap water. Huge response from netizens, who accuse the company of false advertising. Traditional media picks up story August 6, 2008 — National Business Daily picks up the story, noting that bottling plant is located in an area without natural springs. Reporter speaks to Master Kong representative, who says: "Everyone does it. A one or two kuai bottle of water can't be natural spring water."
  • 43. How Story Played Out Regulators react Mid August — government regulators get involved, review bottled water standards. Corporate response September 2 — Master Kong apologizes for creating the "gap in understanding" by not adequately explaining its "superior source”. Water is now labelled as “distilled”, “mineral” or mineralized”. Reputational fallout September 9 — Results of an online poll conducted by China Youth Daily reveal: 57.3% of respondents will no longer buy Master Kong water; 72.9% believe that supervision of the water industry needs to be strengthened
  • 44. Lessons Learned • Social media is the world’s biggest fact-checker and can rapidly expose false advertising • Traditional media now feeds off social media