June 16 2004
Corporate Reputation Clearly On The Agenda For CEO'S In China
Survey shows eighty-nine percent believe that corporate reputation is very important for the development of Chinese
corporations
BEIJING, June 16, 2004 ¨C Brand-building is the number one business objective that corporate reputation and corporate
social responsibility fulfill for companies in China, according to a survey of 122 Chinese business leaders carried out
in May 2004. 75% of the corporate executives polled said that brand-building was the most important business outcome
from their company's corporate reputation. 84% thought that brand-building was the most important achievement for
corporate social responsibility.
The Corporate Reputation Watch (China) survey, targeting Chinese business executives and sponsored by global
communications consultancy Hill & Knowlton and leading Chinese business publication The Economic Observer examines corporate executive level (C-Suite)
perspectives on issues in China such as the importance of corporate reputation, the role of corporate social
responsibility in Chinese companies, and corporate governance issues in China.
This is the first time that the Corporate Reputation Watch survey has been carried out solely in China, although Hill & Knowlton has sponsored five global surveys previously. Responses to the last global survey carried out in August 2003
provide comparative global reference data to the latest survey of Chinese business leaders.
The Chinese survey clearly shows that CEOs not only recognize the importance of their corporate brand, but also the
importance of meeting the demands of their customers. Customers are ranked the most critical external force on a
company's reputation. And product/service problems and customer criticism together rank high in the list of threats to
reputation, other than financial performance, that Chinese CEOs worry most about.
Speaking in Beijing at the launch of the survey results, Paul Taaffe, chairman and chief executive of Hill & Knowlton Inc. said: These findings reveal that Chinese CEO's really understand the link between company reputation and
corporate sales. They are savvy marketers of their companies and of their products, and recognize that the customer is
king. This will make them very strong competitors as more and more Chinese companies globalize.
The results also show that Chinese CEOs, like many CEOs around the world, take very seriously their responsibility to
manage reputation and that both reputation management and corporate social responsibility activities need to be senior
management concerns, added Harlan R. Teller, president of Hill & Knowlton¡¯s worldwide corporate practice. The premise that reputation has tangible business value and must be managed
like other disciplines is embraced in China as it is elsewhere, he said.
Other key findings from the survey include: CSR initiatives are important ¨ 87% of the CEOs surveyed agree that CSR
initiatives contribute a lot to a company's corporate reputation. However, Chinese CEOs understand CSR essentially to
comprise ethical corporate behavior, environmental initiatives and financial donations. And the dominant activity that
their companies undertake in terms of CSR is charitable donations. This is very different from western companies and is
probably a reflection that CSR is in the early stages of development in China and that corporate leaders are still
defining what CSR can mean within a Chinese context.
CEOs are the number one managers of their company's reputation and CSR ¨C 75% of those polled said that the CEO was the
guardian of their company¡¯s reputation, with the Board (12%) as the next highest. Similarly, 63% said that the CEO had
the primary responsibility for managing CSR initiatives, with the Board at 16%. Both CEO percentages are significantly
higher than was found in the August 2003 global study where, for example, among respondents from Europe only 44% saw the
CEO as the prime guardian of corporate reputation.
Boards of Directors are not seen to be doing a very good job ¨ Only 28% of the CEOs polled thought that company Boards
of Directors were doing a good job. Compare this level with the 2003 global study where 61% of N. American CEOs, 72% of
European CEOs and 68% of Asian CEOs believed that Boards of Directors were doing a good job. Cultural differences may in
part explain the different perspective in China. Powerful leaders are perceived to result in powerful companies and so
individual leaders are often more important than Boards. However, as more Chinese companies transition from the public
to private sectors and adapt to more western models of management one of the issues in China may well be the relatively
small pool of qualified Board members for the potential number needed.
Third parties are limited influencers of corporate reputation ¨ While the Government as an opinion former and influencer
of reputation ranks much higher in China than in the US or Europe, other groups, in particular financial analysts and
NGOs, are seen by Chinese CEOs as having negligible impact, which is in contrast to how they are viewed elsewhere in the
world. Similarly, NGO criticism polled only 5% as a potential threat to corporate reputation among Chinese CEOs. This
suggests that either CEOs in China do not yet have as heightened concern about this type of criticism as their
counterparts do in North America and Europe or that NGOs play a more passive and less antagonistic role in China than in
the West.
Research Methodology Name lists were provided by The Economic Observer. 300 surveys were sent out in May 2004 with 102
returned and 20 additional face-to-face interviews. Codification and tabulation of the responses was handled by
Sino-Monitor. The full results (Chinese and English versions) can be viewed at www.corporatereputationwatch.com.
About Hill & Knowlton Hill & Knowlton, Inc. is a leading international communications consultancy, providing services to local, multinational and
global clients. The firm is headquartered in New York, with 70 offices in 37 countries as well as an extensive associate
network. The agency is part of WPP Group plc (NASDAQ:WPPGY), one of the world's largest communication services groups.
Hill & Knowlton is currently celebrating its 20th anniversary in mainland China. The firm was the first international PR firm
to set up operations in China.
About The Economic Observer The Economic Observer is the leading Chinese weekly business newspaper, with a circulation
of 390,000. It targets an audience that represents the powerful, the wealthy and the educated. The Economic Observer is
highly regarded by the business community in China and thought by many to be as popular and influential as the Financial
Times is in the West.
ENDS