Amid anti-French demonstrations and calls to boycott its stores, French retailer Carrefour canceled its planned May Day (Chinese Labor Day) marketing campaign, including its annual three-day holiday sale, losing 20% of expected volume sales for that period. For a company boasting over 120 hypermarkets and 280 hard-discount stores across the mainland, that must have hurt.
Meanwhile, elsewhere in the Chinasphere, Microsoft unveiled a marketing campaign of its own. The campaign encourages Chinese netizens to express their love for their homeland and their support for the 2008 Olympic Games by appending a red heart icon plus the word “China” to their user names in MSN messenger, Microsoft’s online instant messaging service. By afternoon the day of launch, over 2 million users had hopped on the “I Heart China” bandwagon.
These two instances of business success and failure represent a change in the way decisions are made in the executive suite: a shift away from enforced apolitical thinking toward more socio-political decision making.
Political Education for Business
In an interview published in the McKinsey Quarterly (February 2008), president of the US Council on Foreign Relations Richard Haass highlighted the need to educate business leaders in politics.
“Today, the environment that business leaders operate in is fundamentally different than it was a generation ago,” he said. “It’s far more political.” And, by political, he wasn’t simply referring to interactions with governments and with those associations among governments.
There is a proliferation of actors in the socio-political scene. Not only are the NGOs and media organizations becoming more powerful, the number of region-specific, community-based organizations has also risen significantly. These small organizations (some so small they’re managed by a single individual) are becoming increasingly active as their influence and reach continue to grow.
In spite of this, most businesses are not yet wired to think and act politically. While many businesses have government or regulatory departments, these departments are often too narrowly focused (i.e., on governments) and are far too detached from line management to influence core business decisions.
“The new world calls for a different sense of… priorities,” says Haass. Socio-political decisive thinking has to be mainstreamed at the top as well as across the organization.
Sin of Omission
With over 10 years of successful operations in China, Carrefour has proven itself adept at managing diplomatic relations with the Chinese government. This skill is further proven by its chairman’s quickness to act on calls for a nationwide boycott of its stores with a proclamation of all-out support for the 2008 Olympic Games, a gesture welcomed by the Chinese government.
So what went wrong at Carrefour? The truth is Carrefour didn’t do anything wrong. They just didn’t do anything (at least not soon enough). And that was a mistake.
What the retailer failed to do was preempt the socio-political fallout from the disruption of the Olympic relay in France earlier that month. By keeping quiet, Carrefour risked someone else defining its political stand on the pro-Tibetan rallies in Paris. And, lo and behold, someone else did.
Had the French retailer announced its support for the 2008 Olympic Games in China just a few weeks earlier (thus, defining its political stand), the May Day sale would have been spared. Shoppers would have had their bargains, Carrefour its 20% uplift in sales, and infuriated Chinese nationalists another French company to pick on. Unfortunately, the announcement came a little too late.
I Heart China Heart MSN
While some companies struggle with socio-politics (trying hard to keep their hands off the muck), others leap in and reap the benefits of opportunity.
One such company is Microsoft. By adding a simple feature to MSN Messenger, the company not only built its corporate equity among the Chinese but also increased usage of its messaging application among Chinese netizens, stealing users from other service providers such as Yahoo!. While this choice may seem like a no-brainer, it did not come without risks.
The choice involved facilitating the support of (thus, itself purporting to support) Chinese nationalism at a time of political upheaval. This could have been (and frankly I’m surprised it hasn’t been) interpreted as an act in support of China’s political stand on Tibet—a sticky situation most business leaders would want to avoid.
Microsoft took the plunge nonetheless. And it’s been smooth sailing so far for the software development giant. So does this mean we shouldn’t be apolitical and always take a definitive stance? Not necessarily.
In a world with an increasing number of socio-political influences, businesses will have to widen their scope and heighten their sensitivity. Companies are no longer judged simply as businesses but as corporate citizens who will find it increasingly difficult to remain politically noncommittal.
Any decision—whether it be a clear choice or no choice at all—needs to be consciously managed. Failure to do so will come at a price, paid for dearly at the bottom-line.
print ed: 06/08