Western and Japanese multinationals have been operating abroad for years… hundreds of years in some cases. And mostly they had the benefit of entering markets with superior products and technology and came cloaked in brand values that were massively aspirational to consumers in emerging markets. And those from countries like Canada, Germany and Sweden have enjoyed a significant trust advantage abroad on corporate issues for as long as we have been surveying them.
Multinational corporations, or aspirational MNCs, headquartered in emerging markets have a much tougher job breaking out and especially into developed rather than neighboring markets. They are often trying to penetrate crowded sectors in established markets, usually with value rather than premium-based propositions (at least at the outset) and now it turns out, they suffer the burden of a whole host of perceptions or prejudices (take your pick) about how they operate at home and how they will behave abroad.
The approach that works for the 800-pound gorilla at home with connections, government links, a sympathetic media and trusting consumers mostly doesn’t abroad. Our study provides a road map for building trust however. Other than having high quality products and services, the top trust building attributes in Brazil, Russia, India and China (BRIC) markets are transparent and open communications; being seen to act responsibly in a crisis; communicating often and being seen to have ethical business practices.
The perceived performance of BRIC market MNCs in developed markets against these attributes is very low. Much lower than their performance in other emerging markets and of course in their home market. The expectation versus performance gap of Chinese MNCs at home is just 7 percent. When that Chinese MNC ventures abroad that trust gap balloons to 30 percent.
Perhaps not surprisingly, this year protection of consumer data emerged as a significant trust issue for developing market MNCs and so rigorous policy and communication around that will be vital. And this is one issue where the actions of governments are casting a significant shadow over trust in both developed and emerging market MNCs.
We believe that without active engagement programs, ambitious and expansionist companies from emerging markets will pay a significant premium trying to establish commercial partnerships, buy businesses or sell their products and services in the developed world. Establishing trust by proactively engaging with employees, customers, media, NGOs and wider stakeholders to build recognition and familiarity should be seen as a minimum cost of entry.
Background on the inaugural Emerging Markets Supplement to the Edelman Trust Barometer can be found here.
Edelman.com republishes David Brain’s SixtySecondView posts from his curated blog.