Strategy

Beijing Broad Jump

The Olympics controversy highlights a delicate CSR issue for multinationals.
Bennett VoylesJune 16, 2008

Being an Olympic sponsor is a little like being an Olympic athlete. Years of work, years
of planning, a huge investment — and in the end, there’s a chance you’ll end up
with nothing but bruises to show for your trouble.

This spring, sponsors faced their first untied shoe moment when Western activists began a
highly publicized campaign to push sponsors to pressure the Chinese government to change
its policies in Tibet and Sudan.

Having reportedly invested US$50 million or more for their sponsorship, and millions more
in advertising, the Olympics’ top sponsors aren’t about to walk away from Beijing because
of a few protesters. But the fracas illustrates an awkward dilemma confronting many
global companies: preserving hard-won respect from groups such as environmental or human
rights organizations while keeping good relations with customers and governments. And
indeed, for the Olympic sponsors, handling pressure from human rights activists to
improve China’s support of human rights in Tibet and Darfur without alienating the
Chinese government and Chinese consumers is proving a major public relations challenge.

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An Unfun Run

For the sponsors of the Beijing games, the trouble began in early April, when activists
disrupted the grand global torch relay in multiple American and European cities, turning
what was to have been the longest sustained photo-op in history — a sort of mobile
advertisement for the new China — into a roving protest on China’s human rights
record in Tibet and its support of the oppressive Sudanese government.

As disruptive as the protests themselves were, the most serious PR complications seem to
have arisen as a result of Chinese public opinion. When the Chinese saw the Paris melee
on the news and learned of French President Nicolas Sarkozy’s announcement that he
wouldn’t attend the opening ceremonies unless China’s human rights policies in Tibet and
Darfur improved, many were outraged.

Even as sponsors debated how to respond to the growing furor, Carrefour, the French
Wal-Mart, found itself picketed in Beijing by local protesters.

In the West, the protests caught many by surprise. Scott Kronick, China president of
Ogilvy Public Relations Worldwide, whose client roster includes Olympic sponsors Adidas
and UPS, says that although sponsors prepared in advance for possible disruptions to the
games, they were still taken aback when the media began focusing on the Tibet protests.
“The level of response to the issue in Tibet was not something people had expected,” he
says.

They could have anticipated the depth of feeling on the part of ordinary Chinese, though.
A pre-torch survey of 2,687 Chinese in 20 provinces, conducted by the Ogilvy Group and
Millard Brown ACSR in March, found that 74 percent of Chinese said they were excited
about the Olympics, and 72 percent said they felt proud of China. The survey found that
unlike the Athens games, when many locals fled, only 2 percent of Beijing residents plan
to leave town. And it looks like they’re going to have some company: 36 percent of
Shanghai residents surveyed said they plan to travel to Beijing during the Games —
where 27 percent of the residents in Guangzhou hope to join them.

Carrefour is not an Olympic sponsor, but the action drove home the trouble angry Chinese
consumers might create for a company. The protests demonstrated that for the Olympic
sponsors (at least the consumer sponsors) the challenge isn’t just a matter of balancing
the opinion of the Chinese government against whatever Western activists can drum up.
Now, they must also consider the opinion of ordinary Chinese citizens.

“I think in the global operations of any of these brands, it’s become more imperative to
consider all angles,” says Kronick.

Coke Adds Life Not Strife

Politics is nothing new to the Games — the torch relay itself, after all, was a
spectacle invented by the Germans to kick-off the 1936 Berlin Olympics — but
managing these multiple angles requires some finesse on the part of sponsors.

In this respect, say some public relations experts, The Coca-Cola Company’s response is
worth a look. Outside of China, the beverage company’s sponsorship of the Beijing
Olympics has led to only “a very limited number of [negative] consumer calls,” according
to a Coca-Cola spokesperson.

Coke is trying to make the case that it is committed to alleviating the suffering in
Tibet and Darfur while at the same time supporting the non-political ideals of the
Olympics.

Responding to a bad “report card” issued by an activist group called Dream for Darfur,
Neville Isdell, the chairman and CEO of Coca-Cola, wrote in the Financial Times on
April 17 that the group’s approach is flawed. “It judges concern by one narrow measure
— the degree to which one pushes a sovereign government in public — while
ignoring what we and others are doing every day to help ease the suffering in Darfur.” In
fact, he says, the company has actually been quite active in terms of supporting relief
assistance in the region, citing the US$5 million Coca-Cola has committed to improving
water supplies in Sudan.

Isdell also challenged activists to find a way to use the Olympics in a manner that
doesn’t “attack and undermine one of the world’s last remaining unifying events.”

Inside China, the damage seems likely to be limited as well — especially given that
the company’s total case sales grew by 20 percent in the first quarter alone, despite bad
snows during the Chinese New Year festivities.

However, Coke is taking no chances there either. “Coca-Cola is putting a lot of ‘we love
China’ type advertising and really going over the top to show that it supports China,”
says Shaun Rein, managing director of China Market Research Group in Shanghai.

Synchronized Spinning

It’s too early to say whether Coke will avoid any major problems with either activists or
Chinese consumers. Still, its response fits in with a number of measures that public
relations experts advise companies to take when faced with some kind of organized
opposition:

Say something. In a crisis, it’s important for a company to communicate with
stakeholders right away. “Respond immediately,” says Robin Cohn, a New York-based public
relations consultant who specializes in crisis management.

“Silence is not golden,” agrees Sam Taylor, president of Reputation Dynamics in New York,
a firm that advises companies on corporate social responsibility. Some statement of
acknowledgement is important, she adds, including some show of sentiment. “There’s no way
these companies can go on and not say anything.”

Understand the nature of the protests. The Olympic protest movement, for example,
“is not broad-based so far,” says Edith Terry, managing director of Cotton Tree
Productions, a Hong Kong-based research firm. “It’s quite a number of splinter groups who
pick up different China-related causes.” Most of these groups are small-scale, she says,
lack huge budgets, and have a number of different goals.

Two of the most prominent are Free Tibet, a UK group working to “shame the games” as a
way to promote Tibetan self-determination, and Dream for Darfur, a New York–based
organization that aims to force China to use its leverage in Sudan to stop
government-sponsored atrocities in the African country’s Darfur region.

Reframe the issue. Frame participation in the Olympics as not being equivalent to
support of China in Tibet or China’s backing of Sudan’s government. Cohn suggests talking
about the sponsorship as support for the athletes who have all worked so hard to reach
the event. “Put it back in a human perspective,” she advises.

Play your own game. Don’t let activists distract a company from its earlier social
commitments, say Taylor and others. Crisis management experts warn that simply writing a
check is not going to accomplish much for the company’s PR if the commitment to the cause
wasn’t already well-established. “If this is not a company core value, then it’s a very
obvious marketing tool, which I think is going to backfire or at least is not going to
make friends,” says Cohn. “Just throwing some money at a Darfur cause is not necessarily
going to do it.”

Respond based on your key customers’ values — and those of your employees.

“This is such a delicate issue that I think it would behoove [companies] to do a quick
poll among their own employees and their customers,” Taylor says.

In the end, experts say, PR troubles such as those arising with the Olympics may force a
company to decide which group of stakeholders it cares about most. For the Olympic
sponsors, the chance to hold the attention of all of China for three weeks this August
— when some forecasters estimate that up to 90 percent of China’s 1.3 billion
people will tune in to the Games — may well tip the scales eastward. “It’s a matter
of who their market or audience is,” says Cohn.

No Such Thing as Bad Publicity?

Some PR experts argue that in the end the controversy swirling around the Olympics may
actually help some sponsors. A few reports suggest, for instance, that Lenovo, the
Chinese computer maker, scored a huge coup in sponsoring a Chinese athlete whose
wheelchair was shoved by activists in the Paris melee.

Internationally, Scott Kronick of Ogilvy Public Relations Worldwide suggests that the
publicity has raised awareness of several issues without hurting sponsors’ brands, while
in China the decision to remain a sponsor may be seen as a plus by Chinese consumers. “I
don’t believe anybody has been hit,” says the Beijing-based executive. “If anything, it’s
helped the brands get better rooted inside China.”

Not everyone agrees. “I think the official sponsors are probably very nervous right now,
because they’re getting criticized in their home countries for being an official sponsor,
and so that can be hopefully offset by love for them in China,” says Shaun Rein, managing
director of China Market Research Group (CMRG).

But Rein believes sponsors shouldn’t count on a lot of warm and fuzzy feelings in the
hearts of Chinese consumers as a result of their commitment. His firm recently conducted
several hundred one-on-one interviews with Chinese consumers and found that 80 percent
don’t factor Olympic sponsorship into their purchasing decisions.

One reason that the Olympic sparkle may not have as much luster this year is that the
Chinese have been bombarded for years with Olympics-related messages. “You walk along the
street and you have signs: ‘The Olympics are coming. Don’t spit.’ or ‘China Mobile
— we’re the official sponsor.’ or ‘Adidas, we’re the official sponsor,’” he says.
As a result, customers have become anesthetized to Olympics-related messages.

For sponsors, that media saturation may result in a low return on their investment, at
least inside China. In CMRG’s survey, 50 percent correctly identified Adidas as a
sponsor. Not bad, except that the other 40 percent named Nike and 10 percent identified
Chinese brand Li Ning — neither of whom sponsor the games.

“I think that marketing campaigns, marketing people, and marketing companies need to be a
hell of a lot more accountable for ROI,” Rein says. — B.V.

Sponsor Roster
The main sponsors of this summer’s Beijing Olympics.
“Worldwide Olympic Partners” “Beijing 2008 Partners”
Coca-Cola Bank of China
Atos Origin CNC
GE Sinopec
Johnson & Johnson CNPC
Kodak China Mobile
Lenovo Volkswagen
Manulife Adidas
McDonald’s Johnson & Johnson
Omega Air China
Panasonic PICC
Samsung State Grid
Visa
Source: The Beijing Organizing Committee for the Games of the XXIX Olympiad

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