Holmes Report 16 Sep 2013 // 1:12AM GMT
Companies headquartered in Brazil, Russia, India and China suffer a serious trust deficiency in developed markets, according to the inaugural emerging markets supplement to the Edelman Trust Barometer, which focuses on the issues and opportunities facing BRIC-based multinational corporations.
Just over one-quarter (27 percent) of respondents in the key developed markets of the US, UK, Germany and France say they trust BRIC-based MNCs. China-based companies rate particularly low among German (19 percent), French (22 percent) and U.S. (26 percent) respondents.
“Brands are built over a long period of time and most BRIC-based companies are new to developed markets,” says Richard Edelman, president and CEO, Edelman. “People aren’t familiar with these brands or their CEOs. And many suffer from a negative perception around governance, supply chain management and treatment of employees. People no longer just buy products; they buy the corporation behind the products.”
There are consequences for this deficiency in trust within developed markets. Nearly two-thirds of respondents in developed markets would reject domestic investment from companies based in any given BRIC market. Only one-third of developed market respondents say they would trust a China-based business to “buy a company in your country” (34 percent), “buy a minority share in a company in your country” (36 percent) or “make a major investment in a new plant or office in your country” (38 percent).
Respondents within BRIC markets have a much different view of their home-grown businesses than the West. Chinese nationals trust Chinese-based corporations three times more than respondents from developed markets (83 percent versus 24 percent). Similarly, inside the borders of India, trust in Indian-based companies is 83 percent compared to 28 percent by developed market respondents. Respondents within the emerging markets of India, China, South Africa, Indonesia and Mexico, also have greater trust for BRIC-headquartered companies.
One major concern is state ownership and control in BRIC-based corporations. Overall, respondents from the US, UK, Germany, France, India and China believe these companies and their governments are too tightly linked, particularly companies in China (50 percent). A majority of respondents in China (51 percent) and India (60 percent) say there is “too much” state control in their own national companies.
“Many in developed markets do not trust BRIC market governments and this greatly impacts trust on any organization closely tied to them,” says David Brain, president and CEO, Edelman Asia Pacific, Middle East & Africa. “Businesses closely linked with their national governments must be radically transparent about their organization’s history, values, structure and decision-making processes.”
Other factors that could be responsible for the gap in trust include lack of international familiarity and the perception of poor performance against key trust drivers such as being ethical, treating employees well and listening to customers.