In 2004 Lenovo successfully acquired the personal computer division of IBM in what is to this day the highest-profile acquisition of its kind by a Chinese company. Along the way Lenovo faced some major challenges defending its acquisition before a suspicious American press and public, retaining talent and managing a complex, cross-cultural integration.

The Lenovo-IBM deal stands as the highest profile example for Chinese companies making the leap into global markets, but not every deal has gone as well. A year after Lenovo’s move, the China National Offshore Oil Corporation (CNOOC) made a bid for American oil company Unocal. Despite intensive lobbying and public relations, CNOOC’s attempt to acquire Unocal failed, at least in part because CNOOC could not convince American stakeholders to accept the deal.

Both of these deals illustrate the new communication challenges that Chinese businesses increasingly face. While few ventures will be as demanding as these examples, a growing number of Chinese companies is engaging in commercial mergers and acquisitions, venturing into global markets, and dealing with global stakeholders, sometimes with unpredictable results.

Increasing global demands are matched by changes at home. Domestic media are rapidly growing and professionalizing. China remains a market in which complicated issues and full-blown crises regularly arise. Finally, the Internet continues to be a powerfully disruptive force in public communication, creating both new opportunities to engage stakeholders and new risks.

Let’s look more closely at the four powerful trends that are redefining corporate communication for Chinese companies, and indeed for all companies doing business in China:

Globalization

Ten years ago there was essentially no such thing as a global Chinese company. Today Lenovo, Haier, Huawei, Li Ning and several others can claim that mantle. But it’s not a one-way process. As Chinese companies have moved to the world, so has the world come to China, with an increasing number of global competitors, partners, investors and media operating here. The result of this explosion of stakeholders is that Chinese and global standards for effective communication are converging, forcing local companies to adopt global practices or see their reputations suffer. Chinese CEOs and executives are increasingly compared to and judged by the same standards as global CEOs and must communicate effectively at the same level.

The Changing Media Environment

The last decade has been a golden age for Chinese media, with the emergence of a vigorous, lively business press led by such publications as Caijing, 21 st Century Business Herald, the Economic Observer and others. The analysis and investigative reporting of top Chinese media now rivals that of the best global news organizations. Chinese companies are dealing with much higher expectations from journalists and media, and a more sophisticated audience. Relationships alone are not enough. Modern executives need to know how to handle tough interviews from savvy journalists and make sure their messages come across clearly, even in difficult situations.

Globalization is also reshaping China’s media environment. Today there are more than 500 foreign correspondents in Beijing alone, and China hosts some of the biggest overseas bureaus of major foreign news organizations. Habits cultivated for Chinese media can be at best unproductive and at worst risky. The good news is that effective spokesperson skills apply equally well to the best Chinese media and to foreign media.

Change Communication and Crisis Management

2009 will be a challenging year for many companies, with shifting financial results, staffing changes, acquisitions or divestments and other problematic situations. These issues sometimes erupt into full-blown crises that can damage or destroy reputations years in the building. Sometimes companies get dragged into situations that are not of their own making. Last year’s dairy quality problems caused trouble for many firms not directly responsible for the trouble, including food manufacturers and retailers.

While not every crisis can be prevented, most can be prepared for. Often the key to a quick recovery is how clearly and proactively a company communicates with key stakeholders in a crisis. Well prepared companies develop issues-kits that guide communication in fast-moving, high-pressure situations and train spokespeople and communication teams how to function in a crisis.

Digital Communication

The big picture

These trends reinforce each other. Globalization means more stakeholders, which means more potential issues and crises unfolding in a fast-moving digital world, with increasingly demanding media. But communication is the key to managing them all. While communication can’t replace effective business strategy, it does complement it, helping business leaders explain decisions and actions to stakeholders, develop consensus, and build their companies’ reputations even in demanding environments.

In many cases, however, the trends are developing at a speed that outstrips the development of the skills for managing them effectively. A recent survey of nearly 4,000 Chinese business leaders by the New Leaders Group and Fortune China revealed that multinational management experience and cross-cultural communication abilities are in short supply, impacting on enterprise performance and business growth.

Fortunately, effective communication skills can be developed with training and practice, helping companies to master the changing business environment, deepen relationships with customers and key stakeholders, and enhance their reputations. In the following weeks we will take an in-depth look at each of the four trends presented here and discuss best practices and case studies for managing each of them.

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