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Edelman is the worlds largest public relations firm, with 67 offices and more than 4,800 employees worldwide, as well as affiliates in more than 30 cities. Edelman was named Advertising Ages top-ranked PR firm of the decade in 2009 and one of its A-List Agencies in both 2010 and 2011; Adweeks 2011 PR Agency of the Year; PRWeeks 2011 Large PR Agency of the Year; and The Holmes Reports 2011 Global Agency of the Year and its 2012 Digital Agency of the Year. Edelman was named one of the Best Places to Work by Advertising Age in 2010 and 2012 and among Glassdoors top ten Best Places to Work in 2011 and 2012. Edelman owns specialty firms Edelman Berland (research), Blue (advertising), BioScience Communications (medical communications), and agencies Edelman Significa (Brazil), and Pegasus (China). Visit http://www.edelman.com for more information.

About the Edelman Trust Barometer: Emerging Markets Supplement

The 2013 Edelman Trust Barometer: Emerging Markets Supplement examines trust among informed publics in the developed world towards companies headquartered in emerging markets. The survey was produced by research firm Edelman Berland and consisted of 20-minute online interviews conducted July 19, 2013 August 13, 2013. The Emerging Markets Supplement sampled 5,400 informed public respondents across 9 countries (China, France, Germany, India, Indonesia, Mexico, U.K., U.S., and South Africa). Informed publics meet the following criteria: aged 25-64; college educated; household income in the top quartile for their age in their country; read or watch business/news media at least several times a week; follow public policy issues in the news at least several times a week. For more information, visit http://trust. edelman.com/ or call 212.704.4426.

2013 Emerging Markets Supplement

About Edelman Berland

The 2013 Edelman Trust Barometer: Emerging Markets Supplement is powered by Edelman Berland. Edelman Berland is a global, full-service market research firm that provides corporate, non-profit and government clients with strategic intelligence to make their communications and engagements with stakeholders the smartest they can be. The firm specializes in qualitative and quantitative research, measurement, tracking and analysis in reputation, branding and communications. Edelman Berland has more than 100 employees in offices serving clients in more than 50 countries and is part of Edelman, the worlds largest public relations company. Edelman Berland: strategic intelligence for the smartest engagement possible.

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Emerging Market Businesses Face Significant Trust Deficit

In a recently published book called Brand Breakout, Professor Nirmalya Kumar of London Business School and Jan-Benedict Steenkamp of Kenan-Flagler Business School at University of North Carolina argue that brands from emerging markets will become a serious competitive force in the developed economies. The professors write, They share weak national images, poor marketing capabilities, low cost as the sole competitive advantage and limited business modelsBrand building takes time, sometimes generationsbut the pace is acceleratingwe believe that some of the emerging market brands will become household names in the West sooner than some may believe. In our inaugural 2013 Emerging Markets Supplement to the Edelman Trust Barometer we have researched the challenges facing emerging market companies, in particular the low level of trust to do the right thing. There is a 33-point gap between global trust in multinational companies based in developed markets (76 percent) and those in emerging markets (43 percent). Among the BRICs, Chinese and Russian companies face the most profound skepticism in developed markets, with special concern expressed by France, Germany and the U.S. (trust standing at between 16 and 27 percent). Most BRIC companies do extremely well in their home markets (trust in 60-85 percent range), and substantially better in emerging markets such as Indonesia and Mexico (trust over 50 percent), but there is an evident issue in South Africa, where trust is mired at 34 percent. This trust gap has remained consistent for the past five years.
Figure 1: EMERGING MARKET HEADQUARTERED COMPANIES HAVE DECLINING DEVELOPING MARKET HEADQUARTERED COMPANIES HAVE DECLINING TRUST SINCE 2011 TRUST SINCE 2011 HOW MUCH DO YOU TRUST GLOBAL COMPANIES HEADQUARTERED IN THE GLOBAL TRUST IN MULTINATIONAL COMPANIES (MNCs) HEADQUARTERED IN EACH COUNTRY FOLLOWING COUNTRIES TO DO WHAT IS RIGHT?
90% 80% 70% 60% 50% 40% 30% 20% China Russia 2009 2010 2011 2012 2013 Germany
UK DEVELOPED MARKET AVERAGE

State Ownership or ControlIn Germany, the majority of respondents feel that Chinese and Russian companies are too heavily state controlled. Only 37 percent of respondents in developed markets trust a state-owned company from the emerging markets versus 50 percent trust in a publicly held company. Trust Drivers Developed market respondents note huge gaps between what they expect from emerging market companies and how well those companies perform. For Chinese companies that gap in areas such as being transparent and open (43 points), acting responsibly in a crisis (41 points), protecting the environment (38 points) and placing customers ahead of profits (36 points) is especially severe. There are important consequences for Figure 2: DEVELOPED MARKET-BASED MNCs HAVE 33-POINT TRUST LEAD this lack of trust in emerging market OVER MNCs HEADQUARTERED IN EMERGING MARKETS? DEVELOPED MARKET-BASED MNCs HAVE 33-POINT TRUST LEAD OVER MNCs HEADQUARTERED IN EMERGING MARKETS HOW MUCH DO YOU TRUST GLOBAL COMPANIES HEADQUARTERED IN THE PLEASE INDICATE HOW MUCH YOU TRUST GLOBAL COMPANIES HEADQUARTERED IN THE companies, most notably impinging FOLLOWING COUNTRIES TOTO DO WHAT IS RIGHT FOLLOWING COUNTRIES DO WHAT IS RIGHT upon their ability to expand through DEVELOPED MARKETS 76% EMERGING MARKETS 43% Developed Markets 76% Emerging Markets 43% acquisition or investment overseas. In 80% 78% developed markets, only about one72% 72% third of respondents would trust an emerging market company to buy 47% 45% an enterprise in their country, buy 44% 43% 42% 40% 39% a minority share or make a major investment in a plant or office. This may explain the slow approval process for the proposed $4.7 billion takeover Germany UK US France Brazil South Russia India China Mexico Indonesia of U.S.-based Smithfield Foods by Africa Chinese-based Shuanghui. The trust Responses 6-9 only on 1-9 scale; 9 highest Responses 6-9 only on 1-9 scale; 9 highest gap also prompts questions among investors; the Wall Street Journal headline at the end of August said, A Struggle for Transparency; U.S. Investors Face Gap in Disclosure by Chinese Firms.
50%
1

2013 Edelman Trust Barometer

33 point gap between developed and emerging market trust

France US India Brazil

EMERGING MARKET AVERAGE

There are three primary explanations for these developed market perceptions: low brand awareness, sensitivity to state ownership or influence and perceived poor performance against key trust drivers, such as transparency, ethical behavior and treatment of employees. Brand FamiliarityMost of the emerging market brands have low prompted familiarity in developed markets, with the sole exception being Chinese brands such as Lenovo and Air China which are consumer facing. There is also low awareness of CEOs; fewer than 10 percent of developed market respondents were able to name even the most famous, such as Alexey Miller of Gazprom or Ratan Tata of Tata.
1

Responses 6-9 only on 1-9 scale; 9 highest Average based on 20 country global total

There are trust issues in developed markets across every industry from emerging markets, including those targeted as growth opportunities. Pharmaceuticals, financial services and media are the BRIC industries that suffer from the largest lack of developed market trust with trust standing at 31-34 percent. In emerging markets however, BRIC-based companies score significantly better. The highest trusted industries are technology (84 percent) and telecommunications (79 percent), and even the lowest food and beverage and pharmaceuticals score above 67 percent.

There is a lesson from Confucius that applies. When asked about a well-regarded government, the Master listed three needs: enough food, enough weapons and the confidence of the people. Suppose you had to do without one of these; which would you give up first? asked his disciple Tzu Kung. Confucius replied, Weapons. What if you had to give up one of the remaining two; which would it be? asked Tzu Kung. Confucius said, Food. All men must die but a state cannot survive without the confidence of its people. In a skeptical world, it is more than what you do and say; you must explain how and why. Professors Kumar and Steenkamp conclude their book as follows: What was so energizing about our visits to emerging market firms in Brazil, China, India and elsewhere was the sheer ambition that they displayed. The best of them are both strategic and entrepreneurialwe were astonished at the uncanny ability to spot the next markets that they could enter, often unrelated to their current enterpriseswe do not doubt global brand break-out from these countries. Rather than following the Western corporate experience of gradual and grudging acceptance of the need for business to be a force for good in society, we recommend that the leaders of emerging market companies take the lead in establishing a transparent business model that embraces critics and offers proof of performance on integrity of supply chain. Trust will be established by consistent performance and communication, winning the confidence of stakeholders over a period of years.

Trust in Emerging Market Multinationals

The inaugural 2013 Emerging Markets Supplement to the Edelman Trust Barometer focuses on the issues and opportunities facing BRIC-based multinational corporations (MNCs). The research reveals that companies headquartered in emerging markets face an uphill climb when it comes to earning developed nations trust. However, emerging market companies may not perceive this trust deficit as the study shows that emerging markets have a much different view of their home-grown businesses than the rest of the world does.
Figure 3: TRUST IN BUSINESS IN MAJORITY OF EMERGING MARKETS TRENDING UPWARD TRUST IN BUSINESS CONTINUES TO RISE WITHIN EMERGING HOW MUCH DO YOU TRUST BUSINESS IN GENERAL TO DO WHAT IS RIGHT? MARKETS
HOW MUCH DO YOU TRUST BUSINESS TO DO WHAT IS RIGHT?

2012
8 MARKET AVERAGE: 56

2013
8 MARKET AVERAGE: 65

2013 Emerging Markets Supplement

9 MARKET AVERAGE: 67

TRUSTERS

Indonesia Mexico China

78 77 71 69 50 38 34 28

Indonesia Mexico China India US UK Germany France

74 82 74 81 62 56 48 44

Indonesia Mexico China India US UK Germany France South Africa

77 74 79 81 64 56 52 55 69

+3 -8 +5 No Change +2 No Change +4 +11 New

NEUTRAL

India US UK Germany France

In both developed and emerging markets, trust in business as an institution is on an upward trend: trust in business to do what is right is up an average of 2 points over January 2013 and 11 points over 2012. China, France, Germany and Indonesia showed the largest trust increases; in contrast, Mexico showed an 8-point drop. Significantly, business is more trusted than government in every market except China, where both institutions are trusted equally. On average, respondents trusted business to do whats right 67 percent of the time, but only 49 percent trust government to do the right thing.

Mind the trust gap: When taking Figure 5: APPROXIMATELY TWO-THIRDS OF DEVELOPED MARKET a side-by-side view of trust in RESPONDENTS REJECT DOMESTIC INVESTMENTS FROM COMPANIES BASED IN ANY GIVEN BRIC MARKET businesses based in emerging vs. HOW MUCH WOULD YOU TRUST A COMPANY FROM THE FOLLOWING COUNTRIES TO DO developed markets, a clear and APPROXIMATELY TWO-THIRDS OF DEVELOPED MARKET RESPOND WHAT IS RIGHT IN THESE INVESTMENT SITUATIONS ANY TYPE OF DOMESTIC INVESTMENT BY BRIC-BASED BUSINESS consistent gap emerges, particularly TRUST IN BRIC-BASED COMPANIESN TO DO WHAT IS RIGHT IN VARIOUS IN DEVELOPED EMERGING SITUATIONS when looking across industry sectors. BUYING A MINORITY SH BUYING A COMPANY IN YOUR COUNTRY Developed market respondents were COMPANY IN YOUR COU significantly less trusting of BRIC34% China China 63% based companies in all industries 38% India India than emerging market respondents 60% 40% were. BRICAPPROXIMATELY businesses in key growth Brazil Brazil TWO-THIRDS OF DEVELOPED MARKET RESPONDENTS REJECT 60% APPROXIMATELY TWO-THIRDS OF DEVELOPED MARKET RESPONDENTS REJECT APPROXIMATELY TWO-THIRDS OF DEVELOPED MARKET RESPONDENTS REJECT APPROXIMATELY TWO-THIRDS OF DEVELOPED MARKET RESPONDENTS REJECT ANY TYPE OF DOMESTIC INVESTMENT BY BRIC-BASED BUSINESSES industries, ANYincluding TYPE OF pharmaceuticals, DOMESTIC INVESTMENT BY BRIC-BASED BUSINESSES 30% ANY TYPE OF DOMESTIC INVESTMENT BY BRIC-BASED BUSINESSES ANY TYPE OF DOMESTIC INVESTMENT BY BRIC-BASED BUSINESSES Russia Russia TRUST IN BRIC-BASED TO DO WHAT IS RIGHT IN VARIOUS INVESTMENT 62% IN BRIC-BASED TO DO WHAT IS RIGHT IN VARIOUS INVESTMENT TRUST IN BRIC-BASED COMPANIESN TO DO WHAT IS RIGHT IN VARIOUS INVESTMENT media,TRUST financial services COMPANIESN andCOMPANIESN food TRUST IN BRIC-BASED COMPANIESN TO DO WHAT IS RIGHT IN VARIOUS INVESTMENT SITUATIONS SITUATIONS SITUATIONS SITUATIONS and beverage, face significant MAKING BUYING A MINORITY SHARE AMAJOR INVESTMENT IN A NEW BUYING A COMPANY INhurdles YOUR COUNTRY BUYING A MINORITY SHARE IN A INA BUYING A COMPANY IN YOUR COUNTRY BUYING AIN MINORITY SHARE BUYING A COMPANY IN YOUR COUNTRY BUYING A MINORITY SHARE IN A IN A PLANT OR OFFICE YOUR COUNTRY BUYING A COMPANY IN YOUR COUNTRY COMPANY IN YOUR COUNTRY COMPANY IN YOUR COUNTRY with less than 40 percent of developed COMPANY IN YOUR COUNTRY COMPANY IN YOUR COUNTRY 36% 38% 36% 34% 34% those China market respondents trusting China China 63% 36% 36% 65% China China 34% 34% China China 63% 63% 63% China 63% China 63% 63% 63% 40% 41% 38% businesses to do whats 38% right. 41% India India India 41% 38% 63% 62% India 60%
India

Responses 6-9 only on 1-9 scale; 9 highest

2 Responses 6-9 only on 1-9 scale; 9 highest

Figure 4: TRUST IN IN BRIC-BASED MNCs BYMNCS INDUSTRY TRUST BRIC-BASED BY INDUSTRY MUCH DOTRUST YOU TRUST MARKET-BASED COMPANIES IN THESE INDUSTRIES DO WHAT IS HOW HOW MUCH DO YOU BRIC BRIC MARKET-BASED COMPANIES IN THESE INDUSTRIES TO DOTO WHAT IS RIGHT?
RIGHT?
Technology

Just over three-quarters (76 percent) 30% 30% Russia of all respondents say they trust 62% Russia Russia 62% Russia developed market-based businesses, MAKING A MAJOR INVESTMENT IN A NEW A MAJOR INVESTMENT IN A NEW MAKING A MAJOR INVESTMENT IN A NEW while only 43 percent MAKING trust those MAKING A MAJOR INVESTMENT IN A NEW PLANT OR OFFICE IN YOUR COUNTRY PLANT OR OFFICE IN YOUR COUNTRY PLANT OR OFFICE IN YOUR COUNTRY PLANT OR OFFICE IN YOUR COUNTRY from BRIC markets, a 33-point gap. 38% 38% China China 38% 38% 65% 65% China China Companies based in Indonesia, Mexico 65% 65% 40% 40% India 40% 63% India 40% 63% and China are the least trusted, at 39 India India 63% 63% 43% 43% Brazil percent, 40 percent and 42 percent Brazil 43% 43% 63% 63% Brazil Brazil 63% 63% 34% respectively. Companies Russia based 34% Russiain 34% 34% 63% 63% RussiaRussia 63% 63% Germany (80 percent) and the UK (78 percent) are the most trusted. Responses 6-9 only on 1-9 scale; 9 highest
Brazil Brazil
4 4 4 4 4

60% India India 40% 40% 60% 60% Brazil Brazil

DISTRUSTERS

60% 60% Brazil 40% Brazil 40% 60% 60% RussiaRussia 30% 30% 62% 62%

38%

62% India India 43% 43% Brazil 63% 63% Brazil Brazil 33% 33%Russia 63% 63% RussiaRussia

41%

43% 34%

62%

62%

43% 33%

43% 63%
63%

63% 63%

63% 63%

33%

54% 49%
47%

84%

Telecommunications

79%
77%

Automotive

Energy

43%
40% 34%

76% 72%
71%

Aerospace and Defense

DEVELOPED EMERGING

Financial Services

Consumer Packaged Goods

44%
34% 31%

71% 69%
68%

Media

Pharmaceuticals

Food and Beverage

4

39%

67%

There are consequences for this deficiency in trust within developed markets. Nearly two-thirds of developed market respondents would reject any type of domestic investment from companies in any given BRIC country. Russia was least trusted with only one-third of developed market respondents saying they would trust a Russianbased business to buy a company in your country (30 percent), buy a minority share in a company in your country (33 percent) or make a major investment in a new plant or office in your country (34 percent).

Figure 6: TRUST GAP: EMERGING MARKETS TRUST THEIR LOCALLY-BASED TRUST GAP: EMERGING MARKETS TRUST THEIR LOCALLY-BASED MNCs MNCs SIGNIFICANTLY MORE THAN THE REST OF THE WORLD TRUSTS THOSE SIGNIFICANTLY MORE THAN THE REST OF THE WORLD TRUSTS THOSE COMPANIES COMPANIES TRUSTED HOW MUCHNATIONAL DO YOUIDENTITIES TRUST GLOBAL COMPANIES HEADQUARTERED IN THE FOLLOWING COUNTRIES TO DO WHAT IS Developed RIGHT? Market Trust in Country-Based MNCs
DEVELOPED MARKET TRUST IN COUNTRY-BASED MNCS

EMERGING MARKET TRUST IN

Emerging Market Trust in Country-Based MNCs

National MNCs COUNTRY-BASED MNCS Trust in Locally-Based LOCALLY-BASED 83%

NATIONAL TRUST IN MNCS

83%

71% 50%

64% 55%

61% 50% 28% 48%

50%

46%

31% 22% 23% 24%

IndonesiaBased MNCs

Mexico-Based MNCs

S. AfricaBased MNCs

China-Based MNCs

India-Based MNCs

Responses 6-9 only on 1-9 scale; 9 highest

Responses 6-9 only on 1-9 scale; 9 highest

5

Despite an overall lack of trust in BRIC-based multinational corporations, respondents within BRIC markets have a much different view of their home-grown businesses than the West. Chinese nationals trust Chinesebased corporations three times more than respondents from developed markets (83 percent versus 24 percent). Similarly, inside the borders of India, trust for Indian-based companies is 83 percent compared to 28 percent by developed market respondents. Respondents within emerging markets, which include India, China, South Africa, Indonesia and Mexico, also have greater trust for BRIC-headquartered companies than their counterparts in developed markets (56 percent versus 27 percent).

Figure 8: DEVELOPED MARKETS DO NOT TRUST ANY FORM OF BRIC MARKET-BASED BUSINESSES; STATE-OWNED BUSINESSES TRUST BYTRUST BRIC-BASED SUFFER LARGEST DEFICIT BUSINESS OWNERSHIP HOW MUCH DO YOU TRUST THE FOLLOWING TYPES OF ORGANIZATIONS IN BRIC MARKETS?
DEVELOPED EMERGING
Emerging Developed

DEVELOPED MARKETS DISTRUST ALL FORMS OF EMERGING MARKETBASED BUSINESSES, BUT STATE-OWNED BUSINESSES MOST DISTRUSTED

Publicly listed

77%
50%

Sensitivity Over State Influence

The supplement revealed a major concern over state ownership and control in BRIC-based corporations from both developed and BRIC market respondents. Both believe BRIC market companies and their governments are too tightly linked. A majority of respondents in China (51 percent) and India (60 percent) say there is too much state control in their national companies. Not surprisingly, developed markets trust state-owned businesses the least, with less than four in ten (37 percent) of developed market respondents saying that they trust them. However, developed markets do not overly trust any form of emerging market-based businesses, including those that are publicly listed (50 percent), entrepreneurial (50 percent) and privately owned (45 percent).
% AGREE WITH STATEMENT

Entrepreneur

73%
50%

Privately owned

71%
45%

State owned

67%
37%

Responses 6-9 only on 1-9 scale; 9 highest

7

CHINA, RUSSIA-BASED COMPANIES SEEN AS HAVING TOO MUCH STATE CONTROL

Figure 7: CHINA, RUSSIA-BASED COMPANIES SEEN AS HAVING TOO MUCHSTATE CONTROL % AGREE WITH STATEMENT: THERE IS TOO MUCH GOVERNMENT CONTROL OF COMPANIES FROM [COUNTRY]
CHINA RUSSIA INDIA BRAZIL China

Dont Know, Dont Trust: Low Brand Familiarity of Emerging Market Companies
The Emerging Markets Supplement revealed a lack of developed market familiarity with both BRIC-based MNCs and CEOs, especially in the U.S. BRIC-based companies such as Lenovo (China) and Tata (India), have very high familiarity rates domestically (upwards of 89 percent), yet in developed markets, familiarity levels never climb above 72 percent (Lenovo) and can drop as low as 9 percent (Vale). Consumer-facing corporations based in China are making the most progress. Companies such as Lenovo (72 percent), Air China (63 percent) and Bank of China (54 percent) have higher levels of familiarity in the U.S. compared to BRIC-based counterparts including Lukoil (30 percent), Tata (25 percent) and Vale (9 percent).

Russia

India

Brazil

70% 65%

64% 58%

60% 51% 41% 44% 36% 37% 25% 24% 47% 43%

42% 38% 26% 21% 23%

25% 24%

21% 16%15%

Recognition of BRIC market CEOs is even lower in developed markets. Less than 5 percent of developed market respondents were able to name a CEO in Brazil (2 percent), China (3 percent) and Russia (4 percent).

Performance on Supply Chain, Employee Relations Drive Trust

Germany India China UK US France
Top 2 box (Strongly/somewhat agree)
6

In order to establish higher levels of trust, BRIC-based corporations should execute more effectively against key tangible actions. Data protection, quality control and protection of intellectual property are universal table stakes for building trust, but developed markets want BRIC-based MNCs to also focus on respecting employee rights and fulfilling their tax obligations. Emerging markets want to see an improvement in responsible supply chain management of BRIC-based corporations.
6

Furthermore, the survey shows that emerging market companies performance falls short of developed markets expectations on attributes that drive trust, including being transparent and ethical, where there was a 34- and 32-point gap respectively.
Figure 9: BRIC-BASED MNCs HAVE TO RAISE OVERSEAS AWARENESS; CONSUMER-FACING BRANDS MAKING PROGRESS BRIC-BASED MNCs HAVE TO RAISE OVERSEAS AWARENESS; BRIC-BASED MNCs HAVE TO RAISE OVERSEAS AWARENESS; CONSUMER-FACING WHICH OF THE FOLLOWING COMPANIES YOU AWARE OF? OVERSEAS BRIC-BASED MNCsARE HAVE TO RAISE AWARENESS;
US

Figure 11: DEVELOPED MARKETS PERCEIVE A LARGE GAP IN EXPECTATIONS VS. PERFORMANCE ON KEY TRUST BUILDING TRUST BUILDING ATTRIBUTES FOR BRIC-BASED MNCS DEVELOPED MARKETS PERCEIVE A LARGE GAP IN EXPECTATIONS VS. PERFORMANCE ATTRIBUTES FOR BRIC-BASED MNCs HOW IMPORTANT ARE EACH OF THE FOLLOWING ACTIONS TO BUILDING TRUST? HOW IMPORTANT ARE EACH OF THE FOLLOWING TO BUILDING TRUST? Gap
TRANSPARENT & OPEN HIGH QUALITY PRODUCTS IS ETHICAL ACTS RESPONSIBLY IN CRISIS COMMUNICATES OFTEN LOOKS AFTER EMPLOYEES LISTENS TO CUSTOMERS CUSTOMERS BEFORE PROFITS PROTECTS ENVIRONMENT ADDRESSES SOCIETY'S NEEDS POSITIVELY IMPACTS COMMUNITY
Importance Performance

48% 58% 49% 49% 50% 52% 54% 48% 47% 50% 51% 58% 48% 50% 48% 59%

82% 82% 81% 81% 80% 80% 78% 77% 76% 75% 74% 72% 70% 68% 68% 65%

-34 -24 -32 -32 -30 -28 -24 -29 -29 -25 -23 -14 -22 -18 -20 -6

CONSUMER-FACING BRANDS MAKING PROGRESS BRANDS MAKING PROGRESS CONSUMER-FACING BRANDS MAKING PROGRESS EUROPE OWN PROMPTED AWARENESS OF MARKET BRIC-BASED BRANDS BY MARKET
WHICH OF THE FOLLOWING COMPANIES ARE YOU AWARE OF? PROMPTED AWARENESS OF BRIC-BASED BRANDS BY MARKET

ENGAGEMENT INTEGRITY PRODUCTS & SERVICES PURPOSE OPERATIONS

China China China

89% 89% 89% 72% 72% 70% 72% 70% 70% 50 % 50 % 50% 79% 79% 79% 68% 68% 63% 63% 68% 63% 87% 87% 87% 63% 63% 63% 54% 54% 54% 81% 81% 81% 45% 45% 26% 26% 26% 25% 25%
25%

98% 99% 98% 57% 54% 57%

India India India

98% 98% 98%

45%

36% 36% 36%

23% 23%
23%

INNOVATOR PARTNERS W/ 3RD PARTIES ADMIRED TOP LEADERSHIP

Lenovo Air China Bank Bank of Lenovo Air Air China Bank of Lenovo China of China China China

Haier Haier Haier

Tata Tata Tata

Infosys Infosys Infosys

TOP GLOBAL COMPANY CONSISTENT FINANCIAL RETURNS

Responses 6-9 only on 1-9 scale; 9 highest
9

Brazil Brazil Brazil

50 % 50 % 50%

65%

Russia Russia Russia

30%
30% 23% 30% 23% 23%

26% 26%

26%

38% 38%

38%
9% 9%

65% 65%

9%

11% 11%

11%

20%

Trust and Communications: Who Should Communicate and Where

As seen in previous Trust surveys, developed market populations believe experts (e.g., academics) and regular employees from their home markets to be among the most credible spokespeople for companies. The same appears to hold true when developed market respondents hear about BRIC-based companies. Experts and regular employees rank as the most trusted spokespeople from BRIC markets (78 percent and 74 percent on average, respectively), beating out the companys CEO. Earned media (i.e. traditional) is considered to be the most credible source for information. However, developed markets showed low levels of trust in all emerging market media sources, with only 36 percent saying they trust earned media as a news EXPERTS AND EMPLOYEES ARE source. MOST CREDIBLE SPOKESPEOPLE FOR BRICBASED MNCS WHEN COMMUNICATING IN DEVELOPED MARKETS
CREDIBILITY OF SPOKESPEOPLE FOR BRIC-BASED MNCS IN DEVELOPED MARKETS

20% 20%

Percentage aware
8 8

Petrobras Petrobras Petrobras Percentage aware

1

Vale Vale Vale

Gazprom Gazprom Gazprom

Lukoil Lukoil Lukoil

Figure 10: MORE EFFECTIVE EXECUTION AGAINST TANGIBLE ACTIONS BY BRIC BASED- MNCS WOULD IMPROVE TRUST IN DEVELOPED MARKETS Figure 10: MORE EFFECTIVE EXECUTION AGAINST TANGIBLE ACTIONS BY BRICBASED-MNCS WOULD IMPROVE TRUST
HOW IMPORTANT ARE EACH OF THE FOLLOWING ACTIONS TO BUILDING TRUST? IN DEVELOPED MARKETS EXPECTATION VS. PERFORMANCE HOW IMPORTANT ARE EACH OF THE FOLLOWING ACTIONS TO BUILDING TRUST? EXPECTATION VS. PERFORMANCE

Top 10 AcHons to Build Developed Market Trust In BRIC-Based MNCs

1. Quality control 2. Protects customer data 3. Respects employee rights 4. Protects intellectual property 5. Responsible supply chain management 6. Pays appropriate taxes 7. Uses R&D 8. Independence from State 9. Makes CSR progress 10. Employs diverse workforce

Gap in Perceived Performance Against ExpectaHons

-31 -32 -35 -31 -33 -28 -23 -26 -27 -22

Figure 12: EXPERTS AND EMPLOYEES ARE MOST CREDIBLE SPOKESPEOPLE FOR BRIC-BASED MNCs WHEN COMMUNICATING IN DEVELOPED MARKETS IF YOU HEARD INFORMATION ABOUT A COMPANY EACHRussia PERSON, HOW CREDIBLE WOULD THAT INFORMATION BE? China Brazil FROM India
CHINA BRAZIL INDIA RUSSIA
83% 80% 71% 60% 44% 72% 80% 68% 77%

76% 59%

71% 62% 56%

75%

76%

72%

67%

63% 45%

Responses 6-9 only on 1-9 scale; 9 highest

1

Responses 6-9 only on 1-9 scale; 9 highest

A Global CEO of a A company executive An academic or expert A regular employee of company from this BRIC market- from this BRIC market this BRIC-based MNC headquartered in this based MNC who is BRIC market based in your country
Top 3 box (Extremely, very, somewhat credible)

A government leader (senior official) from this BRIC market

7
10

Trust and Proactive Engagement

Western and Japanese multinationals have been operating abroad for yearshundreds 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 doesnt 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 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.

David Brain President and CEO, Edelman Asia Pacific, Middle East & Africa

10