In crisis, Chinese companies simply shut up – The WTO-column

(Later also at Chinabiz)
China Mobile saw its US$ 5.3 billion bid to take over an international telecom provider in Luxembourg end in a disaster earlier this week. Millicom International Cellular, with customers in Asia, Africa and Latin America, said on Monday the talks, started in May, had been called off. It concluded “that this purchaser will not be in a position within an acceptable timeframe to make a binding offer that is suitably attractive, given the current strong performance of the business, or sufficiently certain of closing.”
One can only assume the depth of frustration and the clash of cultures that lay behind this statement. It would have been the largest acquisition abroad by any Chinese company if it had succeeded.
It was the first large scale effort to purchase a part of the international telecom market by China Mobile and the company failed miserable. This is what I would qualify as a decent corporate crisis.
China Mobile, one of the world’s largest telecom conglomerates, reacted like any Chinese state-owned company confronted with a crisis: it did nothing. In other countries crisis managers would have been called in, statements would have been made to control international image damage. But all what the world got was a statement from the listed China Mobile daughter in Hong Kong, who said it has never been aware of any talks, so could not comment on those talks being terminated.

Some Western managers might prefer to deal in similar way with corporate crises, when their companies have to deal with it, but in general it is not done. In most cases you cannot manage a crisis by simply ignoring it.
Listed Chinese companies like China Mobile are still majority owned by the state, so even the drop of the shares at the Hong Kong stock exchange after the announcement by Millicom would not really punish the company for its behavior. And let’s be honest: shareholders tend to be rather irrational in their behavior too, so it would be hard to see a fully floating company as a panacea for a lack of management skills.

The other days I discovered that a Chinese journalist I know had swapped her job at a disintegrating daily paper in Shanghai for that of one of the leading economic publications in China. In the past we had exchanged many thoughts on how to get decent sources for her stories. That was obvious not easy in a country like China and partly explains why journalists faking interviews – like happened massively during the World Championships Soccer in Germany – is the easiest way to get enough output even if you have no sources.
“It must be easier to get sources now you are working for a prestigious paper,” I assumed. She started to laugh. “I thought you knew this country a bit,” she bit back. “Of course official do not want to talk to me, whatever paper you are with.”

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