Daily Research News Online no. 1927 - Crisis of Trust in Business Spreads to Asia

Crisis of Trust in Business Spreads to Asia

October 11 2002

A new Golin/Harris Trust in Asian Business survey reveals 72 percent of Asians cite a 'crisis of trust in the way we do business,' compared to 69 percent in the USA- but the most and least trusted businesses differ dramatically.

The Trust in Asian Business survey conducted in Tokyo, Hong Kong, Taipei and Singapore also discovered that when thinking about the future, 86 percent of Asians surveyed agree that 'from now on I am going to be more careful about which companies I trust'. These levels of apprehension are even more intense than in the U.S., where Golin/Harris research found that 69 percent of Americans said they don't know who in business to trust anymore.

Among the four markets surveyed, the Tokyo respondents feel the crisis most acutely. Eighty-five percent in Tokyo say Asian business is in crisis, compared to 71 percent in Taipei, 68 percent in Hong Kong and 67 percent in Singapore. All four markets evinced even more concern about the future, with 95 percent of the Taipei participants cautioning they will be more careful about whom to trust moving forward, followed by 84 percent of the respondents from Singapore, 82 percent of those in Tokyo and 80 percent of Hong Kong people.

'The research suggests three reasons why the crisis of trust in Asian business is so profound,' explained Anne Forrest, Golin/Harris' Hong Kong-based managing director for Asia. 'First, the erosion of trust, like the economic downturn, is a worldwide phenomenon. This is more than just `when America sneezes, Asia catches cold'. Because our economic lives and livelihoods are so interconnected globally, the decline of confidence in one region has dramatic ramifications in all others.'

'Moreover,' Forrest continued, 'Asia itself is undergoing tremendous transformation at all levels - economically, politically, culturally and socially. The crisis of trust is a mirror of the crisis of change that is shaping Asia as we move into the 21st century. In these times of intense change, trust moves to the forefront, for trust is the glue that holds together people and institutions. And thirdly, while the challenge of trust is universal across Asia and the world, it is manifested in very different ways from market to market and from industry to industry. Within this continuity there is tremendous and important diversity.'

Underscoring the point about diversity between the markets within the overall crisis of trust, the Golin/Harris research reveals that the specific businesses that Asians trust and mistrust the most are very different than in the U.S., and they vary from market to market. The Golin/Harris Trust Index combines four variables to show a business' trust profile - which businesses are strongly trusted and which are weakly trusted and if trust in the business is increasing or decreasing. Higher positive Trust Index scores indicate a strong trust profile relative to other sectors, while bigger negative Trust Index scores suggest a weak trust profile. In the Asian markets the five most trusted businesses are electric power, computers, telecommunications, pharmaceuticals and automotives compared to supermarkets, major retailers, drug stores, computers and health & beauty on the US market. In the Asian markets the five least trusted businesses are property developers, health & beauty, media, securities/investment banks and construction, whereas on the US market they are oil and gas, insurance, securities/investment banks, utilities and airlines.

The businesses that are most trusted tend to be sectors that are critical to national economic and social wellbeing, in many cases the trusted foundation of the Asian industrial and commercial infrastructure. In Asia, electric power and telecommunications are perfect examples of business sectors that are seen as providing stable, reliable, fundamental and pervasive service that, literally, drives every aspect of economic life. In the USA, these are precisely many of the same industries most affected by scandal in recent months, hence their very low scores in America.

Similarly, the automotive sector is central to the Japanese economy, and the same might be said about banking in Hong Kong, computers in Taiwan, and pharmaceuticals and travel and tourism in Singapore - all of which scored very well in their respective markets.

In contrast, the least trusted businesses in Asia tend to be sectors that have negatively affected the collective economic and social well-being as well as individual welfare, and therefore are not well trusted. This can be seen in concerns about the quality and safety of health and beauty products, the social impact of the media, and the economic behaviour of property developers, construction companies and the investment community.

'While the U.S. has captured most of the global headlines for businesses wracked by scandal and decay, the U.S. does not stand alone. European, British, Japanese, Hong Kong and other Asian companies have had their own share of deceptive dealings, dishonest executives and shoddy, dangerous products,' Forrest observed. 'It is not just investors who have lost faith in businesses and their leaders. Consumers worldwide are also wondering if they can trust the products and services being offered - consider accountants' audit reports, beef in Japan or chicken in Hong Kong and killer diet pills in Asia. Even employees as a result are wondering if they can trust their top bosses.'

'What we are seeing are some fundamentally different views of trust between Asian and American society,' Forrest added. 'Often in Asia, trust is measured by the collective good an industry delivers to society, whereas in the U.S., trust is more intensely personal, how a given business affects `me'.'

When asked what a business can do to foster trust, respondents across Asia selected the five most important steps for company to initiate:

Be open and honest in business practices 87%
Provide the best value products and services 87%
Communicate clearly, frequently and straightforwardly 86%
Be profitable and financially solid 83%
Show concern and consideration for employees 81%.

Moreover, management, especially the CEO, have a particularly important role to play in the trust building process. Golin/Harris asked the surveyparticipants: 'Imagine you are having a conversation with the chief executive of a company you trust, who asks you: `As a business leader, what should I do to keep earning your trust?' Below are the 'extremely important' or 'very important' actions executives should take to build trust:

Assume personal responsibility and accountability 91%
Visibly show care and concern for customers 91%
Handle crises better 91%
Communicate a vision of the company's future 90%
Make customers' and consumers' interests top priority 84%.

Also, how people interact with and learn about the brand has a vital impact on perceptions of trust and confidence. When asked, 'how important are the following sources of information in influencing your opinion of a company', the respondents selected the following as the five most important communication influencers:

How the company handles a crisis 87%
Personal experience with the company's products 82%
Company's financial performance 82%
Company being investigated by the government or sued 80%
Company's brand or reputation 80%.

'The most important conclusion of the Golin/Harris Trust in Asian Business survey is that trust in a brand is built, not born,' Forrest stressed. 'Every company has the tools and talent to promote and protect trust and, as the data suggest, these capabilities are common-sense, fundamental and tried-and-true tactics.'

'However, the survey results reflect a greater degree of trust in Asian business than in America,' concluded Forrest. 'Even though 72 percent of Asian respondents feel there is a crisis of confidence and trust, 64 percent of the business sectors surveyed have a positive Trust Index score, against only 20 percent of American business with a positive score.'

'While the concern about trust is very real and very deep, Asian consumers fundamentally believe in the value, benefit and good behaviour of their business institutions. People want to trust and are eager to show confidence, loyalty and support to brands that conscientiously and consistently deliver on their promise. The Golin/Harris Trust in Asian Business survey isn't a fire alarm declaring that business confidence has burned to the ground; it is a wake-up call that reminds all of us that trust is real, precious, and most importantly, actionable.'

The Golin/Harris Trust in Asian Business survey was conducted in late summer/early autumn 2002 in four markets: Hong Kong, Tokyo, Taipei and Singapore. A total of 800 telephone interviews, 200 per market, were conducted in each market's native language, yielding a confidence factor of 95 to 96 percent.

The survey was conducted by NFO WorldGroup, and the Asian study complements the Golin/Harris Trust in American Business survey conducted in the spring, 2002.

All articles 2006-22 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.