2004 Edelman Asia Pacific Stakeholder Study: The Only Way to Have a Friend is to Be One Ralph Waldo Emerson

1. 2004 Edelman Asia Pacific Stakeholder Study: The Only Way to Have a Friend is to Be One Ralph Waldo Emerson

2. Admired/ Successful Corporation Meeting Stakeholder Needs & Expectations Driving Corporate Reputation Driving Business Outcomes Corporate Reputation Management Delivering Quality Products & Services

3. Major Forces are Impacting Business Globalization Deregulation & Privatization Erosion of Trust in Corporations Rise of Consumerism Advances in Science and Technology Tech and Media Convergence Dispersion and Immediacy of Media Social Responsibility

4. Imperative to switch focus: Resulting Shift Managing relationships as drivers of corporate reputation and resulting business outcomes Managing perceptions as drivers of corporate reputation

5. Business success requires mastery of the ‘Relationship Imperative’-- a philosophy that underscores the critical role of open, interactive, and information-richrelationships between a corporation and its stakeholders. So, What Does this Mean for Business? Driving Business Outcomes

6. Implications for Driving Business Outcomes Aligning your agenda to your stakeholders’ agendas • Mutuality • Commitment • Satisfaction • Trust

7. How Do We Do This?

8. Research Objectives -- To examine and understand: The current environment for corporations The drivers of stakeholder opinions The role of social factors in relationships Edelman’s Asia Pacific Stakeholder Research • Research Premise: Relationships with key stakeholder groups are critical to driving business outcomes

9. Six stakeholder groups: Senior business executives Government officials Media NGOs/Trade Associations Up-scale consumers Employees* Nine markets: Australia (2) China (3) Hong Kong India (2) Japan* Korea Malaysia Singapore Taiwan Edelman’s Asia Pacific Stakeholder Research • Year two of annual research • Conducted by Wirthlin Worldwide • Forty-minute, in-depth face to face interviews with 540 stakeholders in 13 Asia-Pacific cities * Added to 2004 research

10. Asia Pacific Business Environment

11. Similar to 2003, 3-in-4 stakeholder respondents believe that things are 'pretty much on the right track’ The most often cited reasons for this optimism are: Follow strategies, plan for the future, and good management A good economy, high GDP, and better lifestyles Profitability of corporations Stable political/legal system/good government policy Significantly more respondents in 2004, compared to 2003, cited this indicator In thinking about the way corporations do business, are things going in the right direction or are they off track? An Optimistic View of Markets & the Direction of Corporations

12. The Other Perspective… • 1-in-4 feel things are 'off track‘ • Japan and Korea account for much of this perspective • The most often cited reasons for this are: • Corporations over emphasize profit making • Corporations are short-sighted • Bad government policy/lack of corporate governance • Lack customer focus • Unethical/fraudulent behavior Average Response Japan Korea Right Direction 75% 45% 58% Off Track 25% 55% 42% Significantly more respondents in 2004 cited these reasons, compared to 2003

13. Reasons for why feel things have ‘gotten off track’ Gov’t Media Consumers NGOs Sn. Execs. Employees Emphasis too much on profit 21% 21% 22% 38% 35% 26% Short-sighted 5% 13% 28% 14% 30% 9% Bad gov’t policy/Lack corp. governance 21% 17% 10% 10% 20% 13% Worth Noting

14. Air of confidence for corporations in pursuing relationships and pursuing agendas Stakeholders predisposed to cooperate with corporations What this Means for Managing Stakeholder Relationships • However, macroeconomics and government policy -- not corporate behavior -- driving perceptions of business environment

15. Drivers of Corporate Image

16. Key Findings: Tangible business indicators still most critical Significant increase in importance of: Customer relationships Corporate Social Responsibility (CSR) Stakeholders’ Opinions Of Corporations In Asia Pacific

17. When thinking about corporations in your market, what do you usually notice first that makes them stand out from the rest? First Impressions of Corporations Significantly more respondents cited ‘Good service’ in 2004 Significantly less respondents cited ‘Management/leadership’ in 2004 26% 25% 19% 14% 13% 12% 12% 11% 10% 10% 5% 2% 2004 2003 Profitable Good service Staff quality/attitude Brand/product quality Corporate Image/lack of scandal Management/leadership

18. Employee benefits Active promotion/Ads Corp Culture Customer focus Global vs. local corporation Corporation size Efficiency/operations Corporate citizenship Innovative First Impressions of Corporations Additional factors of importance 9% 8% 7% 7% 7% 6% 6% 6% 5% 2004

19. Mean Score* Mean Score* Quality product/service How it deals with customers Management team How would you prioritize different aspects of a corporation’s corporate image when seeking information about that corporation? Underscoring the Point ‘Customer Relations’ and ‘CSR’ more important in 2004 2004 2003 Financial performance Attention to CSR How it deals with employees * The mean score represents the average allocation of poker chips (out of 10) that a respondent would spendfor information on each of the six areas.

20. Why A Focus on These Factors?

21. Corporate Social Responsibility Upscale consumers and employees are significantly more likely to discount this information NGOs/Trade Associations are significantly more likely to value this information Dealing with Customers NGOs/Trade Associations are significantly more likely to discount this information Employees are significantly more likely to value this information Worth Noting…

22. Where Does CSR Fit?

23. A Responsible Corporation in Asia Pacific Key Findings: • Tangible business factors are still considered the most essential to a ‘good and responsible’ corporation • Intangibles/social factors receiving higher priority – and in some areas – have rivaled tangible business factors • Building relationships with stakeholders and operating in an open and transparent fashion is now more important than providing profits for owners/shareholders • Providing good training and staff development is now more important than making products that impress others

24. How important is it for a good and responsible corporation to have each of the following characteristics? A Responsible Corporation in Asia Pacific Most essential* characteristics: Characteristics of a Responsible Corporation in Asia Pacific 78% Offers top quality products/services Stands behind its products/services when something goes wrong 72% * A ranking of eight or higher on a 10-point scale with 10 being absolutely essential.

25. A Responsible Corporation in Asia Pacific 2003 2004 65% Listens to customer attitudes and opinions on satisfaction 65% Significantly less respondents ranked this as essential in 2004 56% 55% Provides senior leadership that can be trusted 52% Works hard at building relationships with core stakeholders -- Operates in an open and transparent fashion 51% 50% Provides profits for its owners/shareholders 58% 49% Significantly less respondents ranked this as essential in 2004 Provides good training and development for staff 54% 49% Makes products that really impress other people 44% 58% 41% Communicates frequently and openly with employees 42% Significantly more respondents ranked this as essential in 2004 Educates customers about the impact of its products/services on society 36% 37% Concerned about/active in doing something about community welfare 29% 36% = Tangible business factors * A ranking of eight or higher on a 10-point scale with 10 being absolutely essential.

26. Why are Tangible Business Indicators So Important?

27. Why are Intangible/Social Factors Important?

28. CSR = meeting the expectations of your stakeholders CSR = meeting the expectations of your stakeholdersandmeeting the needs of your community A Note on CSRAn Evolving Definition in Asia Pacific 2003 2004

29. What Does This Mean? Key to CSR activities in Asia Pacific: Understand the difference between corporate altruism and CSR CSR must focus on your core competencies and increasingly your communities’ welfare

30. How Do Corporations Perform Against These Criteria? • Western multinationals (MNCs) • Asian MNCs • Healthcare/pharmaceutical corporations • Technology/telecommunications corporations

31. ‘Living Up’ to Stakeholder Expectations Key Findings: • All corporations fail to ‘live up to’ most important characteristics for a ‘good and responsible’ corporation • Western MNCs performed significantly better on most characteristics versus other corporations • Technology/telecommunications corporations generally outperformed Asian MNCs and pharmaceutical/healthcare corporations • Overall performance similar to 2003

32. To what degree* do you believe these corporations live up to the characteristics? Degree MNCs ‘Live Up To’ Characteristics Expected Western MNCs Tech/Telecoms Pharma/Healthcare Asian corporations * On a 10 point scale where 10 = completely live up to it and 1 = not at all.

33. To what degree* do you believe Western MNCs live up to the characteristics? Degree Western MNCs ‘Live Up To’ Characteristics Expected Western MNC performance * On a 10 point scale where 10 = completely live up to it and 1 = not at all.

34. Western MNCs performed significantly: Better in ‘provides senior leadership that can be trusted’ Worse in ‘provides profits for its owners/shareholders’ Worse in ‘makes products that really impress other people’ Significant Changes from 2003 to 2004 These two characteristics were also significantly less important to respondents in 2004 compared to 2003

35. To what degree* do you believe Asian corporations live up to the characteristics? Degree Asian MNCs ‘Live Up To’ Characteristics Expected Asian MNC Performance * On a 10 point scale where 10 = completely live up to it and 1 = not at all.

36. Asian MNCs performed significantly: Better in ‘offers top quality products and services’ Better in ‘communicates frequently/openly with employees’ Significant Changes from 2003 to 2004

37. To what degree* do you believe Pharma/HC corporations live up to the characteristics? Degree Pharmaceutical/Healthcare Corporations ‘Live Up To’ Characteristics Expected Pharma/HC Performance * On a 10 point scale where 10 = completely live up to it and 1 = not at all.

38. Pharmaceutical/Healthcare corporations performed significantly: Better in ‘offers top quality products and services’ Better in ‘listens to customer attitudes and opinions on satisfaction’ Better in ‘provides senior leadership that can be trusted’ Better in ‘communicates frequently/openly with employees’ Significant Changes from 2003 to 2004

39. To what degree* do you believe Tech/Telecoms corporations live up to the characteristics? Degree Technology Corporations ‘Live Up To’ Characteristics Expected Tech/Telecoms corporations performance * On a 10 point scale where 10 = completely live up to it and 1 = not at all.

40. ‘Living Up’ to Stakeholder Expectations Summary: • Corporations continue to fail to ‘live up to’ most important characteristics for a ‘good and responsible’ corporation • Some improvements seen between 2003 and 2004 performance, especially among pharmaceutical/healthcare corporations • Western MNCs continue to lead in performance levels • Corporations in Asia Pacific must close the gap between perceived performance and stakeholder expectations: • Offer quality products and services • Stand behind products and services • Listen to customer attitudes • Operate transparently

41. 1. Start with a focus on relationship outcomes, not on driving a communications message. Relationships – their creation, enhancement and management – should be at the heart of business strategy and communications campaigns. Key Learnings: Four Imperatives

42. 2.Building relationships with key stakeholders means understanding their priorities and what factors they use when forming opinions about corporations. Tangibles regarding corporate performance are the most important in driving relationships … but alone, they are not enough Intangibles and more socially-driven topics such as ‘listening to customer attitudes’ and ‘commitment to community welfare’ are an increasingly part of the equation Key Learnings: Four Imperatives

43. 3.Expectations of responsible behaviors start with factors driven by a corporation’s core competencies. Should be anchored by quality products and services and appropriate support of these should something go wrong At a minimum, the needs of the community must be understood – actually addressing these needs will become increasingly more important to stakeholders in Asia Pacific Key Learnings: Four Imperatives

44. Customers set the tone.If your customers are satisfied and think highly of you, other stakeholders will follow. When seeking information about a corporation, stakeholders investigate how a corporation deals with customers as the second most important driver Key Learnings: Four Imperatives