PowerPoint Presentation

2013 TRUST BAROMETER: EMERGING MARKETS SUPPLEMENT

2

GLOBAL

ONLINE SURVEY IN NINE COUNTRIES

5,400 respondents

Nine countries:

Developed: U.S., U.K., Germany, France

Emerging: China, India, Indonesia, Mexico, South Africa

INFORMED PUBLICS

600 respondents in each country

Ages 25-64

College-educated

In top 25% of household income per age group in each country

Report significant media consumption and engagement in business news and public policy

13 years of data

Indonesia 74

Mexico 82

China 74

India 81

US 62

UK 56

Germany 48

France 44

DIS

TR

UST

ERS

TRU

STER

S N

EUTR

AL

TRUST IN BUSINESS IN MAJORITY OF EMERGING MARKETS TRENDING UPWARD

3

Indonesia 77

Mexico 74

China 79

India 81

US 64

UK 56

Germany 52

France 55

South Africa 69

+3

-8

+5

No Change

+2

No Change

+4

+11

New

2013 Field date: Q4 2012

2013 Emerging Markets Supplement

Field date: Q3 2013

8 MARKET AVERAGE: 56 8 MARKET AVERAGE: 65 9 MARKET AVERAGE: 67

2012 Field date: Q4 2011

Indonesia 78

Mexico 77

China 71

India 69

US 50

UK 38

Germany 34

France 28

HOW MUCH DO YOU TRUST BUSINESS IN GENERAL TO DO WHAT IS RIGHT

Q7. [Business in General] Below is a list of institutions. For each one, please indicate how much you trust that institution to do what is right using a 9-point scale where one means that you do not trust them at all and nine means that you trust them a great deal. (Top 4 Box, Trust) Informed Publics Ages 25-64

2013

33 point gap between developed and

emerging market trust

Brazil

China

France

Germany

India

Russia

UK

USA

20%

30%

40%

50%

60%

70%

80%

90%

2009 2010 2011 2012 2013

EMERGING MARKET HEADQUARTERED COMPANIES HAVE DECLINING TRUST SINCE 2011 GLOBAL TRUST IN MULTINATIONAL COMPANIES (MNCs) HEADQUARTERED IN EACH COUNTRY

DEVELOPED MARKET AVERAGE

EMERGING MARKET AVERAGE

Now we would like to focus on global companies headquartered in specific countries. Please indicate how much you trust global companies headquartered in the following countries to do what is right. Use the same 9-point scale where one means that you do not trust them at all and nine means that you trust them a great deal. (Top 4 Box, Trust) Informed Publics Ages 25-64 in 20-country global total # 2012 data is not available a simple average has been used to show a trend

The 2013 Emerging Markets Supplement to the Edelman Trust Barometer explores the following factors that may affect developed markets trust in emerging market-based businesses, based on our hypotheses:

Low brand familiarity: Respondents in developed markets are not familiar with emerging market-based multinational corporations (MNCs).

Sensitivity about the state: Developed markets perceive emerging market-based businesses to have close ties with their national governments, whom they do not trust.

Tangible actions dominate: Perceived poor performance against concrete trust-building actions (e.g., supply chain management, IP protection, etc.) erodes trust.

THE STATE OF TRUST IN EMERGING MARKETS

TRUST IN INSTITUTIONS: NGOs REIGN IN DEVELOPED MARKETS WHILE EMERGING MARKET TRUST LANDSCAPE MORE DIVERSE EMERGING VS. DEVELOPED MARKET NATIONAL TRUST IN INSTITUTIONS

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EMERGING MARKETS

DEVELOPED MARKETS

50%

56%

80%

57%

39%

25%

48% 49%

39% 44%

77%

86%

81%

66%

51% 50% 50% 47%

51%

81% 79% 77% 74%

69% 64%

56% 55% 52%

73%

87%

59%

81%

66% 69%

63% 68%

61%

India China Indonesia Mexico S. Africa U.S. UK France Germany

BUSINESS

NGOS MEDIA

GOVERNMENT

Q7. [Business in General, Government in General, Media in General, NGOs] Below is a list of institutions. For each one, please indicate how much you trust that institution to do what is right using a 9-point scale where one means that you do not trust them at all and nine means that you trust them a great deal. (Top 4 Box, Trust)

67%

81% 79%

77% 74%

69%

64%

56% 55%

52% 49%

56%

80%

57%

39%

25%

48% 49%

39%

44%

Total India China Indonesia Mexico South Africa US UK France Germany

BUSINESS HAS A TRUST ADVANTAGE OVER GOVERNMENT, EXCEPT IN CHINA TRUST IN BUSINESS VS. GOVERNMENT

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EMERGING MARKETS

DEVELOPED MARKETS

50%

BUSINESS GOVERNMENT

Q7. [Business in General and Government in General] Below is a list of institutions. For each one, please indicate how much you trust that institution to do what is right using a 9-point scale where one means that you do not trust them at all and nine means that you trust them a great deal. (Top 4 Box, Trust) Informed Publics Ages 25-64

50%

80% 78%

72% 72%

47% 45% 44% 43% 42% 40% 39%

Germany UK US France Brazil SouthAfrica

Russia India China Mexico Indonesia

9

DEVELOPED MARKET-BASED MNCs HAVE 33-POINT TRUST LEAD OVER MNCs HEADQUARTERED IN EMERGING MARKETS MOST TRUSTED NATIONAL IDENTITY FOR COMPANIES

Developed Markets 76% Emerging Markets 43%

Q8. [TRACKING] Now we would like to focus on global companies headquartered in specific countries. Please indicate how much you trust global companies headquartered in the following countries to do what is right. Use the same 9-point scale where one means that you do not trust them at all and nine means that you trust them a great deal. (Top 4 Box, Trust) Informed Publics Ages 25-64 in 9-country global total

22%

46%

71%

23%

50%

64%

31%

55%

61%

24%

50%

83%

28%

48%

83%

50%

TRUST GAP: EMERGING MARKETS TRUST THEIR LOCALLY-BASED MNCs SIGNIFICANTLY MORE THAN THE REST OF THE WORLD TRUSTS THOSE COMPANIES TRUST RELATED TO COMPANIES NATIONAL IDENTITY

10

Indonesia-Based MNCs South Africa-Based MNCs

India-Based MNCs China-Based MNCs

Mexico-Based MNCs

EMERGING TRUST IN COUNTRY-BASED MNCs

NATIONAL TRUST IN LOCALLY-BASED MNCs

DEVELOPED TRUST IN COUNTRY-BASED MNCs

Q8. [TRACKING] Now we would like to focus on global companies headquartered in specific countries. Please indicate how much you trust global companies headquartered in the following countries to do what is right. Use the same 9-point scale where one means that you do not trust them at all and nine means that you trust them a great deal. (Top 4 Box, Trust) Informed Publics Ages 25-64

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CHINA- AND RUSSIA-BASED MNCs FACE LARGEST TRUST HURDLE IN DEVELOPED MARKETS GERMANY MOST DISTRUSTFUL OF ALL BRIC HEADQUARTERED COMPANIES TRUST RELATED TO COMPANIES NATIONAL IDENTITY

*January 2013 data

50% 50%

Chinas Trust in Chinese MNCs 83%

Russias Trust in Russian MNCs* 40% 37%

19%

29% 26%

22%

50%

33%

61%

53%

Total Germany UK US France India SouthAfrica

Indonesia Mexico

Q8. [TRACKING] Now we would like to focus on global companies headquartered in specific countries. Please indicate how much you trust global companies headquartered in the following countries to do what is right. Use the same 9-point scale where one means that you do not trust them at all and nine means that you trust them a great deal. (Top 4 Box, Trust) Informed Publics Ages 25-64

44%

16%

25% 27%

24%

66%

83%

32%

65% 60%

Total Germany UK US France India China SouthAfrica

Indonesia Mexico

12

INDIA AND BRAZIL-BASED BUSINESSES ENJOY SLIGHT TRUST ADVANTAGE IN THE WEST SOUTH AFRICA A SURPRISING CHALLENGE FOR ALL BRIC-BASED MNCs TRUST RELATED TO COMPANIES NATIONAL IDENTITY

*January 2013 data

50% 50%

Brazils Trust in Brazil MNCs* 60%

Indias Trust in India MNCs 83%

47%

23%

32%

38% 38%

60%

76%

38%

55%

66%

Total Germany UK US France India China SouthAfrica

Indonesia Mexico

38%

21%

30% 35%

28%

61%

32%

50% 50%

Total Germany UK US France China SouthAfrica

Indonesia Mexico

Q8. [TRACKING] Now we would like to focus on global companies headquartered in specific countries. Please indicate how much you trust global companies headquartered in the following countries to do what is right. Use the same 9-point scale where one means that you do not trust them at all and nine means that you trust them a great deal. (Top 4 Box, Trust) Informed Publics Ages 25-64

TRUST ISSUES ACROSS INDUSTRIES FOR BRIC COMPANIES IN DEVELOPED MARKETS

13

HOW MUCH DO YOU TRUST BRIC MARKET-BASED COMPANIES IN THESE INDUSTRIES TO DO WHAT IS RIGHT?

13

EMERGING MARKETS

DEVELOPED MARKETS

67%

68%

69%

71%

71%

72%

76%

77%

79%

84%

39%

31%

34%

44%

34%

40%

43%

47%

49%

54%

Food & Beverage

Pharmaceuticals

Media

Consumer Packaged Goods

Financial Services

Aerospace & Defense

Energy

Automotive

Telecommunications

Technology

Q11. [TRACKING] Please indicate how much you trust businesses in BRIC markets such as Brazil, Russia, India and China in each of the following industries to do what is right. Use the same 9-point scale where one means that you do not trust them at all and nine means that you trust them a great deal. (Top 4 Box, Trust) Informed Publics Ages 25-64

APPROXIMATELY TWO-THIRDS OF DEVELOPED MARKET RESPONDENTS REJECT DOMESTIC INVESTMENT FROM COMPANIES BASED IN ANY GIVEN BRIC MARKET

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62%

60%

60%

63%

30%

40%

38%

34%

Russia

Brazil

India

China

BUY A COMPANY IN YOUR COUNTRY

63%

63%

62%

63%

33%

43%

41%

36%

Russia

Brazil

India

China

BUY A MINORITY SHARE IN A COMPANY IN YOUR COUNTRY

63%

63%

63%

65%

34%

43%

40%

38%

Russia

Brazil

India

China

MAKE A MAJOR INVESTMENT IN A NEW PLANT OR OFFICE IN YOUR COUNTRY

Q9. Please continue to think about global companies headquartered in specific emerging markets. How much would you trust a company from [INSERT BRIC COUNTRY] to do what is right in the following investment situations? (Top 4 Box, Trust) Informed Publics Ages 25-64

HOW MUCH DO YOU TRUST A COMPANY BASED IN [BRIC] TO

EMERGING MARKETS

DEVELOPED MARKETS

LOW BRAND FAMILIARITY

16

PROMPTED AWARENESS OF BRIC MARKET BRANDS BY MARKET

BRIC-BASED MNCs HAVE TO RAISE OVERSEAS AWARENESS; CONSUMER-FACING BRANDS MAKING PROGRESS

50%

26%

9%

38%

11%

Petrobras Vale

72%

63%

54% 45%

70% 68% 63%

26%

89%

79% 87%

81%

Lenovo Air China Bank of China Haier

25%

36%

54%

23%

99% 98%

Tata Infosys

20%

30%

65%

23%

Gazprom Lukoil

50%

US EUROPE OWN MARKET

Q15. Below is a list of companies. Which are you aware of? SELECT ANY THAT APPLY. Informed Publics Ages 25-64 in US, Europe (France, Germany, UK) and own market

14% 12% 10% 10% 5% 4% 3% 2%

0%

20%

40%

60%

80%

India* Russia China* Brazil

BRIC COMPANY CEOs HAVE LOW VISIBILITY GLOBALLY, ESPECIALLY IN DEVELOPED MARKETS

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UNPROMPTED AWARENESS OF BRIC MARKET COMPANY CEOs or CHAIRPERSONS BY MARKET

Top CEOs Emerging Developed Emerging Developed Emerging Developed Emerging Developed

1 Ratan Tata Tata Ratan Tata Tata Alexey Miller Gazprom Alexey Miller Gazprom Yang Yuanqing Lenovo Yang Yuanqing Lenovo Maria das Graas

Silva Foster Petrobras

Maria das Graas Silva Foster Petrobras

2 Naveen Jindal

Jindal Steel Power Limited

N. R. Narayana Murthy Infosys

Oleg Deripaska Basic Element

Company

Andrey Kostin VTB Bank

Robin Li Baidu

Hong Qi Minsheng

Banking Corp

Murilo Pinto de Oliveira Ferreira

Vale

Eike Batista EBX Group

3 Mukesh Ambani

Reliance Industries

Mukesh Ambani Reliance

Industries

Andrey Kostin VTB Bank

Oleg Deripaska Basic Element

Company

Ren Zhengfei Huawei

Fu Chengyu Sinopec

Ricardo Semler Semco SA

Murilo Pinto de Oliveira Ferreira

Vale

*India: Emerging market data does not include Indian data; China: Emerging market data does not include Chinese data The top first-mentioned three CEOs by market

68% of Chinese can name a Chinese HQ CEO

77% of Indians can name an Indian HQ CEO

Level of unprompted CEO awareness in their

own country

EMERGING MARKETS

DEVELOPED MARKETS

Q16. When you think of CEOS/Chairmen of companies from the following markets, which individuals first come to mind? [INSERT MARKET: CHINA, BRAZIL, INDIA, RUSSIA] (Respondents answering with at least one current CEO/Chairman of a company headquartered in China/Brazil/India/Russia. Informed Publics Ages 25-64

SENSITIVITY ABOUT THE STATE

50%

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

19

% AGREE WITH STATEMENT: THERE IS TOO MUCH GOVERNMENT CONTROL OF COMPANIES FROM [BRIC] (TOP 2 BOX)

70%

64%

51% 47%

42%

23%

65%

58%

36%

43%

38%

21% 25%

60%

44%

25% 26%

16%

24%

41% 37%

24% 21%

15%

Germany India China UK US France

CHINA INDIA

RUSSIA BRAZIL

Q13. Please indicate how much you agree or disagree with the following statement: There is too much government control of companies from [INSERT MARKET: BRAZIL, INDIA, RUSSIA, CHINA]. (Top 2 Box Strongly/Somewhat agree) Informed Publics Ages 25-64

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

20

TRUST BY BUSINESS OWNERSHIP

20

77%

73%

71%

67%

50%

50%

45%

37%

Publicly Listed

Entrepreneur

Privately Owned

State Owned

EMERGING MARKETS

DEVELOPED MARKETS

Q10. When you think about the following types of organizations in BRIC markets such as Brazil, Russia, India and China, how much do you trust each type of organization to do what is right? (Top 4 Box, Trust) Informed Publics Ages 25-64

TANGIBLE ACTIONS DOMINATE

59%

48%

50%

48%

58%

51%

50%

47%

48%

54%

52%

50%

49%

49%

58%

48%

65%

68%

68%

70%

72%

74%

75%

76%

77%

78%

80%

80%

81%

81%

82%

82%

CONSISTENT FINANCIAL RETURNS

TOP GLOBAL COMPANY

ADMIRED TOP LEADERSHIP

PARTNERS W/ 3RD PARTIES

INNOVATOR

POSITIVELY IMPACTS COMMUNITY

ADDRESSES SOCIETY'S NEEDS

PROTECTS ENVIRONMENT

CUSTOMERS BEFORE PROFITS

LISTENS TO CUSTOMERS

LOOKS AFTER EMPLOYEES

COMMUNICATES OFTEN

ACTS RESPONSIBLY IN CRISIS

IS ETHICAL

HIGH QUALITY PRODUCTS

TRANSPARENT & OPEN Importance Performance

DEVELOPED MARKETS PERCEIVE A LARGE GAP IN EXPECTATIONS VS. PERFORMANCE ON KEY TRUST BUILDING ATTRIBUTES FOR BRIC-BASED MNCS STATED IMPORTANCE VS. COMPANY PERFORMANCE (TOP 4 BOX) DEVELOPED MARKETS

-34

-24

-32

-32

-30

-28

-24

-29

-29

-25

-23

-14

-22

-18

-20

-6

Gap

Q16. How important is each of the following actions to building your TRUST in companies headquartered in [INSERT BRIC]? Use a nine-point scale where one means that action is not at all important to building your trust and nine means it is extremely important to building your trust in a company. (Please select one response for each.) Q. 18 Please rate companies headquartered in [INSERT BRIC] on how well you think they are performing on each of the following attributes. Use a nine-point scale where one means they are performing extremely poorly and nine means they are performing extremely well. (Top 4 Box, Trust) Informed Publics, ages 25-64 (excluding dont know)

22

INTEGRITY ENGAGEMENT PURPOSE PRODUCTS & SERVICES OPERATIONS

23

Importance

Performance

MORE EFFECTIVE EXECUTION AGAINST TANGIBLE ACTIONS BY BRIC BASED-MNCs WILL HELP ESTABLISH HIGHER LEVELS OF TRUST WITHIN DEVELOPED MARKETS TOP 10 BEHAVIORS TO BUILD TRUST IN BRIC HEADQUARTERED COMPANIES DEVELOPED MARKET VIEW RANKED BY IMPORTANCE

TOP 10 BEHAVIORS TO BUILD DEVELOPED MARKET TRUST IN BRIC-BASED MNCS

GAP IMPORTANCE VS. PERFORMANCE

1. Quality control -31

2. Protects customer data -32

3. Respects employee rights -35

4. Protects intellectual property -31

5. Responsible supply chain management -33

6. Pays appropriate taxes -28

7. Uses R&D -23

8. Independence from State -26

9. Makes CSR progress -27

10. Employs diverse workforce -22

Q17. How important are each of the following factors to building your TRUST in companies headquartered in [INSERT BRIC]? Use a nine-point scale where one means that action is not at all important to building your trust and nine means it is extremely important to building your trust in a company. (Please select one response for each.) (Top 4 Box, Trust) Informed Publics Ages 25-64

THE PATH FORWARD FOR BRIC-BASED MNCs

50%

CHINA INDIA

RUSSIA BRAZIL

59% 56%

72% 68%

44%

76% 75%

83% 80%

67% 71% 71%

80% 77%

63% 62% 60%

76% 72%

45%

A Global CEO of a companyheadquartered in this BRIC

market

A company executive from thisBRIC market-based MNC who is

based in your country

An academic or expert from thisBRIC market

A regular employee of this BRIC-based MNC

A government leader (seniorofficial) from this BRIC market

25

EXPERTS AND EMPLOYEES ARE MOST CREDIBLE SPOKESPEOPLE FOR BRIC-BASED MNCs WHEN COMMUNICATING IN DEVELOPED MARKETS CREDIBILITY OF SPOKESPEOPLE FOR BRIC-BASED MNCs IN DEVELOPED MARKETS

Q22. [TRACKING] Below is a list of people. In general, when forming an opinion of a company, if you heard information about a company from each person, how credible would the information be--extremely credible, very credible, somewhat credible, or not credible at all? (Top 2 Box, Very/ Extremely Credible) Informed Publics Ages 25-64

EARNED MEDIA MOST TRUSTED SOURCE FOR NEWS ON BRIC-BASED COMPANIES IN DEVELOPED MARKETS EMERGING VS. DEVELOPED MARKET TRUST IN MEDIA FOR BRIC-BASED COMPANY NEWS

26

50%

36%

28% 26%

64% 58% 57%

EARNED MEDIA ADVERTISING OWNED MEDIA

Q21. How much do you trust each of the following media sources when you see or hear news, information or stories about a company headquartered in [MARKET]? Please use a 9-point scale where one means that you "do not trust it at all" and nine means that you "trust it a great deal(Top 4 Box, Trust) Informed Publics Ages 25-64

RECOMMENDATIONS FOR PROMOTING BRIC HEADQUARTERED COMPANIES OVERSEAS

27

BUILD YOUR BRAND

BE MORE PROACTIVE AND TRANSPARENT

FOCUS ON ETHICAL BEHAVIORS

USE EXPERTS AND EMPLOYEES AS SPOKESPERSONS, NOT CEO