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

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

50%

80% 78%

72% 72%

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

Germany UK US France Brazil SouthAfrica

Russia India China Mexico Indonesia

4

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

5

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

6

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%

China’s Trust in Chinese MNCs 83%

Russia’s 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

TRUST ISSUES ACROSS INDUSTRIES FOR BRIC COMPANIES IN DEVELOPED MARKETS

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

7

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

8

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

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 mgmt, IP protection, etc.) erodes trust.

10

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 CEO’S 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 Graças Silva Foster Petrobras

Maria das Graças 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

50%

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

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% 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

13

TRUST BY BUSINESS OWNERSHIP

13

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

58%

43%

39%

40%

56%

41%

42%

37%

39%

47%

39%

40%

42%

46%

53%

40%

65%

66%

67%

67%

70%

72%

74%

75%

75%

77%

79%

80%

80%

80%

81%

83%

CONSISTENT FINANCIAL RETURNS

TOP GLOBAL COMPANY

PARTNERS W/ 3RD PARTIES

ADMIRED TOP LEADERSHIP

INNOVATOR

POSITIVELY IMPACTS COMMUNITY

ADDRESSES SOCIETY'S NEEDS

PROTECTS ENVIRONMENT

CUSTOMERS BEFORE PROFITS

LISTENS TO CUSTOMERS

LOOKS AFTER EMPLOYEES

IS ETHICAL

COMMUNICATES OFTEN

ACTS RESPONSIBLY IN CRISIS

HIGH QUALITY PRODUCTS

TRANSPARENT & OPEN

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Importance Performance

DEVELOPED MARKETS PERCEIVE A LARGE PERFORMANCE GAP FOR CHINA-BASED MNCS AGAINST CHINA-SPECIFIC TRUST DRIVERS STATED IMPORTANCE VS. COMPANY PERFORMANCE (TOP 4 BOX) – DEVELOPED MARKETS

-43

-28

-34

-38

-40

-40

-30

-36

-38

-32

-31

-14

-27

-28

-23

-7

Gap INTEGRITY ENGAGEMENT PURPOSE PRODUCTS & SERVICES OPERATIONS

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 “don’t know”)

Top 10 Factors

1 Protects Customer Data Quality Control Responsible Supply Chain

2 Respects Employee Rights Protects Customer Data Protects Intellectual Property

3 Quality Control Responsible Supply Chain Quality Control

4 Protects Intellectual Property Respects Employee Rights Protects Customer Data

5 Pays Right Tax Protects Intellectual Property Pays Right Tax

6 Responsible Supply Chain Pays Right Tax Supports Local Causes

7 Independent from State Uses R&D Independent from State

8 Uses R&D Independent from State Makes CSR Progress

9 Makes CSR Progress Makes CSR Progress Respects Employee Rights

10 Diverse Workforce Diverse Workforce Uses R&D

BRIC-BASED MNCS MUST UNDERSTAND AND ADAPT TO MARKET PERCEPTIONS OF COMPANY ACTIONS

15

TOP 10 ACTIONS TO BUILDING TRUST IN CHINA-BASED MNCS; DIFFERNECES IN STATED IMPORTANCE

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.) Ranked by mean score

DEVELOPED MARKETS ON CHINA MNCs

EMERGING MARKETS ON CHINA MNCs

CHINA ON CHINA MNCs

SIMILARITIES

DIFFERENCES

+5

+2

0

-3

0

+5

0

+1

-7

-2

DEVELOPED VS.

CHINA

FOR CHINA-BASED MNCS, CLOSING THE GAP IN PERCEIVED DELIVERY OF CONCRETE ACTIONS IS CRITICAL TO BUILDING TRUST WITHIN DEVELOPED MARKETS

16

TOP 10 BEHAVIORS TO BUILD TRUST IN CHINA HEADQUARTERED COMPANIES – DEVELOPED MARKET VIEW RANKED BY IMPORTANCE

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.) Informed Publics Ages 25-64 *Ranked by mean scores

80%

81%

80%

79%

78%

42%

34%

43%

38%

43%

Protects Customer Data

Respects EmployeeRights

Quality Control

Protects IntellectualProperty

Pays Right Tax

GAP IMPORTANCE VS. PERFORMANCE

Importance

Performance

-38

-37

-47

-41

-35

Performance

TOP 10 BEHAVIORS TO BUILDING DEVELOPED MARKET TRUST IN CHINA-BASED MNCS*

1. Protects Customer Data

2. Respects Employee Rights

3. Quality Control

4. Protects Intellectual Property

5. Pays Right Tax

6. Responsible Supply Chain

7. Independent from State

8. Uses R&D

9. Makes CSR Progress

10. Diverse Workforce

RECOMMENDATIONS FOR PROMOTING CHINESE HEADQUARTERED COMPANIES OVERSEAS

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• BUILD YOUR BRAND

• BE MORE PROACTIVE AND TRANSPARENT

• FOCUS ON ETHICAL BEHAVIORS

• USE EXPERTS AND EMPLOYEES AS SPOKESPERSONS, NOT CEO