Biz should stay out of politically-driven boycotts

Rule of thumb for companies caught up in politically-charged incidents leading to product boycotts is to stay out of it, but grassroots engagement and swift action help in crisis management too.

Companies caught up in politically-charged incidents leading to product boycotts should stay out of it, but grassroots engagement and swift action help in crisis management as well.

Politics get in the way of many things, and many a business have fallen foul of worsening relationships between governments. When these issues crop up, however, businesses should steer clear and not pick a side in order to bounce back quickly once political tensions dissipate.

The past few months have witnessed incidences of politically-driven product boycotts affecting IT companies in the region. In South Korea, for example, some six million merchants banded together to declare a boycott of Japanese products such as Nikon cameras to protest against Japan's assertion of sovereignty over the Takeshima or Dokdo islets.

Eric Turner, owner of reputation management firm CrisisExperts, said such boycotts will negatively impact the sales and revenues of affected companies, but the main risk will be damage to their reputation. They essentially have no control over the situation driving the boycott--unless the company was the cause of the incident in the first place--which makes addressing the issue more complex, he said.

As such, companies should stay out of the conflict as much as possible, Turner suggested.

Companies can easily get sucked into the political minefield simply by association, and this may cause their brand equity and reputation to sink, added Stephen Robertson, Asia-Pacific director of crisis and risk practice at public relations company Edelman.

There is no straightforward way to manage the situation and a product recall together with creative campaigns and reduced prices are not likely to win over consumers, Robertson noted. Similarly, reactive engagement with affected stakeholders or hastily concocted campaigns can also appear self-serving, he said.

Local engagement, being responsive help
As such, a long-term plan is needed, Turner advised. "While companies may manage the issue in the immediate short term, much more is required to ensure a smooth and seamless healing process," he added.

In fact, companies which bounce back quickly and escape from such politically-charged boycotts relatively unscathed are the ones that understand the way their brands are perceived by the market and have had a lengthy presence in the market, Robertson said.

Such actions may include demonstrating a commitment to the local community over time, either through job creation or local reinvention, knowledge transfer, voluntary work or even a partnership with an NGO (non-governmental organization), he pointed out.

"It is through these means of public engagement that a company will be in a better position to control its own destiny and weather politically-motivated boycotts," he said.

As for companies which are directly involved in the political strife, they should take swift, public corrective measures, said Leon Perera, CEO of Spire Research and Consulting.

A good example of this approach is Amazon's termination of its partnership with the Jerusalem Post in November 2002. The Web giant took swift action to end the association after it found out parts of the profits Jerusalem Post derived from partnership were used to fund Israeli soldiers, Perera explained.

"Consumers and the general public tend to respond well to such quick and decisive action, recognizing that everyone makes mistakes," he said. "The danger lies in being defensive or, worse still, non-responsive or ambivalent. In damage containment, speed is of the essence."