The Vietnamese PangasiusCatfish Case

Anton Rizki SulaimanKiroyan Partners

Agenda

O Introduction: The Vietnamese Pangasius Catfish Problem

O Tools: Reputation Building and the Stakeholder Mindset

O Responding to allegations: Strategies to build acknowledgement

O Reaching the consumer: Going beyond labels?

O Conclusion

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The Vietnamese Pangasius Catfish

ORemarkable growth in the past decade

OAffordable alternative “white fish”

OFarmed in the Mekong Delta

O90% of production are exported in over 100 countries

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Strong Growth

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Source: Nguyen Van Hao, Ministry of Agriculture and Rural Development

Reputation problems

O Due to strong growth, has attracted the concern of many stakeholders

O Claims:

O Mekong Delta is polluted contaminated fish

O Unsustainable farming practices: destroying the environment

O Untrustworthy product not safe for consumption

O Negative campaign partly driven by market protectionist sentiments

O Key response: adherence and compliance to standards and certifications

O Although allegations unfounded, the image prevails

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What is Reputation?

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Doorley and Garcia

What is reputation?

O Merriam-Webster: “overall quality or character as seen or judged by people in general”

O Reputation is founded on perceptions others have of you, not on “reality”

O Reputation is a result or outcome of what stakeholders know about your performance and behavior

To build reputation: first improve performance and behavior, then make these efforts known among stakeholders

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Why adopt reputation perspective?

O See it as a process, a long term result of multiple short term actions and efforts

O Sets the focus on how and why people see us in a certain way, rather than adopting a purely defensive stance

O Reminds that good performance alone is not enough

O But also emphasizes that communication without performance is dangerous in the long term

O Communication as building mutual understanding, knowledge and respect

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The Stakeholder Mindset

O Edward Freeman, “Strategic Management: A Stakeholder Approach” (1984)

O Developed to counter a dominant mindset

O A mindset that take stakeholders into account to make (ethical) decisions

O A key feature in Social Responsibility (ISO 26000)

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The Stakeholder Mindset

Donaldson, T. and Preston, L. 1995. The Stakeholder Theory of the Corporation: Concepts, Evidence and Implications. The Academy of Management Review.

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The Stakeholder Mindset

Svendsen, A. and Laberge, M. 2005. Convening Stakeholder Networks: A New Way of Thinking, Being and Engaging. Journal of Corporate Citizenship, Vol. 19.

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Three Elements of Stakeholder Mapping

1. Stakeholder Identification

O Who are our stakeholders?

2. Stakeholder Profiling

O What are their issues, concerns and perceptions?

O What is at stake? What are their interests?

O What are their affiliations and networks?

3. Stakeholder Analysis

O How powerful and legitimate are they?

O How vulnerable and impacted are they?

O Who should we prioritize?

O How are their relationships with each other?

O Etc.

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Why adopt stakeholder mindset?

O Enables to identify those that really matter

O Drives toward understanding different “stakes” and issues that are involved

O Lets us better categorize and define problems

O Enables a “sniper approach” (targeted communication) rather than a shotgun approach

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Example: Issues-based analysis

Inspired from: “Stakeholder Politics” –Robert Boutilier, Greenleaf Publishing Ltd., 2009

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The Pangasius Case

O Complex issue, but can be simplified by categorizing stakeholders and issues

O Multiple issues, but will focus on two in this session

O Issue 1: Environmental impact and sustainable farming practices

O Issue 2: Product quality and safety

O Other possible issues: market protection, competition, certification and labelling, etc.

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Pangasius: Towards Sustainability

O Main Issue: Environmental Impact and Sustainability

O Key Stakeholders: Environmental NGOs, local communities, local governments, retailers

O It’s about defining standards and improving environmental and social performance

O Certification schemes help move towards improvement, but is a poor communication tool

CSR communication strategy must be applied

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CSR Communication Principles

O Involvement and dialogue with stakeholders

O Transparency and openness: show improvements but also demonstrate areas that are still lacking

O Consistent reporting to stakeholders

O Follow-up on stakeholder inputs and comments

O Recognize existing problems, ask stakeholders for inputs

Show good faith in trying to become more sustainable, with its opportunities and challenges

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Case Study: Nike and Sweatshops

O 1991: Jeff Ballinger reports on Nike low wages and poor working conditions in Indonesia

O 1993: The New York Times, The International Herald Tribune and The Economist also reported on Nike's Asian factories.

O 1994: Further bad press in The Rolling Stone, The Boston Globe, The Los Angeles Times, The Chicago Tribune and a book by Donald Katz called Just Do It.

O 1997: Anti-Nike rallies held in 50 US cities and 11 other countries

O 1998: Nike sales begin to be significantly affected

O Phil Knight (CEO): “The Nike product has become synonymous with slave wages, forced overtime, and arbitrary abuse”

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Nike = Slavery

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What did Nike do?

O At first, Nike adopted defensive stance and rhetoric, but this strategy was unsuccessful

O Starting 1998, Nike adopted a new approach by recognizing the problems raised by activists and committing to solve them

O Issues are being addressed, code of conduct upgraded:

O Improving working conditions

O Efforts to reform the shoe industry

O Participation and leadership in a range of multi-stakeholder coalition to find solutions

O Independent monitoring and auditing of factories

O Consistent reporting to stakeholders (CSR and Sustainability Reports)

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Learning from Nike

O Nike’s rebuilding of its reputation was a long and difficult process with many ups and downs

O Stakeholders were skeptical (some still are) about Nike’s commitment

O But Nike strived to continue improving working conditions, at its own pace

O The company remained consistent in its communication and engagement with stakeholders

O After a few years, activist acknowledgement begin to show, although some issues still remain

O Over the years, Nike has become a recognized leader for applying best practices in the shoes and apparel industry

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Applications for Pangasius

(Re)Building reputation is a long and arduous process (it took about 5-10 years for Nike)

Being defensive, even when you are right, does not pay

Stakeholders may be skeptical at first and may have expectations that are too high, do not let this put you down

Recognize problems and make efforts to solve them in good faith. In the long run, acknowledgement will come.

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Pangasius: Addressing Consumer

Concerns through Marketing

O Main Issue: Product quality and safety

O Key stakeholders: Consumers, retailers

O Anti-pangasius campaigns has created food scares in Europe

O The prevailing reputation:

O Untrustworthy product

O Poor quality

O Not so safe for consumption

O Labels did not help much to improve reputation among consumers

More conventional marketing approach may be more effective

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Limitations of Ecolabels

O Too many labels create consumer confusion. Consumer knowledge about different labels are low

O Ecolabels are related to certification, that addresses environmental concerns of NGOs and environmental activists, not the consumer

O Ecolabels do not directly address product quality and food safety issues, the main issue for the consumer

O Labels don’t differentiate anymore: low marketing potential

O Most consumers are unwilling to pay more for ecolabelledproducts

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Green consumer market share is low

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Rex, Emma and Baumann, Henrikke, “Beyond Ecolabels: What Green Marketing Can Learn from Conventional Marketing”, Journal of Cleaner Production, No. 15 (2007).

Report: Beyond labels

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O Study conducted by SustainAbility

O Certification and labels has the least value in creating consumer demand!

O Businesses are moving to separate certification use from communication

Case Study: McDonalds UK

O In 2005, the performance and brand of McDonalds UK is stagnating

O Consumer trust has been lost

O This is due among others to the McLibel trial, Eric Schlosser’s book “Fast Food Nation”, the documentary “Supersize Me” etc.

O Food safety and health issues are highlighted, such as the quality of products used and the obesity problem

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McDonalds = Obesity

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What did McDonalds UK do?

O Renewed commitment to listening to and understanding its customers, and being open and transparent as a business

O The company became more customer-focused: rigorous self and customer analysis

O Improved the fundamentals of the business: the food and the restaurants (performance and behavior) and communications

O The food: grown-up menu for adults, healthier happy meals

O Restaurant makeovers: more inviting, better attitude of workers

O Communication: Innovative engagement with customers and advertising to rebuild trust

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Learning from McDonalds UK

O Improve performance first, and then communicate accordingly

O Consumer concerns are not exactly the same as those of activists, so try to pay attention to what costumers really want

O Embed social and environmental issues to products and services offered

O Engage and create a dialogue with customers to build trust

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Applications for Pangasius

O Go beyond labels, they are a poor marketing tool

O Use marketing and branding strategies and approaches to build the vietnamese pangasius brand and reputation

O Be customer-focused: listen and understand their real concerns

O When it comes to sales and marketing, do not get distracted with other issues brought up by other stakeholders, as they may be less relevant to the customer

O Find ways to engage and have conversations with consumers

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THANK YOU