Global leaders must learn from BMW China’s ice-cream incident

Last weekend I sat down to research on BMW China for an EMBA lecture, only to find my screen flooded with enraged comments over who is racist and who wants ice-cream. I soon found out how the German carmaker’s Mini line joined the numerous foreign brands and firms that had attracted unwanted and unkind attention in China. It was a surprise: BMW had been the success story of a Western car company turning heads and beating competitors by localising products, services, production and prospects to suit China’s seemingly unstoppable automotive industry.

In a nutshell for the lucky ones who haven’t seen the video, Mini-uniformed hostesses at this year’s Shanghai Auto fair gave ice-cream to a foreign man who (the firm later claimed) was a BMW employee, but not to local aspirants who were not. Some visitors interviewed on the spot dismissed the incident as a trifling matter, others posted it online with claims how the discrimination proved “Mini was racist”. Putting aside dilemmas of races among humans and how cars should know the difference, the latest of many similar incidents has valuable lessons for foreign firms in China. The first question of both foreign and Chinese executives at multinational firms at my leadership coaching sessions is how companies can avoid such incidents. I don’t believe they can. In my forthcoming book Dragon Suit, I list dozens of cases including:

Predictably disastrous ones, like Leica using ‘the tank man’ image in its advertisement,
Unfortunate but overblown ones, like Dolce & Gabbana’s ill-conceived chopstick videos,
Shockingly random attacks on Marriott for a drop-down country list, The Gap for T-shirt designs, Audi for event murals and the movie Dr. Strange for an absurd reason indeed.

BMW’s ice-cream incident belongs in the last category: unavoidable and unfortunate instances that take one irritable smartphone owner on the spot, and another thousand who don’t know what happened but repost racism claims. They are as abundant in China as elsewhere, so sparks are inevitable. But China’s political atmosphere is especially combustible, and reactions can be fittingly extreme. Prevention efforts are futile, because outrages are not really about the sins of the companies or their employees. BMW’s record as a local employer, sustainability champion and promoter of Chinese innovation abroad is the perfect illustration. “Munich is where we come from, but China is where we are at home,” said BMW Board Member Frank Weber shortly before the chaos ensued. If foreign firms in China cannot avoid such mishaps, is there anything they can do to reduce frequency and minimise damage? Actually, yes. Many firms that get in trouble start with the best intentions and even have workable strategies of China-specific localisation, but execution fails on a more emotionally charged personal level. They build human resource and leadership plans on abstract and often outdated concepts of “the Chinese” instead of contemporary Chinese people. They try to engage Chinese social media users from abroad, or with overseas memes. They do all this because China is big and profitable, which is great for the firm but isn’t an attractive proposition for Chinese buyers, users and employees. All this is understandable. Reliable information has been scarce on both sides of China’s administrative, economic and digital boundaries for decades, and recent years made it scarcer still. Humans get suspicious when they lack data, which manifests in increasingly tense relations between China and even its closes partners—nations and firms alike. Smart businesses sniff opportunity when they encounter information bottlenecks, and some leaders soon realised the advantage in building internal people-to-people exchanges in an otherwise increasingly uncommunicative environment. In simple words, they build and connect matching teams and processes in China and abroad, across the barriers. I hear three specific areas where foreign firms can develop the agility and resilience needed to navigate changeable political and market currents in today’s China: people, data and perspective.

People Scandals come from misunderstandings. During the Dolce & Gabbana scandal, even the food video’s model expressed surprise over the popular outrage. China’s culture is a mystery to most people in the world. Its leadership has spent much energy building information walls around the nation, which makes misunderstandings more likely. Companies that build communication channels, sort-of corporate ‘intercoms’ across the walls reduce the risk of mishaps and help teams manage crises when stuff happens after all. At coaching and training sessions I ask managers in foreign headquarters “Who is a trusted Chinese colleague you can call when you need an inside opinion?” and I ask Chinese managers the reverse: “Do you know anyone at HQ you can discreetly ask or advise?” Blank stares imply risk. Knowing nods mean they are reasonably covered.

Data Strategies show direction, but individual people take the steps. Once personal connections are in place, teams can move on to complex issues. For leaders working in or with China, the most pervasive one is data management. China often complains of being misunderstood abroad, but that comes from decades of self-imposed data isolation. When Mini’s ice-cream incident flooded Chinese social media, worldwide users had no access to what Chinese people saw, thought and shared, and they obviously could not participate. Most Chinese users couldn’t see what the world reported about the scene, and their voices were missing from global forums. Careful leaders create networks of servers, content, channels and in-house users in and out of China to bridge the barriers. Space is too little to share details here, but examples in Dragon Suit will shock you with how much manual data transfer happens within foreign firms in China.

Company vision for China Working across geographic, cultural, political and digital barriers is hard work, which people only do if it makes sense for them. The highest strategic tower is built from bricks of individual human actions, and colleagues who dismiss or dislike one another can undermine entire strategies. Studies show that Chinese people are among the most optimistic and motivated in the world, but they increasingly see foreign and local employers on equal footing: leaders must provide worthy causes to maintain morale. Multinational managers often dangle profits for motivation, but that is both too uncertain and too selfish a quest for many Chinese employees at foreign firms. Companies that contribute to some of China’s celebrated causes, from “common prosperity” to cleaner air or improving China’s image abroad, can count of their local people when trouble strikes.

As far as I know, BMW has done its homework in China, having a good employer's record, supporting badly needed social causes like vocational education and the treatment of people with disabilities, and promoting Chinese innovation abroad, including its Mini factories in the UK. Even if local customers boycotted Chinese-made Minis, Europeans would still drive them. But I am glad that, as I polish the text of this article, I see little continuation to the story online. Scandal-mongers have short attention spans and move on to the next target. BMW China might be scarred but it can rely on strong foundations. The question is whether your firm, or the ones you rely on, are similarly well-prepared.