OREANDA-NEWS. December 12, 2011. SKOLKOVO Institute for Emerging Market Studies (SIEMS) presents the new survey “Torturer, victim or somebody else. Explanation of public crises of Chinese and Russian multinational corporations”.

In recent years, the Chinese and Russian media have enthusiastically disclosed and condemned foreign multinational corporations (MNC). Among common accusation are marketing fraud, product quality flaws, environmental pollution and abusive labor practices. As a result the MNC public crisis in China and Russia has increased during the past decade. These crises have caused financial and reputational losses to MNCs operating.

However it should be mentioned that MNCs themselves sometimes apply behavior not relevant to ethic norms.

Meanwhile emerging markets are growing in both economic and social terms. So, social and political expectations on MNCs in terms of social-environmental responsibility are going high, and the regulation system is improving. If managers are not able to notice changes, they will not have a chance to anticipate possible crises. This report aims to reveal the pattern of crisis incidents, analyze the difference between China and Russia, and make suggestions to MNC managers working in both countries.

The key results of the report are:

MNC’s public crises are regular both in Russia and China. The survey comprises various examples of companies and industries involved in a crisis, its initiators, grievance channels, companies’ respond and the crisis outcome.  Moreover the regulation system’s disadvantages are observed and the crisis’ influence on the regulation system in each case.

This report points out that an MNC does not have to be a bad apple to get accused and punished.

However the MNC’s low-cost logic, fast expansion and reliance on under-trained local staffs may fail the market expectation by incurring problems like flawed products, poor services, irresponsive management and so on.