Defending a global brand

Hyundai flap has lessons for other MNCs

It is not often that a social media post by a provincial car distributor leads to a conversation between two foreign ministers —but that is just what has happened following a message on social media from a Pakistani vendor of Hyundai cars that expressed support for Kashmiri separatists. Following a firestorm on Indian social media, the South Korean foreign minister spoke to his Indian counterpart to express his regrets. Whether social media posts of this sort should eventually be raised to the level of external affairs ministries is one question. But the other question is how transnational companies, like Hyundai, can effectively manage their operations at a time of increasing geopolitical tension. Hyundai India issued a statement dissociating itself from the post by the Hyundai distributor in Pakistan. This did not noticeably calm tensions, nor was it likely to. It is true that Hyundai’s sales in India are unlikely to suffer any lasting damage. But the fact remains that a build-up of such incidents is not good for a brand’s image and shifts companies into fire-fighting mode. Multinationals which face significant domestic competition —like a South Korean carmaker in India — will find themselves particularly disadvantaged in that they will fear some offended potential customers will switch to locally-made alternatives.

Certainly, companies must carefully manage their brand names and their presence on social media in different geographies. There is no reason why the “Hyundai” name should have been used by a distributor in Pakistan rather than by the national office of the carmaker in that country, which would presumably have had a much more careful approach. It is also true that many transnational companies do not have clear social media policies warning their employees to take into account the effect of their posts on other markets. After all, the global public square is much smaller than it was. Posts made by Pakistani accounts are visible in India and vice versa. Companies that have a presence in multiple countries with outstanding geopolitical issues between them must be especially careful. Tighter control over the ecosystem that is associated with a brand is essential to preserve that brand’s integrity and marketability.

In the end, there will be costs to companies from kowtowing too much to such voices, as well. Indian social media may be dominated by hyper-nationalist narratives, but social media in the People’s Republic of China — carefully controlled by the government — is even more nationalist. And it is certainly many times more lucrative than the Indian market, and thus losing it is a risk that few companies are willing to take. Brands and multinationals over the past years have grown to understand and fear the response of Weibo and other mainland social media networks to products and advertising campaigns. But this sensitivity is itself causing a backlash. Companies that bend over too far — such as the film studio that removed a Taiwanese flag from a flight jacket in the Top Gun sequel —may find themselves the subject of harsh scrutiny in their home markets in the West. For now, it may be possible to seek to stay above the fray, as Hyundai should essentially have managed in this particular controversy. Yet that may not always be possible in the future.