Growing mistrust will result from 'no comments' or denials
Companies, public relations firms and the media have to work together to ensure fairness in reporting or history will be the judge
While some scholars praise China for being a more open society, the business world in China is apparently the other way round.
Doing business in China is becoming more important than ever amid an economic slowdown in the West in recent years, and it's also getting less transparent.
Some companies, including some major listed companies, will typically say "no comment" or even deny whatever is reported in the media that they think is negative.
Some companies also get more arrogant as they get richer.
The most recent example is whether UBS financed a secret loan deal to allow Thai billionaire Dhanin Chearavanont to complete his eye-catching acquisition of a major stake in Ping An, China's No 2 life insurer.
Last Friday Reuters reported, citing unnamed sources, that UBS's financial backing for the Ping An deal included a five-year, roughly US$5.5 billion loan, one of the largest loans of its kind ever extended in Asia. The Financial Times confirmed the Reuters report.
However, within 48 hours, Dhanin denied the news completely without too much explanation.
Earlier this year, the press - including the South China Morning Post - reported that China Development Bank (CDB) had decided not to back Dhanin's purchase. The reports said the state-owned bank had learned that Dhanin might have teamed-up with a mysterious mainland businessman whose reputation was widely in doubt, which he quickly denied. His media relations' agent privately tried to assure the press that CDB would provide the loan.
But in the end CDB chose to give up on the deal.
Dhanin, a Thai-Chinese who controls the poultry-to-property industrial giant CP Group, is not alone in such battles against the press.
Charles Zhang's Sohu.com is another case.
Well-placed sources told the Post earlier this year that Zhang, founder and top boss of Nasdaq-listed mainland portal Sohu.com was in talks with banks and funds for a possible privatisation. Before the news went to print, we sent an inquiry to Sohu.com for comment. Sohu.com declined to comment and we let the story run.
The following day, when Sohu.com's share price jumped more than 10 per cent on the news, gaining the attention of the United States securities regulator, the company quickly denied the report.
A lawyer familiar with the matter later said it was technically correct for Sohu.com to deny such news before any deal agreement is officially inked so as to not look stupid in public.
I once described the relationship between businesses, especially public relations professionals working for those businesses, and the media like this: we are in the same boat but we look for different scenes. You tell the true story or whatever you feel comfortable to say to help me understand what you can see, and I will use my news judgment to combine all factors together to produce a fair story.
I believe if there is only a "no comment" or a denial left in the boat, there will just be growing mistrust. Sooner or later, time and history will tell the public the truth.
George Chen is the Post's financial services editor. Mr. Shangkong appears every Monday in the print version of the SCMP. Like it? Visit facebook.com/mrshangkong