MSLGROUP essays about image and reputation regarding the BRICS countries: Brazil, Russia, India, China and South Africa.

1. Image and Reputation:
MSLGROUP Essays on
the BRICS Countries
April 13, 2011

2. The MSLGROUP BRICS Blog Series: Executive
Summary
By Sally O’Dowd, engagement editor, MSLGROUP, Paris
Trade between India and South Africa is booming. Brazil wants a more level
trading field with China. Devalued yuan, anyone? Next door, Russian President
Medvedev is going against the grain (Putin), pledging to end corruption and
lower the tax burden on small business.
Needless to say, the leaders of the BRICS countries have important issues to
discuss at their third-annual BRICS Leaders Meeting on April 14 in the island
province of Hainan in southern China. And note the absence of the United
States, the United Kingdom and every other European power.
Image and Reputation: Policy Matters
This meeting got us thinking about image and reputation. When it comes to sovereign states, such
matters are often a function of government policy. Brazilian President Dilma Rousseff and many other
policy makers around the world voice concerns about low-quality and unsafe goods from China…how
will this play out at the meeting and will Chinese regulations change? Conversely, is this an unfair
portrayal of China, which produces a variety of high-quality goods? Should image, policy, trade get
into sync?
In the case of Russia, if Forbes describes your country’s problems as “crime without punishment”
and “punishment without crime” then you know you have an image problem. And that, in turn, is an
impediment to growth. In a post-apartheid South Africa, the continent’s largest country is doing some
exporting of its own. We led Brand South Africa in India and China: The campaign is just one element
of the African country’s multipronged approach to building ties with its Asian counterparts.
It is with this context that we bring you a collection of essays written by four members of the
MSLGROUP network. We asked our authors to use their unique perspectives to give you, the reader, a
taste of what it’s like to be on the ground.
We hope you find value in the MSLGROUP BRICS essays brought to you by:
• Kirby Chien, head of content development and senior media strategist at MSLGROUP China. For
nearly 20 years he worked for Reuters and Dow Jones, covering the companies, regulators and
markets of Greater China. He studied in China, the US, France and Taiwan.
• Paulo Andreoli, CEO of Andreoli MSL in Brazil, the agency he founded in 1994. No stranger to
international commerce and politics, Paulo earlier in his career won the Brazil ESSO Journalism
Prize (the Latin American equivalent of the Pulitzer) for his reporting on the export of Brazil
uranium to Iraq.
• Jaideep Shergill, CEO of Hanmer MSL in India and head of the financial communications practice
for MSLGROUP Asia. With 15 years of banking and communications practice, he counsels many of
the Indian companies making the I in BRICS a reality.
• Lawrence McDonnell, who in 1998 founded Pravda PR in Moscow. Previously, he spent 10
years as a BBC correspondent and bureau chief for ITN Television News. Pravda represents
the MSLGROUP network throughout Russia. Clients range from the Turkish Trade Mission to
Caterpillar and the Ritz-Carlton.

3. A View from China
By Kirby Chien, head of content development and senior media strategist,
MSLGROUP China
Since the term BRIC—Brazil, Russian, India and China—was first coined by a
Goldman Sachs economist in 2001, the loose grouping has evolved rapidly from
a catchy acronym to an emerging power broker with growing global aspirations.
Indeed, it is now BRICS with the addition of South Africa.
No BRICS nation has been more aggressive than China, the host of the group’s
third summit, in deepening the group’s influence in global affairs. Most recently,
10 countries in the 15-member United Nations Security Council voted in favor
of the resolution to establish a no-fly zone in Libya, but five nations—China,
Russia (which have veto power) and non-permanent members India, Germany
and Brazil—abstained from voting. China has been a vocal critic of the coalition airstrikes in Libya
saying they violated international rules. The New York Times Room for Debate section offers a good
selection of opinion pieces on China’s reaction to recent events in the Middle East.
BRIC economic growth contrasts sharply with the struggling economies of the United States and
Europe, and has given the emerging markets an impetus to push for greater say in issues such as
global climate change, reform of the United Nations, and poverty alleviation.
The group accounts for more than a quarter
of the world’s land area and more than
40% of its population, which will continue
to grow proportionally. Beijing lobbied
heavily last year in favor of admitting South
Africa into the club, although the African
nation does not fit the original model of a
large, fast growing economy. South Africa,
the continent’s largest economy, produces
many raw materials coveted by China. Full
disclosure: MSLGROUP China led the Brand
South Africa campaign in our market, just as
Hanmer MSL did for the Indian market.
While BRIC nations share a similar stage
of economic development, they have no
common political ideology and indeed there
are many contentious issues that separate
the four – not the least of which is China’s
policy of devaluing its currency to support
exports–a topic that my Brazilian colleague
discusses here.
Cooperation for a New World
Lions in Beijing’s Forbidden City, constructed in the early 15th
Order century, are in pairs. The female extends her leg to play with a
baby lion, symbolizing fertility of the royal family. The male lion
There are, however, many issues they can has a ball under its paw, representing the imperial power.
cooperate on. The group worked in concert at
the Copenhagen climate conference in 2009 to endorse the Kyoto Protocols. BRIC nations are all
large emitters of carbon – except for Brazil – but argue that developed nations have belched pollution
for many decades and should therefore shoulder a heavier burden in cutting emissions.

4. In addition, as the recent financial crisis has undermined the legitimacy of the G7 and their large
financial institutions, the second BRIC summit held in Brazil last year was dedicated to financial
reform. And at the London G20-meeting in 2009, the BRIC states issued a separate declaration
calling for reform of the International Monetary Fund, for changes in choosing the leaders of the IMF
and the World Bank.
China’s growing presence on the international stage was underlined by Foreign Minister Yang Jiechi,
who in his 2011 New Year message emphasized China’s role during the first decade of the new century
as a regional and global actor. Yang particularly noted the increasing importance of diplomacy in
ensuring state interests such as security, sovereignty, and development.
While BRICS nations are not close to establishing any formal alliance – China has outstanding border
disputes with both India and Russia, and Brazil’s industrial sectors fret about China’s competitive
strengths – Beijing will be looking to further the group’s cohesion at this year’s summit.

5. Brazil and China: Crossing the Divide
By Paulo Andreoli, CEO of Andreoli MSL, Brazil
The Chinese were trading long before Christopher Columbus was born. For us
Brazilians, they have a historical and cultural richness worthy of admiration, even if it
is sometimes in the context of concerns about their economic might.
In 2009, China replaced the US as Brazil’s biggest commercial partner. Chinese-
Brazilian trade in 2010 jumped 53 percent to US$56 billion, compared with $45
billion with the US. Brazil exports mainly iron ore and agricultural products to China,
whereas China exports many more things to our country: cars, electronics, even
“knick knacks” in the words of Brazilian President Dilma Rousseff.
It is as part of this scenario that President Dilma Rousseff is attending the April meeting of the BRICS
countries in China. She hopes to clarify the China-Brazilian relationship, because former President Lula
left a somewhat unfortunate inheritance: he showed that Brazil was willing to recognize China as a pure
market economy—and sometimes he gave too much—in hopes that the Chinese would support Brazil in its
efforts to become a permanent member of the UN Security Council.
But Brazil’s industrial sectors are genuinely worried
by China’s competitive strengths. Brazilian toy
manufacturers are forced to pay taxes and produce
under strict child-protection standards that are not
the norm for their Chinese counterparts. Likewise,
manufacturers of electronics, cars and other durable
goods here in Brazil complain about a non-level
playing field: The Chinese have devalued their
currency, making their products cheaper.
According to the Economist Intelligence Unit, “Voices
within the administration have started to express
concern about the risk of dependency on China,
not only for trade but also foreign direct investment
(China became Brazil’s top foreign investor in 2010).
The finance minister, Guido Mantega, has criticized
China’s weak-currency policy in particular, and has
warned of a looming trade war.”
Meanwhile, Bloomberg reported that Rousseff has Christ the Redeemer (Christo Redentor), a statue overlooking
Rio de Janeiro, was constructed between 1922 and 1931.
a shared sense with President Obama “that China Considered the second largest Art Deco statue in the world, it
is harming the economic interests of both their is 39.6 metres (130 ft) tall and weighs 635 tonnes.
countries by undervaluing the yuan.”
The Brazilian president’s mission to China will clearly be fraught with challenges. The biggest one is
establishing clearer rules for fairer and more transparent commercial cooperation that would subject
Chinese manufacturers to the same standards set for Brazilian companies. This will be a small but
significant step.
Brazil intends to show the Chinese that it wants a more robust trading relationship,
beyond exporting primary products and importing China’s finished goods. We hope
that good diplomacy from both sides will lead to a positive outcome, resulting in our
ability to export more Brazilian goods and providing more consumer choice to China’s
growing middle class. Naturally, this would be good for Brazilian businesses, which
would be able to hire more workers and help Dilma achieve her goal of raising people
out of poverty. As the Chinese government has likewise taken steps to help its poor, let’s
hope that this shared and noble endeavor can facilitate talks at the negotiating table.

6. India and South Africa Get Down to Business
by Jaideep Shergill, CEO of Hanmer MSL in India and head of the financial
communications practice for MSLGROUP Asia
The global community in less than 25 years has evolved from the Cold War—
where political loyalties rested with one of the two distinct super powers—to
a system based on multipolar relationships. And even those dynamics are
changing quickly.
What used to be taken for granted, even a few years ago, has been turned on its
head. The power equation is shifting from the G8 to other powerful groups in
the making. Competition and collaboration run a parallel course, often resulting
in strange permutations and recombinations. Russia, part of the G8, is also a
member of the BRICS category (Brazil, Russia, India, China and now
South Africa). Yet PricewaterhouseCoopers reports that the gross domestic product of seven
emerging markets, not five, (Brazil, Russia, India, Indonesia, Mexico and Turkey) will replace the GDP
of the G7 (the G8 minus Russia) economies by 2032.
With all of these shifts, it’s important to “follow the money”—as dizzying as that may be. It really is a
different world from the one we knew just two decades ago.
Follow the Money: India and
South Africa
Here in India, we’re pleased to welcome
South Africa into BRIC, for we’ve been
carrying on trade with the largest African
economy since the early nineties. Many
of our clients—Ashok Leyland, Bharti
Airtel, Cipla, Mahindra & Mahindra, ONGC,
Reliance and Tata—invest in South Africa
in the areas of agriculture, infrastructure,
investment banking, pharmaceuticals and
telecom.
India’s rail network traverses the length and breadth of the country,
Since the establishment of diplomatic covering 64,015 kilometres (39,777 mi) and transporting more than
relations in 1993, commercial relations 6 billion passengers and 350 million tonnes of freight annually.
between the two countries have flourished.
Bilateral trade increased from about US$4.7 billion in fiscal year 2006-07 to $7.5 billion in 2008-
2009. India and South Africa are expected to sign a trade agreement reducing tariffs later this year.
We at Hanmer MSL have had the opportunity to help foster good diplomatic relations with South
Africa. We played host last year to President Zacob Zuma during an official visit to our country and led
the Brand South Africa campaign for the Indian market.
Financially speaking, India’s future looks bright. The country’s gross domestic product (GDP) has
maintained a healthy 9.2 per cent in the current fiscal year
(2010-11). With the right economic reforms we can aim for
higher growth in the future. It is with this sense of optimism
that we await the outcome of the BRICS talks. In the new
global order, it is up to the emerging markets to support
companies—and indeed millions of people—in their pursuit
of prosperity and economic development.

7. Ending Corruption in Russia, Da or Nyet?
By Lawrence McDonnell, CEO and founder of Pravda PR, Moscow
With just a year to go before Russia elects a new president there are signs of a
rift between the incumbent Dmitry Medvedev and his Prime Minister, Vladimir
Putin, the man whom many regard as the natural leader currently on sabbatical,
more a tsar than head of the administration.
If we are to take Medvedev at his word, then the initiatives outlined in a recent
speech in Magnitogorsk are nothing short of revolutionary and strike at the heart
of the ruling elite, the state officials who sit on the boards of some of the largest
and richest companies in Russia and who remain fiercely loyal to the prime
minister who put them there.
The president’s speech was focused on improving the investment climate in Russia. Amongst a
number of initiatives designed to stimulate growth, two stand out: breaking corruption and reducing
the heavy tax burden on small and medium-sized businesses. It’s not the first time the president has
focused on corruption but this time he focused specifically on the crony capitalism that replaced the
oligarchs’ hold on the economy in the 1990s. During his own term in office President Putin, in ousting
said oligarchs to foreign lands or gaol, appointed his own trusted officials to the boards of Russia’s
blue chips to keep them in line and loyal to the state.
Officialdom, however, has in
many ways proved more of a
scourge to Russia’s development
than the oligarchy it replaced.
The oligarchs were replaced by
a new class, aptly tagged by the
Economist as the bureaucrat-
entrepreneur. Such individuals
are interested only in securing
a position in the state apparatus
where they can manage and
apparently siphon off large parts
of the state budget. According
to the Economist the number
of civil servants in Russia is
booming, rising from 500,000
people to more than 800,000 in
the last three years alone.
St. Basil’s Cathedral, constructed in the mid-16th century, acquired its vivid
Breaking a System colors in several stages from the 1680s to 1848. The church has been part of the
Moscow Kremlin and Red Square UNESCO World Heritage Site since 1990.
that Stifles Growth
This class not only stifles the trickle-down financial benefits from Russia’s growing income in the
natural resources sector to the wider economy but also takes its money abroad. An emerging market
is not a very good emerging market when money is flowing out rather than in and when the middle
class is being squeezed out of business by government bureaucrats. So when the president promises
to lower taxes he is appealing directly to the middle classes to support him in breaking the system
created by his own prime minister and predecessor. In any other democracy this may sound like
everyday politics but in a country that understands only the power vertical it is akin to shooting your
old boss—and all his relatives.

8. Should we believe this break in the ranks? Or more importantly, should the Russian people believe
it? Do they care? If they do, then they haven’t got many places to talk about it. No surprise that in
the absence of an independent media they are logging on. More than 40 million Russians use the
internet, giving Russia the 2nd highest penetration in Europe. President Medvedev twitters. He
believes in social media and wants to be part of it.
In style and content, Medvedev’s campaign looks like any other presidential race; a candidate reaching
out to engage with a middle class electorate on a promise of lower taxes, less bureaucracy (and
corruption) and a higher standard of living.
Russians today understand choice, it arrived with shopping; the opportunity to see, touch, try and buy.
And this is a campaign platform that could catch the public imagination. But fashion and foreign cars
are easier to introduce than a civil society with genuine political choice, genuine political opposition.
It is also difficult to define or quantify a modern Russian middle class. It isn’t a class that survives well
under communists, oligarchs or a single-party corrupt state apparatus. If Medvedev does manage
to give voice and economic stimulus to the masses under his promised reforms, then he may well
create a stable environment for investment and economic growth through small and medium-sized
businesses—the framework for the sustainable development of a dynamic market economy.
If he doesn’t then Russia faces stagnation and an uncertain future under the same old ruling elite.

9. Thank you for reading.
If you would like more information on MSLGROUP’s international communications
capabilities, please contact Chief Strategy Officer Pascal Beucler at
pascal.beucler@mslgroup.com.
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