UBS all hog-tied in China

This is an interesting case for crisis management aficionados.

We live in interesting times indeed when hypersensitivity meets the mob mentality on social media.

UBS Chief Economist Paul Donovan was commenting in his podcast on China’s economy and how there’s been some inflation caused by sick pigs in China. The country has recently had to cull 1.1 million pigs because of an outbreak of swine fever.

He tried to add a bit of color to his commentary instead of dishing out the usual cut-and-dried tone of economists: “Does this matter?” he asked. “It matters if you are a Chinese pig. It matters if you like eating pork in China.”

Nothing much wrong with that but in China this line has provoked a groundswell of hurt feelings that bubbled and boiled on its social media channels with the state-sponsored Global Times joining in the chorus of condemnation.

UBS, which has a long association with China and huge amounts of investment at stake, immediately caved-in and apologized unreservedly.

UBS’s ‘Chinese Pig’ Apology Shows Who’s in Charge

The swift climbdown is a sign of how much the bank has at stake in China.

Updated on
Apologizing.
Apologizing. Photographer: Matthew Lloyd/Getty Images Europe

It may have seemed a perfectly innocuous choice of words to the economist as he composed his daily commentary on the state of global financial affairs. Within hours, one sentence landed UBS Group AG, the world’s biggest wealth manager, in the center of a media storm and prompted a groveling retraction.

At issue was Paul Donovan’s Morning Audio Comment. He entitled Wednesday’s note “VERY NORMAL INFLATION,” a play on Donald Trump’s use of capital letters in a tweet on the beauty of VERY LOW INFLATION. In it, the economist opined on the rise in Chinese consumer prices, a gain he attributed to sick pigs.

The country has had to cull 1.1 million of the animals amid an outbreak of swine fever, a figure that could, on the basis of previous outbreaks, increase to as many as 200 million for the whole year.

“Does this matter?” he asked. “It matters if you are a Chinese pig. It matters if you like eating pork in China.” (see more here)

The self flagellation, however, doesn’t seem to have worked. After the economist went on Bloomberg TV to say he was wrong and he totally apologized for the culturally insensitive remark, The Chinese Securities Association of Hong Kong — which represents firms including the Hong Kong branches of mainland companies — has urged the bank to “terminate the employment of the staff involved, and report the result to the Chinese public.” A major securities group also announced that it had suspended its activities with UBS.

Here’s an interesting thought experiment for Crisis Management professionals: what else could UBS have done to mitigate the incident? The remark by itself wasn’t exactly culturally insensitive to begin with. And when the issue erupted UBS did not go into denial but apologized straight away. So what went wrong?

Curious as to what have gone wrong, I went to watch Donovan’s apology on Bloomberg’s Surveillance program and think I spotted the cause of the continuing rage and anger over UBS.Here’s the video:

Do you see what I see?

 

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