Trust in Asia Pacific, Middle East & Africa 2017 by Edelman Asia Pacific

Preface

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Preface

It has been a year of unimaginable upheaval across the globe and in Asia Pacific Middle East & Africa (APACMEA). The 2017 Edelman Global Trust Barometer found that two-thirds of the 28 countries surveyed are now ‘distrusters’ across ‘the system’ or the four institutions surveyed – Government, Business, NGO’s and Media. Across APACMEA however we saw an expansive difference, from those ‘developing’ economies like China, Indonesia and India having globally the highest levels trust, to ‘developed’ regional economies like Japan and South Korea in the bottom quartile among the ‘general population’. Trust is an essential asset for any business anywhere in the world, which is why we have been measuring and assessing it now for 17 years. But trust is an outcome, driven by behavior first and communications second. Trust is driven by how business treats its customers, its employees, its partners, the environment and the communities it lives with and the way it communicates. But it has now moved beyond the point of being simply a key factor in product purchase or selection of employment opportunity. It is now in the spotlight as a defining factor in whether society can function efficiently for all. As trust in institutions erodes, the basic assumptions of fairness, shared values and equal opportunities traditionally upheld by ‘the system’ are no longer taken for granted. We can observe deep disillusion and opposition to globalization, innovation, deregulation and multi-national institutions. There is growing despair about the future, a lack of confidence in the possibility of a better life for one’s family. Corruption is the top fear across all of APACMEA, followed by immigration and globalization. Protectionism is now back on the agenda.

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Preface The lack of societal and institutional safeguards provide fertile ground for populist movements fueled by fear. The pharmaceutical industry, financial services and food & beverage sectors were singled out for closer scrutiny on their practices and stronger government controls. CEOs and official spokespeople are less credible while what employees say is trusted more. There was strong agreement that business can continue to make profits, but only if they shoulder greater responsibilities for improving economic and social conditions in the communities in which they operate. Trust is kicked off every year in January at the World Economic Forum in Davos, and all our 5,500 employees across our 65 markets are skilled in understanding the implications global and specific market insights, to be able to provide data driven based solutions for our clients. This collection of essays looks at the data for 11 markets in the Asia Pacific, Middle East and Africa (APACMEA) region. As you will see, the findings vary significantly from market to market, proving that trust-building and protecting needs to be part of any CEOâ&#x20AC;&#x2122;s job. It also needs to be managed market by market. We hope you will find these essays interesting and insightful.

David Brain President and CEO - Asia Pacific, Middle East and Africa

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Content Asia Pacific, Middle East and Africa North Asia China Hong Kong Japan Korea

Emerging Markets India South Africa United Arab Emirates

Southeast Asia Australia Indonesia Malaysia Singapore

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ASIA PACIFIC, MIDDLE EAST & AFRICA

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Asia Pacific, Middle East & Africa

David Brain President and CEO - Asia Pacific, Middle East and Africa

Trust’s a bust…

except in Asia Pacific Middle East & Africa

Trust is in crisis globally, with 19 of the 28 countries we poll annually now distrusting states. Trust in the four institutions of business, government, media and NGOs have all declined this year with media witnessing the biggest falls.

TRUST INDEX A WORLD OF DISTRUST Average trust in institutions, 2016 VS 2017

TRUSTERS 60-100 NEUTRALS 50-59 DISTRUSTERS 1-49

GLOBAL CHINA UAE INDIA SINGAPORE INDONESIA MEXICO CANADA COLOMBIA NETHERLANDS ARGENTINA MALAYSIA BRAZIL AUSTRALIA ITALY U.S.A HONG KONG SPAIN SOUTH AFRICA GERMANY SOUTH KOREA U.K. FRANCE IRELAND TURKEY RUSSIA JAPAN SWEDEN POLAND

2016

2017

50 73 66 65 64 62 60 56 55 52 51 51 50 49 49 49 47 46 45 42 42 42 41 41 41 39 38 37 35

47 72 69 67 60 60 53 52 52 50 49 48 48 48 45 44 44 43 42 42 41 40 40 38 37 36 35 35 34

GLOBAL INDIA INDONESIA CHINA SINGAPORE UAE NETHERLANDS MEXICO U.S.A COLOMBIA CANADA BRAZIL ITALY MALAYSIA ARGENTINA HONG KONG SPAIN TURKEY AUSTRALIA SOUTH AFRICA GERMANY FRANCE U.K. SOUTH KOREA SWEDEN IRELAND JAPAN POLAND RUSSIA

3-point decrease in the global Trust Index

Trust declines in 21 of 28 countries— the broadest declines since beginning General Population tracking in 2012 2 in 3 countries are now distrusters

Source: 2017 Edelman Trust Barometer. The Trust Index is an average of a country's trust in the institutions of government, business, media and NGOs. General Population, 28-country global total.

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Asia Pacific, Middle East & Africa

Trust in All Four Institutions Declines Percent trust in the four institutions of government, business, media and NGOs, 2016 vs. 2017

Trusted 2016

2017

Neutral

50%

Distrusted

-2 -1 -5 -1 NGOs

Business

Media

Government

Two of four institutions distrusted

These are the broadest declines seen since we started tracking the general population back in 2012. The only year we saw similar widespread declines in the trust study was after the global financial crisis of 2008, so the fact that economies have been broadly stable this year points to a new cause. We have labelled this ‘system mistrust’ and its effects can most obviously be seen in the election of Donald Trump and the vote for Brexit. Even in countries where trust in the four institutions remains positive, when asked about their sense of justice, hope, confidence and belief in the ‘system’ and its ability to change for the better, more than half (53%) of respondents responded negatively.

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Asia Pacific, Middle East & Africa

Majority Believe the System is Failing Them How true is this for you? - Sence of injustice - Lack of hope - Lack of confidence - Desire for change

System failing

Approximately

1 in 3 are uncertain

53%

32%

System working

15%

Completely true

1 Not at all true

Equally concerning is a six point increase in the ‘trust gap’ (from nine% to 15%) from 2012 and 2017 between the informed public (top 13% of global population) and the mass population (remaining 87%). That gap is now widely credited as a leading cause of the rise of populism in a number of countries accepted wisdom now, but not so much last year when we published these figures.

Source: 2017 Edelman Trust Barometer Q672-675, 678-680, 688-690. For details on how the “system failing” measure was calculated, please refer to the Technical Appendix.

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Asia Pacific, Middle East & Africa

So our new data on the ‘fears’ and the ‘lack of faith in the system’ that appear to drive populism should perhaps be watched as a new lead indicator (Wikipedia: Populism is a political outlook or disposition that appeals to the interests and conceptions - such as hopes and fears - of the general population, especially when contrasting any new collective consciousness push against the prevailing status quo interests of any predominant political sector). This year, we looked at how concerned people are with corruption, globalization, eroding social values, immigration and the pace of innovation. We also asked them about their ’belief in the system’. On the chart below, South Africa is the only market from our region where the general population have with multiple fears and a belief that the system is failing system them. Interestingly, India a country where the trust index (average trust in the four institutions of government, media, business and NGOs) is the highest, shows the ‘full-house’ of the five’s. Compare this to Germany which displays none of the five fears and yet is highly distrusting of its institutions. Social homogeny, culture, politics and history all play parts in driving or restraining populism it would seem from these two contrasting examples.

Systemic Distrust and Fear Trigger Action

Above-Average Level of Fear Above-Average Belief the System is Failing Countries with Multiple Fears and Failing System

Corruption Immigration Globalization Eroding social values Pace of change

10 countries with above-average belief the System is Failing and multiple fears

UAE

China

Singapore

Hong Kong

India

Japan

Indonesia

South Korea

Russia

Turkey

Malaysia

Argentina

Sweden

Canada

Netherlands

U.S.A.

Ireland

Australia

U.K.

Germany

Colombia

Brazil

Poland

Spain

South Africa

Mexico

Global

Italy

53 72 72 67 67 67 64 62 62 62 60 59 59 57 56 55 55 53 52 51 48 48 42 42 36 35 30 23 19

France

% Who Agree System is Falling

4 countries with Above-Average belief the System is failing - but lack multiple fears

Source: 2017 Edelman Trust Barometer. Corruption Q685-687, Globalization Q681-684, Eroding social values Q676 and Q758, Immigration Q685, Pace of innovation Q677. System is failing: Q672-675, 678-680, 688-690. For details on how the societal fears and the “system failing” measure were calculated, please refer to the Technical Appendix. The margin of error for the countries scores was added and subtracted from the global mean. Countries were considered above the global average if their score was higher than the global mean plus the margin of error.

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Asia Pacific, Middle East & Africa

The increase in the trust gap between the informed public and mass population and our new measures showing a lack of faith in the ‘system’ among the general population point to an increasingly fertile breeding ground for new types of populism and whilst it is true that much of this is centred on western democracies, events in places like the Philippines demonstrate this is not exclusively the case. That said, in the chart above, the top eight markets that have retained ‘faith in the system’ are in this region and generally things appear not quite so bleak trust-wise as, on average, the region remains a neutral one (52%). The five most trusting countries are all from this region; CEOs have more credibility here (four of the top five markets); we have the top five markets for trust in media; the top five markets for trust in government; three of the top four markets for trust in NGOs and four of the top five markets for trust in business. As always, whenever economies are growing and where people believe that the ‘system’ is generally delivering for them and their families, they confer trust on the institutions that got them there. The opposite is also true. However, the world is not flat and there is no such country as Asia Pacific, Middle East & Africa and so we have produced this booklet again, in which we look at the broad themes as well as the specific trust issues emerging in 11 countries across the region. Each story is very different and for businesses trading and operating in these markets, a custom trust-building approach will be required. These essays are a fascinating introduction to that; but please do connect with the Edelman General Manager in your market to learn more or see the detailed market data and discuss your best approach to building trust.

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Asia Pacific, Middle East & Africa

Rupen Desai Vice Chairman - Asia Pacific, Middle East and Africa

Can an activist brand be the people’s champion

in a ‘trust in crisis’ world? The traditional, top down, broadcast first, image led marketing is just not effective anymore. Even if one were to doubt the data that supports this, a simple test would be to imagine a brand seated next to you at the dinner table. How tedious a conversation would you foresee with someone who is self-centred and only speaks about himself, all evening? On one end, consumers have more choices than ever before. At the same time, their ability to be better informed at the click of a button has increased. Unfortunately, the dilemma with the increased number of choices is that they have lesser and lesser time to make educated choices. This is further accentuated by the high levels of advertising avoidance across the region. Agency swim lanes means there is far more content than before, but not necessarily meaningful or engaging content. This results into the same brands who are trying very hard to rise above the noise and clutter with their messages are in effect, ending up becoming a part of the very same noise and clutter. In a year of heavy turmoil, trust has been on a downward spiral, like never before. Trust in all four institutions – business, government, NGO’s and media – to do what is right, declined in 2017.

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Fear further Erode Belief in the System Percent of respondents with each feat who also believe that the system is failing them

E r od

i ng

So ci a G l ob lV ali z a al t io 77 Co n r r up 72 Imm tion ig 68 Pac rati eo f

vation no In

The widespread belief that the system is broken increases a personâ&#x20AC;&#x2122;s vulnerability, ultimately causing deeper distrust in institutions. The combination of distrust in institutions, a lack of faith in the system and a climate produced by societal and economic fears ultimately give rise to an increase in populist action. Media Echo Chamber

lie f i

n S y s te m

Most Vuln era ble

ars Fe

Populist Action

r fT so

Economic & Societal Fears

ti nI ns

Los

NGOs Business Media Government us

e fB

tit u ti o n s

F urth er

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d Ero

Asia Pacific, Middle East & Africa

The implication for business and brands are huge and stakes higher than ever before. Around 75% of general population agree that a company should be able to do both, increase its profits and at the same time improve the economic and social conditions in the community it operates in.

As we face this new normal, can an activist brand be the people’s champion in a ‘trust in crisis’ world?

The best brands have always been genuine north stars. North stars that serve as a centralized organizing principle driving all activities, internal and external; including product, service, innovation, purpose, stakeholders and not just limited to a one way communication. Activist brands start from a strong and authentic purpose, one that is in a meaningful area that people care about. It needs to be a fight about what matters to all of us, not just one that matters to the brand.

The brands trying hard to rise above the noise and clutter with their messages are in effect, ending up becoming part of the same noise and clutter. Activist brands will change the focus of companies from being the ‘best in the world’ to being the ‘best for the world’.

Activist brands do more and talk less. In effect they create and become a platform for engagement & action. Whilst marketers can choose to see this either as a challenge or an opportunity, the reality is the ones that are winning are the ones sharing meaningful platform with consumers allowing them to join, set and achieve the agenda. And it does not matter if setting the agenda means taking a stand, appealing to a smaller audience or dividing a nation. You will have evangelists who will strongly advocate you. When REI took a position on #Optoutside, Dove with #Realbeauty, Ariel with #Sharetheload or when Timberland planted 1Mn trees 6 years before their launch in China, they began a journey of transforming themselves. Whilst this would mean a complete shift in how brands are created, how they operate and what they offer, the ones that have a clear motivating purpose, meaningful narratives and work in collaborative partnerships with their consumer community will succeed. Companies and brands now have an opportunity to take a position rather than rely on positioning, to be activists in a world when trust is in crisis and change the world for better. Imagine the dinner conversation when your brand does take this opportunity. We might even run out of wine that night! TRUST 16

ASIA PACIFIC, MIDDLE EAST & AFRICA

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Asia Pacific, Middle East & Africa

Gavin Coombes Managing Director - Digital - Asia Pacific

Trust in The Socialized Age When Tim Berners-Lee conceived the World Wide Web, he envisioned something that would not only make it easier for citizens of different countries to communicate with one another but also a technological means of increasing understanding and empathy among different peoples.

When looking back on 2016, ‘empathy’ would likely not be the first word that comes to mind. As Internet-based communication has become used more often and by more people, we have found ourselves in the paradoxical circumstance of more information arguably leading to less understanding. The ‘echo chamber’ – identified in the latest Edelman Trust Barometer as a major factor in feeding fear and distrust of institutions – is a phenomenon that reached a tipping point in 2016 and with potentially epochal implications. And, seemingly, without warning.

How did we go from the idealism of the early Internet to our new state of cursive connectivity? It was 2006 when YouTube went online and one year later when Facebook was lit up. So, 2016 represented the 10th anniversary of the birth of the social media age. And like teenagers everywhere, social media is now starting to act out. But we are not talking about ‘fake news’. The influence of social media on the way we perceive the world goes much deeper than that. Social media is in essence tabloid media. It’s not that social media platforms and users are not interested in ‘hard’ news, it’s just that they are much more interested in things that are happy, sad, funny or violent. So far, so what: tabloid media has been around almost as long as media.

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What makes the social media experience different is that our friends are both the sub-editors and subjects of our media. They both, choose the general news stories we see, and feature in stories about themselves. Over time, the very concept of ‘news’ becomes blurry. Important things happening to strangers are not interesting, however mundane things happening to our friends, catch our attention.

Instead of expanding our minds, the Internet age – and especially the social media age – has for many people contracted and blinkered them. Because our social circle is determined in large part by our socio-economic circumstance, our news diet easily becomes a daily double-down digest: facts adjusted and prejudices reshuffled to fit a pre-set point of view. But because so much information is now in digital form, there is never any shortage of raw material to feed that framework, no matter what it happens to be.

Hence, the disconnect between broad content spectrum and narrow perspective it feeds. Which leads us to another related paradox: never in human history has so much information been so readily available (and at no cost) to so many people. Yet never before has a majority of people been so entrenched in their opinions. Instead of expanding our minds, the Internet age – and especially the social media age – has for many people contracted and blinkered them. The impact goes beyond the socio-economic (important as that is). For years, marketers and communicators have been grappling with a real-time, omni-channel, media-neutral and fully-integrated environment that makes the combination of getting the right message to the right person in the right market on the right device at the right time, an exceedingly complex equation. Yet, consider the two biggest world events of 2016: Trump and Brexit. The Trump campaign went through three campaign managers, spent more on hats than on data and was a famously fractious affair. The Brexit ‘leave’ campaign was not even one campaign but three (later two, after a merger of sorts) who were as much at war with one another as with the ‘remain’ crowd.

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But both campaigns had something their opponents did not, a single, memorable message: - ‘Make America Great Again!’ - ‘Take Back Control’

At the end of the day, this was enough to convince the right voters in the right places. Despite each campaign (and one subsequent Presidency) having a loose relationship with the facts. And this leads us to our third paradox: in an age of software and hardware accessibility that was unimaginable even at the turn of this century, it is only the most brutally single-minded messages speaking directly to our reptile brains that cut through. It seems that in order to capture the attention, focus and trust of audiences in 2017, we need to spend at least a little time thinking like we did in the day-glo hard-sell days of 1987, or maybe even much earlier. This applies to what we do in the consumer, corporate and communications marketing space. The right brand with the right meaning, and the authenticity to back it up, could potentially not only gain attention for itself, but even help shift us all out of the comfort of our echo chambers. But there is also no escaping the new reality. Those of us who have been in digital marketing since the days of 50% banner click-throughs know that being digital is all about being human and virtual space is a fun-house mirror of the physical world. But that thinking needs an upgrade. Yes, you must be omni-channel. Yes, you must be real-time. Yes, you must be media-neutral. But you also must ask the question: How would my message look on a red hat?

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North Asia

Bob Grove CEO - North Asia

Back-To-Basics ++ The Trust Divide and its implications, for politics, media, and trade, rightfully steal the limelight in this yearâ&#x20AC;&#x2122;s Trust Barometer. Amidst the commotion of the last few months that the data points to, it is easy to lose sight that the Trust Barometer charts a course for how businesses in Asia Pacific, the Middle East, and South Africa (APACMEA) are expected to behave by the public to protect themselves from this uncertain environment. Survey respondents score the importance of 31 trust driving attributes for any company and then rank how companies are performing against each attribute in their country. The trust attributes are shown in the table below, categorized into five sub-headings. treats employees well

Engagement

listens to customer needs and feedback places customers ahead of profits communicates frequently and honestly on the state of it

Integrity Products & Services

has ethical business practices takes responsible actions to address an issue or a crisis has transparent and open business practices

offers high quality products or services is an innovator of new products, services or ideas

works to protect and improve the environment

Purpose

creates programs that positively impact the local community in which the company operates addresses society's needs in its everyday business partners with ngos, government, and third parties to address societal issues TRUST 22

North Asia

Operations

has highly-regarded and widely-admired top leadership ranks on a global list of top companies, such as best companies to work for or most admired companies delivers consistent financial returns to investors

Employee Empowerment

Diversity

empowers its employees to make decisions regular employees have a lot of influence in how the company is run supports employees joining workers'/trade unions

has a lot of ethnic diversity within its management team has a lot of gender diversity within its management team has a lot of diversity when it comes to attitudes, values, and points of view

Citizenship

Leadership

it creates many new jobs the profits it makes in a country stay in that country pays its fair share of taxes

the CEO gets personally involved in societal issues the CEO is compensated based on the ability to produce sustainable, long-term growth i know who the CEO is and what he or she stands for

Relationship Building

invites the public to contribute to and help shape their products, services or policies has a public image or heritage that i can appreciate and relate to actively encourages and facilitates conversations and interactions with the public

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North Asia

Before addressing the expectations of company behavior, let’s put this into the context of trust in company leadership. In 23 of the 28 countries surveyed globally, CEOs are no longer credible. Japan holds the dubious position of being the world’s most distrusting country of CEOs, dropping seven points over 2016 to a meagre 18%. South Korea dropped 11 points to 24% and Hong Kong had the biggest drop of 19 points to 27%. Even in China, trust in CEOs dropped 13 points to 44% despite a generally high level of trust in business overall at 67%. With business leaders’ credibility in question, companies must find other voices to communicate their actions. Across the region, employees are the most credible spokespeople to talk about a company’s financial earnings and business performance in seven of the eleven countries surveyed in the APACMEA region. Similarly, in seven countries, employees are the most credible source to comment on a company’s business practices and how it handles crises. Not surprisingly, in ten countries, employees are the authority when discussing the treatment of employees by their company. Treating employees well is indeed an important corporate trust driver. In eight of the APACMEA markets, stakeholders rank the treatment of employees amongst the top two in importance out of 31 trust building behaviors for a company. Only in China, India and Malaysia, does the employee trust building attribute not feature amongst the top two, although, it features highly as an important attribute in each of these countries.

TREATMENT OF EMPLOYEES AS A TRUST DRIVER Country

Importance

Performance

GAP

UAE

South Africa

India

China

Japan

South Korea

Indonesia

Australia

Singapore

Hong Kong

Malaysia

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In all markets, companies are not perceived to live up to expectations on how well they treat employees. The gaps between expectations and performance are particularly stark in Australia, South Africa, Japan, and South Korea. The latter two markets may be explained by the hierarchical corporate cultures that remain entrenched, despite the shift in attitudes to employees almost everywhere else in the region. The second most common driver of trust across the region is the quality of product or service offered by a company. Quality of product or service is a top two trust driver in China, Hong Kong, India, Malaysia, South Africa and the UAE. In Australia, Indonesia, Japan, Singapore, and South Korea, product quality is not ranked to be as important in driving company trust. With the exception of Indonesia, perhaps because in these relatively more developed markets, product or service quality is assumed as a license to operate.

PRODUCT OR SERVICE QUALITY AS A TRUST DRIVER Country

Importance

Performance

GAP

UAE

South Africa

India

China

Japan

South Korea

Indonesia

Australia

Singapore

Hong Kong

Malaysia

The importance of product and service quality is understandable in our region. For instance, China continues to struggle with food safety (expired milk, irradiated seafood) and health products (vaccines). Hong Kong had issues with lead poisoning in tap water across several public housing estates. A South Korean brand was embroiled in a global recall for one of its smartphones. Significantly, there is an expectation across key industries that government should regulate more. TRUST 25

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For example, an average of 81% of the general population in this region feel that the pharmaceutical industry should be more regulated. Similarly, an average of 75% feel that governments should impose a higher tax on food and beverages that have an undesirable impact on people’s health. The third most important driver of trust across the region is the expectation that companies should have ethical business practices. This ranks in the top two attributes in Hong Kong, Indonesia, Malaysia, and Singapore. This is emphasized when the survey respondents cited their biggest societal concerns. In eight of the eleven APACMEA markets, corruption ranked as the top concern. Worryingly for companies in Australia, China, Hong Kong, Japan, Indonesia, South Africa, and South Korea, is that the gap between perceived importance and performance of ethical business practices was more than 10 points, suggesting that companies still have some way to ago in addressing the fundamental expectation of abiding by the law. With business leaders’ credibility in question, companies must find other voices to communicate their actions. In previous years, there has been more disparity across the region about the most important trust drivers for companies. This year, the sentiment is that companies need to go back to basics by focusing on being ethical, providing a good quality product or service and treating employees well. Trust is certainly more complex than these three factors, but companies who fail to live up to these core principles will not be forgiven. Undeniably, the basics themselves will not set a company apart. There are lessons to be learnt from the political events of the last few months, where the “left-behinds” have demonstrated their dissatisfaction with the status quo. On average, 74% of the general population across the region believe that companies have the responsibility to take specific actions to both increase profits and improve the economic and social conditions of the communities where they operate. The social contract between companies and the community is perhaps needed more than ever to shore up optimism and to prove that companies can contribute more than providing a return to their shareholders. It is a time for companies to lead by example – the basics and by doing good – or they too may be left behind.

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NORTH ASIA CHINA

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North Asia, China

Jeffrey Yu President - China

Restoring Trust: Case for optimism in China

China has often deviated from global findings in Edelman’s annual Trust Barometer study in previous years and 2017 is no exception. While the rise of populism captured in the global Trust Barometer has been causing much alarm around the world, the picture in China is much less severe, though it still raises interesting questions on the way forward for the following institutions: Government, businesses, media and NGOs. China is traditionally a “high-trust” market, where trust in institutions has remained among the highest globally in the years we have conducted the study. However, this market is not immune to the global decline in trust, with declines for all four institutions. This comes as no surprise in a year of serious, high profile scandals, such as children’s vaccines and online medical advertisements, where human lives were at stake.

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TRUST INDEX A WORLD OF DISTRUST

Average trust in institutions, 2016 VS 2017

GLOBAL

TRUSTERS 60-100 NEUTRALS 50-59 DISTRUSTERS 1-49

2016 50

CHINA

2017

-6

GLOBAL

INDIA

UAE

INDONESIA

INDIA

CHINA

SINGAPORE

INDONESIA

UAE

MEXICO

NETHERLANDS

CANADA

MEXICO

COLOMBIA

U.S.A

NETHERLANDS

COLOMBIA

ARGENTINA

CANADA

MALAYSIA

BRAZIL

ITALY

AUSTRALIA

MALAYSIA

ARGENTINA

HONG KONG

ITALY

U.S.A

-3

HONG KONG

SPAIN

TURKEY

SOUTH AFRICA

AUSTRALIA

GERMANY

SOUTH AFRICA

SOUTH KOREA

GERMANY

U.K.

FRANCE

U.K.

IRELAND

SOUTH KOREA

TURKEY

SWEDEN

RUSSIA

IRELAND

-4 -3

JAPAN

SWEDEN

POLAND

RUSSIA

3-point decrease in the global Trust Index

Trust declines in 21 of 28 countriesâ&#x20AC;&#x201D; the broadest declines since beginning General Population tracking in 2012 2 in 3 countries are now distrusters

Source: 2017 Edelman Trust Barometer. The Trust Index is an average of a country's trust in the institutions of government, business, media and NGOs. General Population, 28-country global total.

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North Asia, China

Trust in All Four Institutions Declines

Percent trust in the four institutions of government, business, media and NGOs, 2016 vs. 2017

Trusted 2016

2017

Neutral

50% Distrusted

-2 -1 -5 -1 NGOs

Business

Media

Government

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North Asia, China

Social Media Shows Steepest Decline

Percent trust in each source for general news and information

2012

2013

Traditional Media Online-Only Media** Search Engine* Social Media Owned Media Media as an institution

2014

2015

2012

2017

Change 2012 - 2017

77 73 75 69 64 73

76 66 66 58 54 65

-1 -7 -9 -11 -10 -8

2016

2017

Social media down 11 points, the most of all media types

Source: 2017 Edelman Trust Barometer Q11-620. Below is a list of institutions. For each one, please indicate how much you trust that institution to do what is right using a nine-point scale, where one means that you “do not trust them at all” and nine means that you “trust them a great deal.” (Top 4 Box, Trust) General Population, China, Questions asked of half the sample. *From 2012-2015, “Online Search Engines” were included as a media type. In 2016, this was changed to “Search Engines.” **From 2012-2015, “Hybrid Media” was included as a media type. In 2016, this was changed to “Online-Only media.”

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North Asia, China

Beyond the trust in institutions that are a staple of the Trust Barometer, this year’s study also investigated what we call the ‘lack of belief in the system’. When asked about their sense of justice, hope, confidence, nearly one in two respondents (47%) in China was uncertain whether the ”system” is working. This may seem like an alarming statistic but it is significantly better than the global results, where over half of the respondents (53%) believe that the system is failing them (the figure is 23% in China).

Majority Are Uncertain or Fully Believe the System is Failing Them How true is this for you? - Sense of injustice - Lack of hope - Lack of confidence - Desire for change

Approximately

1 in 2 are uncertain

47%

System failing

System working

29%

23%

Completely true

1 Not at all true

Source: 2017 Edelman Trust Barometer Q672-675, 678-680, 688-690. For details on how the “system failing” measure was calculated, please refer to the Technical Appendix.

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North Asia, China

Majority Believe the System is Failing Them

How true is this for you? - Sense of injustice - Lack of hope - Lack of confidence - Desire for change

System failing

53%

Approximately

1 in 2 are uncertain

32%

System working

15%

Completely true

1 Not at all true

These findings have profound implications for China. They mean that what we do now will determine which way the balance tilts in the future, i.e. whether China will rise above the system mistrust that is plaguing many developed countries across the world. There are reasons for optimism in the future. While trust in institutions has declined, trust in government remains strong, which is an endorsement of the Chinese governmentâ&#x20AC;&#x2122;s overall performance in steering the Chinese society and the economy. This also provides the government a mandate for it to continue taking the lead in addressing challenges. Source: 2017 Edelman Trust Barometer Q672-675, 678-680, 688-690. For details on how the â&#x20AC;&#x153;system failingâ&#x20AC;? measure was calculated, please refer to the Technical Appendix.

TRUST 33

North Asia, China

But businesses are also expected to do more. 75% of respondents believe “a company can take specific actions that both increase profits and improve the economic and social conditions in the community where it operates.” Yet, there remain significant gaps between what stakeholders view as important to building trust and companies’ performance against them. This provides an opportunity for business to restore declining trust, through exercising a high level of integrity, enhancing engagement with stakeholders and demonstrating commitment to help solve larger societal challenges.

The Trust-building Attributes

Company Importance vs. performance Importance

Performance

Integrity

Has Ethical Business Practices

Takes responsible Actions To Address An Institution Or A Crisis

Has Transparent And Open Business Practices

Engagement

Treats Employees Well

Listens To Customer Needs And Feedback

Places Customer Ahead Of Profits

Communicates Frequently And Honestly On The State Of Its Business

Products

Offers High Quality Products Or Services

Is An Innovator Of New Products, Services, Or Ideas

Purpose

Works To Protect And Improve The Environment

Creates Programs That Positively Impact The Local Community

Addresses Society’s Needs In Its Everyday Business

Partners With NGO’s, Government, And Third parties To Address Societal Issues

Products

Has Highly-Regarded and Widely-admired Top Leadership

Ranks On A Global List Of Top Companies, Such As The Best To Work For Or Most Admired

Delivers Consistent Financial Returns To Investors

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GAP

North Asia, China

In communicating with stakeholders, authenticity matters most. Our study shows that 74% of respondents trust “blunt and outspoken” over “diplomatic and polite”, the preference for the former over the latter is consistent with global findings. However, where Chinese stakeholders differ from their counterparts across the world is their trust in “data” over “personal experience.” Close to two-thirds (64%) trust the former more, whereas the result globally was almost evenly split. There is also still a traditional respect for expertise in China, with technical experts remaining the most trusted. All of this indicates that facts and expertise still hold currency in China, at a time when both are losing ground in some developed markets like the United States.

The With, Not At

Which is more believable?

57% 43%

55% 45%

Spontaneous Speaker

Rehearsed Speaker

54% 46%

74% 26%

Blunt & Outspoken

Diplomatic & Polite

36% 64%

51% 49%

82% 18%

62% 38%

Personal experience

Data

Company’s Social Media

Advertising

Global

China

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North Asia, China

Peers More Credible than CEO’s and Government Oficials

Percent who rate each spokesperson as extremely/very credible, and change from 2016 to 2017

Board of Directors credibility decrease the most, dropping to an all-time low 63

58 48

-6 Technical Expert

-8 A person like yourself

-9 -13 -13 NGO representative

Acadamic expert

CEO

-4 Employee

Y-to-Y Change

-5 -15 Government Official/regular

Board of directors

-7 Financial Industry analyst

Trust levels in institutions remain relatively high compared to other markets, and stakeholders are more rational rather than emotionally-driven, which is always welcomed in the marketplace of ideas A solid foundation for protecting and restoring trust in China is therefore in place. While there are uncertainties among stakeholders, trust levels in institutions remain relatively high compared to other markets, and stakeholders are more rational rather than emotionally-driven, which is always welcomed in the marketplace of ideas. This points to an opportunity for businesses to earn greater trust and reputation over time. Their words and actions, now and in the future, will play a part in determining whether China remains free from the system mistrust that is prevalent in much of the world. Source: 2017 Edelman Trust Barometer Q11-620. Below is a list of institutions. For each one, please indicate how much you trust that institution to do what is right using a nine-point scale, where one means that you “do not trust them at all” and nine means that you “trust them a great deal.” (Top 4 Box, Trust) General Population, China, Questions asked of half the sample.

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TRUST 37

NORTH ASIA HONG KONG

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North Asia, Hong Kong

Adrian Warr Managing Director - Hong Kong

Chief Executives, Beware! The second favorite question perennially asked in Hong Kong – after the property bubble one – is whether the HKSAR is losing its position as a global business hub. The further decline in trust in Hong Kong for all four of the institutions surveyed, with NGOs still faring best, hardly paints a rosy picture. Indeed, 2016 certainly was a year of flashpoints, with everything from illegal food stalls to a piece of left luggage threatening to reignite public protests. Yet, for all the gloomy headlines, 2016 was by no means a year of unrelenting turbulence for Hong Kong; certainly by global standards. According to the IMD World Competitiveness Yearbook, Hong Kong successfully reclaimed its title as the world's most competitive economy in 2016, despite concerns that it is losing its edge to mainland and regional rivals. Impressively, there were 128 new listings registered last year on the Hong Kong exchange. This generated over US$25.1 billion in fresh capital and cemented Hong Kong’s position as the single most prolific IPO market globally, despite a 26 percent decline year-on-year. Once again, both GDP and unemployment figures also held relatively steady.

Sound the alarm Given the current economic landscape, arguably one of the most alarming findings from this year’s Hong Kong findings is the decline of trust in business. The data illustrates that business as an institution is resoundingly distrusted, earning the backing of just 34 percent of Hong Kongers this year, down from 39 percent last year and considerably lower than trust in both government and media. When one looks deeper into the drivers of this trend, some of the rhetoric that has propelled the new US president and the UK Brexiteers into ascendency seems to have some resonance here in Hong Kong.

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North Asia, Hong Kong

73 percent of respondents agree that the government should protect jobs and local industries at the expense of economic growth if required. Similarly, 60 percent professed a need to prioritize the interests of Hong Kong over those of the rest of the world. Whilst by no means shocking in today’s climate, how one remedies such sentiments with the realities of Hong Kong’s long-entrenched, highly-globalized economic model, poses challenging questions. Hong Kong’s business leaders appear to have borne the brunt of the growing credibility crisis. Only 27 percent of respondents now deem CEOs to be credible. This is closely mirrored by the paltry 29 percent backing for Government Officials. This trend shows little sign of abating, with a number of once-revered bastions of industry and society joining the growing list of leaders to be ensnared in high-profile corruption scandals.

Whether you’re a business leader or the city's next leader, the job ahead is not an easy one as trust hits its lowest levels ever for business, government and media.

Don’t count your chickens… While it remains to be seen whether the shutters are really coming down on global trade as we know it, 2016 did see some notable openings, including the approval of the Shenzhen-Hong Kong stock trading link. Equally, Hong Kong's role in the One Belt One Road initiative was hammered home as offering the potential to bring fresh impetus to trade in the region and beyond. Despite this potential, 35 percent of those surveyed here feel like the system is failing them, citing a sense of injustice, desire for change, and lack of hope or confidence. Moreover, one in two Hong Kongers claim to feel ‘uncertain’ about the future, suggesting we find ourselves at a potential tipping point. This is by no means a simple case of the ‘haves’ versus ‘have nots’, with Hong Kong’s high-income and college educated respondents also sharing this sentiment. Across everyone surveyed, corruption and the perceived erosion of social values proved to be the most substantial drivers of these fears. Only 37 percent of Hong Kongers now believe they will be better off in five years’ time, compared to a more optimistic global average of 51 percent. It is in business’ interest, as well as the communities they serve and operate within, that such fears are proven to be unfounded. TRUST 40

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NORTH ASIA JAPAN

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North Asia, Japan

Ross Rowbury President - Japan

Imperative for business to step up to the plate in Japan

My parents married in 1956. It was an era when even at the young age of 22 they could take out a housing loan and build a house. I remember finding a copy of the loan contract in a drawer one day. It was a loan for 2,400 dollars at 1% interest. They paid for the land in cash. I think I was about 12. I canâ&#x20AC;&#x2122;t remember how the conversation came about but my mother told me how as a young couple they were so full of hope. They had married young, opposed by both their parents for being too young. But they married, and together they built a house. But they were frightened. My mum told me that one night in October 1957 they stood on the porch of their newly completed house. They embraced each other as they looked up to the night sky and watched the Soviet Sputnik cross the night skies. At that instant, my parents kissed each other and vowed that they could never bring children into a world that would be dominated by communism. In one way or another, every generation faces the fears of that generation. I am as scared about the world today as my parents were on that night in 1957. War, Communism, Nuclear war, Global warming. Trump. Each generation has its fears. However, connectivity seems to have, in some way, made the fears of this generation more severe. Fear features heavily in the results of the 2017 Edelman Trust Barometer. Fears around the impact of globalization, fears about the pace of innovation. And fears over immigration and eroding social values. These fears, amplified and intensified by the echo chamber of social media, are taking us past the erosion of trust to a situation where erosion of belief in the system is leading to populism and heightened nationalism.

TRUST 43

North Asia, Japan

In last year’s Trust Barometer we highlighted the low level of trust combined with relatively high social cohesion by saying “We might be cynical but at least we are all cynical together.” How has trust in Japan changed over the past year. Is the fear we see in many parts of the world also applicable to Japan? Firstly, despite the already low levels, trust in all the four institutions declined in 2017. The greatest fall was in trust in media which fell six points from 38 to 32. Less than one third of Japanese now trust the media. Trust in the media ranks sixth from the bottom globally with trust lower in only Turkey, Ireland, Poland, Russia and Australia. The fall in trust in institutions however, is eclipsed by the low credibility in leaders of those institutions. Only 13% of Japanese trust government officials and perhaps more remarkably, only 18% see CEO’s as being credible. The lowest level of any country. This compares to 37% for CEO’s globally and 29% for government officials. Just over 2 in 5 Japanese believe the system is failing them. While this is lower than the global average of 53%, 45% said they were uncertain. This is significantly higher than the global average of 32% indicating potential for disbelief in the system increasing in the coming years. Last year we pointed out that the trust gap between mass population and informed publics in Japan was only 3 percentage points, much lower than the global average. However, we also showed that the gap was significantly wider between those in the top and bottom income quartiles. Part of this was the further decline in trust in institutions among the mass population from 38% to 34% and part of it was a jump in trust from 41% to 49% among informed publics. The gap is more due to a jump in trust among informed publics than a fall in trust by the mass population. As a cultural trait, Japanese tend to self-appraise in the context of their environment. It is more relative than absolute. One explanation for this may be that the Japanese informed public is looking at issues such as Brexit and Donald Trump and judging that Japan is not so badly off after all. However, even among the top income group, 35% of respondents said they do not believe the system is working.

TRUST 44

North Asia, Japan

Fear exists in Japan too. Between 40 and 50% of respondents replied that they were concerned about issues such as globalization, the pace of innovation, immigration and eroding social issues. With between 10 to 20% of people saying they were fearful over these issues. These figures are lower than the global averages of around 50 to 70% concern and 20 to 40% fearful but remain quite significant for a normally patient and resilient nation.

I see this yearâ&#x20AC;&#x2122;s data as a warning. Last year we pointed out how business had the opportunity to take a leadership position and work for societal benefit and change. Except for some isolated cases, business appears to have failed to rise to the occasion. In Japan, CEOs are trusted by less than 20% of people. 63% of people find individuals to be more believable than institutions. 68% see leaked information as being more credible than company press statements. And 73% would rather listen to a reformer than a preserver of status quo. Unless business works to regain trust, reform for reforms sake may become the agenda. There is a huge opportunity here for business in Japan. In fact, 51% agree that companies should take specific actions that both increase profits and improve the economic and social conditions in the community where it operates. 41% of Japanese respondents think the pace of change in business and industry is too fast. It is imperative that businesses clearly articulate the rationale for change to both their external and internal stakeholders. Employees rank as more credible than CEOâ&#x20AC;&#x2122;s in communicating information a range of topics from financial and operating performance to innovation efforts. As a first step in taking a leadership position, companies in Japan must not assume the loyalty and trust of their employees. They must earn it by keeping them informed, engaged and involved. Trust in the system in Japan is on shaky ground. It is up to companies to do more to help allay the fears and shift the credibility needle.

TRUST 45

NORTH ASIA KOREA

TRUST 46

North Asia, Korea

SB Jang Managing Director - Korea

2016: Korea not doing business as usual

Here is a quick summary of Korea’s 2016: we had an influence-peddling corruption scandal, chaebols were behaving badly, and a president facing impeachment. Lest we forget, the country also experienced low economic growth, coupled with unemployment reaching over a million, and mass layoffs in traditional industries including shipbuilding. Add all these together and you end up with a formula for public distrust across all four institutions. Government and business, in particular, suffered – meaning Korea again ended up in the distruster category.

A dramatic downfall Let us start by looking back at the end of 2016, which marked a pivotal moment in Korea’s young history of democracy. No other story brought more dismay and anger than the dramatic influence-peddling scandal that swiftly engulfed President Park Geun-hye. Outrage spread across the country after it was revealed that Park’s friend-turnedconfidante Choi Soon-sil, a woman with neither official position nor authority, had been wielding enormous political power. This fact led to the discovery of further evidence of corruption relating to governmental institutions and big Korean businesses. By late November, Park’s approval rating had plummeted to 4 percent, according to Gallup Korea. The scandal – which is still under investigation – was unprecedented. It uncovered a quite unbelievable, unpalatable and yet very grim reality that corruption lies at the core of the Korean government. What surprised most was that the corruption appears to have been far more reaching than possibly conceived – or accepted. Indeed, trust in government officials’ credibility plunged 10 percentage points, from 27 to 17 percent.

TRUST 47

North Asia, Korea

Distrust was truly one of the hottest topics of 2016, and trust in the government dropped from the already low 2016 figure of 35 percent to 28 percent. Korea, so often politically divided, saw people from all sides and ages gather in downtown Seoul and across the nation for candlelit rallies often over a million-strong – all united in their demands for Park to step down.

Media: from conveyor of truth to bearer of justice The presidential scandal was (and is) nothing short of a media sensation. A major cable broadcaster’s news program was the first to shed light on some of the key allegations of abuse of power. The channel’s ratings shot up and the nation became transfixed by the daily writing – and broadcasting – of history. Most major networks followed suit, adding special programs and inviting panelists to make (often unsubstantiated) claims, while the media ensured the rumor mill stayed in full swing. This might explain why, in the era of fake news, despite the Korean media’s newfound role as a bearer of justice, trust in the media actually went down 3 percentage points to 40 percent, also in line with global trends. There were also claims that the media had done too little, too late. Many believe that the media was already aware of the government’s corruption – but chose not to act. A case in point involved one of Korea’s most powerful conservative newspapers, which had a sudden change of heart in its attitude toward the president. Once one of her staunchest supporters, the paper suddenly found itself on unfavorable terms with the president, and dramatically turned on her. Perhaps this is also one of the reasons the country has witnessed a dramatic drop in journalistic credibility, from 24 to 17 percent.

Lowest trust in business, again Among all the countries surveyed, Korea ranked lowest in terms of business trust again, dropping from 33 to 29 percent. The mighty and often scandal-struck chaebols, the mega-companies that dominate the Korean economy, faced increasing scrutiny regarding their complicated governance structures and lack of transparency. Practically no major chaebol has come out of ‘Choi-gate’ unscathed. The scandal uncovered evidence of companies putting large sums of cash into a slush fund – and punishing those that did not cooperate. Koreans are also extremely distrustful of company CEOs, who dropped 11 percentage points to 24 percent (for the general population).

TRUST 48

North Asia, Korea

In 2016, we also saw Korea’s top businesspeople apologize for their company and own families’ misdoings and mistakes. Chaebol CEOs were already perceived as sources of corruption, but the Choi scandal reinforced existing negative opinions. Interestingly, the informed public also expressed significant distrust in the credibility of CEOs – this also took a two-fold drop from 40 percent to a low of 19 percent. Lack of trust in businesses is often linked to the health of the country’s finances, and Korea showed low economic growth in 2016. There were mass layoffs in the shipbuilding industry, unemployment topped the million-person milestone for the first time and among the youth – already burdened by an aging population – unemployment figures hit a record high. It is no wonder, then, that so many people have lost their trust in businesses.

Unilateral decisions, no public opinion `Park Geun-hye’s presidency has been characterized by a lack of communication and its tendency to make decisions that fly in the face of public opinion. At the end of 2015, the Korean government lost credibility after making a “final and irreversible” deal with Japan resolving the comfort women issue (regarding the Japanese military’s use of Korean women as sex slaves during WWII). This sudden move took many Koreans by surprise, with many immediately calling for the accord to be scrapped. Last year also saw the sudden closure of the inter-Korean Kaesong Industrial Complex, in retaliation against perceived North Korean provocation, and despite the implementation President Park’s so-called “Trust Building Process” policy. And finally, there was the decision to deploy the THAAD anti-ballistic missile defense system. This provoked much discomfort and objection in Beijing, and China has since decided to ban Korean cultural content, including dramas, films, and celebrity coverage. Furthermore, some Korean companies were blamed for perceived double standards in terms of product safety in the Chinese market. And as such, we have witnessed a staggering 21 percentage point drop in the trust the Chinese have in Korean products – from 72 to 51 percent.

TRUST 49

North Asia, Korea

Ordinary citizens cannot help but question whether anything that is said by the government, media and businesses can be taken at face value.

Change takes time With distrust, scandal and corruption the main topics of 2016, it is very fitting that anticorruption measures were enshrined into law last year. An all-encompassing anti-graft law came into effect last September, which essentially prohibits any “excessive” money or gift-giving between companies, government bodies (officials), and media representatives (journalists), the institutions that have experienced the greatest loss in trust. To say that 2016 was a rough year would be an understatement. Put simply, Koreans do not know who to trust anymore. Given all the revelations of favors and scandals that have plagued the government, ordinary citizens cannot help but question whether anything that is said by the government, media, and businesses can be taken at face value. What is on the cards for 2017? For a start, there will be a constitutional decision on President Park’s impeachment – possibly leading to a new president taking office well ahead of schedule. There will also likely be mixed messages from presidential candidates and the press, and more Choi-gate developments. Amid the chaos, it is difficult to anticipate any significant changes in the level of trust for the year ahead. While it is high time for Korea to start a real “Trust Building Process,” this will no doubt be a slow process.

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TRUST 51

EMERGING MARKETS

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Emerging Markets

Robert Holdheim CEO - South Asia, Middle East & Africa

The Emerging Markets Paradox

“An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.” This missive by Canadian writer Laurence J. Peter highlights the potential for frustration when seeking to reconcile conventional economic theory with human behavior. Take trust, for example. Economic theory would suggest that people will trust institutions that successfully deliver on their purpose – and withhold that trust from those that fail to do so. A logical conclusion might be that trust levels in wealthy, developed markets would be high, based on their long track record of delivering jobs, stability and economic growth (and limiting corruption). Emerging markets, with a history of delivering less of everything but the corruption, should exhibit lower levels of trust in key institutions.

Wrong! And yet, year after year, the results of the Edelman Trust Barometer contradict this conventional wisdom. It seems to be an enduring feature of our current reality that trust levels are generally higher in emerging markets, and lower (and declining) in developed ones. This year again, the top five nations on our Trust Index are dominated by emerging markets: India (80%), China (79), Indonesia (78), the UAE (77) and Singapore (71). This relates to the informed public, which roughly corresponds to societal elites. The countries with the most trusting mass populations are the same, though slightly reordered with India at 70 percent, followed by Indonesia (67), China (62), Singapore (59) and the UAE (59). Bringing up the rear among informed publics, we have Poland at 43 percent, followed by Ireland (44), Russia (45), Sweden (47), Japan and South Africa (both at 49). For the mass population, it is: Russia (31%), Poland (34), Japan (34), Ireland (35), Sweden and South Korea (both at 36). Once again, this establishes developed markets as the bigger mistrusters. For reference, the global Trust Index stands at 60 percent for the informed public, and 45 for the mass population. TRUST 53

Emerging Markets

Wrong again! Economic theory further postulates that emerging markets should exhibit societal inequality both more acute and more entrenched than developed markets, reflecting a much larger gap between the haves and the have-nots. Political theory tells us this gap will cause societal discord. And history seems to support these assumptions. Yet again, the gap between the informed public and the mass population in our survey indicates the contrary. Eight of the top 10 countries with the largest trust gap are developed markets, with the US (boasting a 21 point differential), the UK (19) and France (18) leading the way. Seven of the ten markets with the lowest trust gap are emerging, with Brazil (4 points), Colombia (5) and Argentina (6) showing the smallest discrepancy in viewpoint between mass and the informed public. And the trend is skewing even further in this direction. Over the past three years, the top five increases in the trust gap are in Canada (with an increase of 13 points), Japan (12), the US (11), Hong Kong (11) and the UK (10). In other words, these are the five countries surveyed where trust levels between the informed public and mass population have diverged the most. It is worth noting that Hong Kong began with no gap at all in 2015, so their 2017 gap of 11 points is still relatively low. The countries with the lowest “gap growth” since 2015? Brazil (with a gap reduction of 7 points), followed by India (-3), the UAE (-2), Indonesia (-2) and the Netherlands (-2). Both the 2017 scores and the three-year trend suggest that differences between the informed public and the mass population are static or declining in emerging markets even as they grow in the developed Western world.

Trust and Populism This continuing dichotomy between emerging and developed markets, between expectation and reality, suggests the application of a different standard of trust in each. It seems that both the informed public and mass population in different markets have different expectations of their institutions. In developed markets, the provision of societal stability and basic economic benefits no longer seems sufficient to generate trust. This has become table stakes. Instead, expectations have risen to the realm of specific issues of personal importance – immigration, racial and national identity in Europe’s Brexit referendum and the American presidential election, for example. This has opened the door for populist leaders who can appeal to those specific interests. 1- The Trust Index represents an average ranking of all four key institutions combined (government, business, media and NGOs). 2- The Global Trust Index is defined as the average across the 28 markets surveyed. 3- The trust gap is defined as the difference between the Trust Index of informed publics, and that of the mass population respondents in a given market.

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Emerging Markets

Ironically, such populism has long been considered the hallmark of leaders in emerging markets, where it has often been applied as a means of distracting attention from the lack of basic economic opportunity. India’s transition to a populist leader has made it the most trusting country in our survey, with a relatively low (and declining) trust gap between the informed public and the mass population. To date, this is less a reflection of Prime Minister Modi’s success in addressing key societal issues than his ability to appeal to broad swathes of the population and to generate hope for future improvement. The UAE and China are also among the most trusting nations in our Index. They are trust gap anomalies, however, scoring the third (tied with France at 18 points) and fifth (17) largest gaps in our survey respectively. It seems that the inability to influence leaders directly is a trust reducer, at least among mass populations, who likely benefit less than the informed public in countries with non-democratic forms of government.

This continuing dichotomy between emerging and developed markets, between expectation and reality, suggests the application of a different standard of trust in each. The United States, on the other hand, exhibits the biggest trust gap in our survey. This gap confirms one or our key findings from a year ago, which we have dubbed the “inversion of influence”. While in many cases, authority remains with the elites, influence has increasingly migrated to the mass population. When asked about the credibility of corporate spokespeople, for example, CEOs scored an all-time global low of 37 percent (dropping 12 points from a year ago), and government officials brought up the rear with only 29 percent (down 6 points). Employees ranked much higher at 48 percent, and “a person like yourself” topped the list (tied with technical and academic experts) with 60 percent. It is likely that this influence shift contributed directly to the election of populist Donald Trump. It remains to be seen whether President Trump will reverse the widening trust gap. Early signs are not encouraging. Conventional Western political and economic theory have long positioned the path of societal evolution as culminating in capitalist democracy as it exists in developed Western nations today. Recent events in the United States and Europe – supported by the results of our Trust Barometer – could make one wonder exactly who is evolving towards whom.

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EMERGING MARKETS INDIA

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Emerging Markets: India

Rakesh Thukral, Managing Director - India

When Trust Rests on Hope There is a veritable crisis in trust the world over. The ‘implosion’ in trust is across the four institutions of government, business, media and NGOs, where trust levels have decreased in many countries and the credibility of leaders and leadership has come into question. Paradoxically, India is among the few countries where trust is still riding high. Globally, the general population’s trust in all four institutions has declined, with two of the four institutions distrusted and two in three countries distrusters. And herein lies the contradiction: Bucking every trend, India has seen a 7-point rise in the trust index in the year 2017 . The global trust index may have gone down this year to 47% from 50% in 2016, but India’s trust index has risen to 72% from 65% last year. Where global trust in the government is at 41%, in India it is 75%, up 10%. Interestingly, the Indian government is also the second most trusted after China and tied with the UAE. In India, trust in business is at a high of 74%, up 5 points; trust in NGOs is at 71%, up 7 points; and trust in media is at 66%, up 3 points compared to the global figure for media (43%), which is down by 5 points. The government is distrusted in 75% of the countries surveyed. Countries such as the US, the UK, and Italy, that have shown a lack of trust, have also respectively seen the election of Donald Trump, the Brexit vote and the failed referendum. Globally two of the four institutions are not trusted enough to do what is right. Trust is also critical to having belief in the system and it differentiates those who are uncertain and those who believe the system is failing them. The numbers within the latter indicate that one in two countries has lost faith in the system. It is against this backdrop that we must understand why India is so trusting. Some would argue that because India has a ‘populist’ leader in Prime Minister Modi it is the most trusting country in the survey. Yes, India has reposed faith in his government over the last two years, with the hope for a better future. But it is not so much a vote for the government alone as much as it is for all the forces that collectively drive the economy.

TRUST 57

Emerging Markets: India

Possibly, the momentum of the Indian economy is the reason for this sustained trust across institutions. There is hope that the economy will continue to retain its pace of growth – recently, per data released by the IMF, India surpassed the UK to become the world's sixth-largest economy in GDP terms. Following the change in the rankings, India's economy stands behind the US, China, Japan, Germany and France. India's economy maintained its growth around 7% on the back of a price slump in global commodities, good rainfall, and lower-than-expected inflation, in addition to measures taken by the government to spur growth. Interestingly, India isn’t untouched by the systemic distrust and fear. In fact, India has above the average level of societal fear when it comes to corruption, immigration, globalization issues, eroding social values and the pace of change. “Concerns” about corruption in India are high at 83%; however, those who “fear” are less (52%) because there is hope that the government will find solutions. The demonetisation of high value currency notes announced by the Modi government has largely been viewed as a measure to counter corruption, despite the mass inconvenience caused and the outpourings of political outrage. A large section of even those adversely impacted by the absence of cash in the market are inclined to give Modi the benefit of the doubt and hope that his vowed objective of containing corruption will be achieved. Globally, trust in the media is at an all-time low; trust in media fell from 48% to 43%. Only India, Turkey, Sweden and Indonesia have seen a rise in trust since 2016. Mapped against the cloverleaf, trust has gone up for India’s traditional media (+6 points), online media (+4 points ) and search engines (+6 points ). A review of the past five years shows that Indians have grown to trust the media in general, trust in online and search engines have also gone up. This increased trust in media in general is probably because of the broad satisfaction with standards in Indian media. And because the media tries to strike the right balance for supporting the freedom of speech, in most cases, and for the societal issues it may have raised. Add to it the significant growth across India in mobile, internet penetration, social platforms and the use of apps and tools. The year 2017 may prove to be a litmus test for the media’s health, given recent business growth issues. Last year, the traditional pyramid of influence—with elites on top—was turned on its head globally and influence lay in the hands of the general populace, creating a trust gap of 12 points. This year, that gap has widened to 15 points, with the highest trust gap of 21 points in the US. India’s trust gap measured 10 points, where the informed public are more trusting of the institutions than the mass population. Now the inversion of influence is clear: the mass population now has influence and authority.

TRUST 58

Emerging Markets: India

A great example of this is the recent controversy surrounding Jallikattu, the bull taming sport in the southern Indian state of Tamil Nadu. The Supreme Court of India had banned the practice, citing animal welfare concerns. But after a week-long state-wide mass protest by the youth, an ordinance was issued recently, allowing the popular sport to make a thumping return. For communicators, there are interesting findings in the survey. Last year, trust in CEOs experienced a spike both globally and in India, but this has changed dramatically in 2017 -- trust in the CEO has plummeted 8 points in the country. ‘Persons like yourself’ (up 7 points) and NGO representatives (up 8 points) are now as credible as experts in India. Personal experience is more believable over data and there is more reason to believe a company’s social media than advertising. But, while that may hold true, there is a strong sense of belief that businesses can act in a manner that combines profitability with responsibility to improve economic and social conditions in the communities where they operate. Respondents believe companies must do more – treat their employees well, offer better products and services, place customers ahead of profits and pay more attention to customer needs and feedback. Companies must be transparent in their practices and take responsible action in the face of crises. This weaves in with the overall trust conferred upon the government – the need to do the right thing for a better future. The complete inversion of influence necessarily mandates that institutions work with the people. Yet again, business and government have been given the opportunity to work in tandem in such a way that public policy, societal and economic gains and information flow can lead to sustainable development and redress the concerns of the masses. India has bet on hope; bet on better days to come and the trust in its key institutions is a result of that hope.

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EMERGING MARKETS SOUTH AFRICA

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Emerging Markets: South Africa

Jordan Rittenberry, Managing Director - South Africa

A Perfect Storm of Populism and Fear Gutted Trust in SA, but Opportunities Exist for Business to Lead

With trust declining among the general South African population in three of the four mainstream institutions of government, media and business, itâ&#x20AC;&#x2122;s obvious that above average levels of fear about corruption, immigration and the erosion of social values is having an impact on the way South Africans perceive their country. Globally, the South African government is least trusted by its people, with only 15% of citizens affirming their trust in government, according to the 2017 Edelman Trust Barometer. This lack of faith in the system, combined with deep societal fears, explains the rise of populist movements such as #FeesMustFall, service delivery protests and populist candidates such as the leader of the Economic Freedom Fighters, Julius Malema, and recently elected US President, Donald Trump. Malema and Trump, as well as other populist leaders in France, Italy and Mexico, have proven that appealing to the common man and issues that affect him outweigh political leadership attributes when it comes to getting elected. Despite its comparatively small size, the EFF has been a vocal opposition party that has succeeded in setting the political agenda on several occasions and has aligned itself with popular protest movements. Given the decline of trust in government, widely respected former South African Public Protector, Thuli Madonsela, hit the nail on the head when she recently said that the trust deficit in SA will continue to grow. She was referring to her state capture report, released last year, which contained serious findings on the influence certain businessmen had over top politicians in the country, including President Jacob Zuma, who fought the release of the report. In the report, Madonsela suggested that an inquiry be set up to properly investigate state capture, but the president is challenging her findings in court.

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Emerging Markets: South Africa

How populism fuelled the fearful into action

Declining trust in the main pillars of society has fuelled the belief that the system is no longer working, and in such a climate, mild societal concerns expand into full-blown fears, which are now spurring the uprisings and dramatic power transfers in key Western markets. The rise in popularity of the student protest movements and the political rhetoric of labour unions and politicians such as Malema are feeding the fears and insecurities of the man in the street who is now looking to people on his own level which he believes he can identify with, depend on and has greater trust in. These low levels of trust in government likely contributed to the ANC’s defeat in several key municipalities last year. It also explains why people have more trust in Chapter 9 institutions such as the Public Protector’s office and the judiciary.

The echo chamber effect

Peers are now considered to be as credible as experts, indicating that facts matter less. In South Africa, 70% of people now consider “a person like me” to be on a par with technical and academic experts. Nearly two thirds found financial analysts to be credible, 52% found CEOs to be credible and only 20% found government officials to be credible. In a year that saw the rise of “fake news” spreading across the world, media took the biggest knock and is now seen as politicised, unable to meet its reporting obligations due to economic pressure. Recently, a respected local newspaper was criticised by a freelance writer’s association and journalists for asking members of the public to write for the paper free of charge. While some south-east Asian countries gained trust in media, the majority of the countries experienced a decline. Globally, the trust in media is at 43%. In South Africa, trust in media in general dropped from 45% in 2016 to 39% in 2017. Traditional media saw a decline from 60% in 2016 to 56% this year and it’s concerning to note that there was an increase in trust in search engines from 66% in 2016 to 69% in 2017. This means that South Africans would rather search for news on Google than on accredited news websites. Worryingly, technology has allowed the creation of media echo chambers so that a person can reinforce, rather than debate, their own opinions, and 59% of global respondents would rather believe a search engine than a human editor, 53% do not regularly listen to people or organisations they disagree with and respondents are nearly four times more likely to ignore information that supports a position they do not believe in. TRUST 62

Emerging Markets: South Africa

How business can leverage trust levels The decline in credibility in CEOs, coupled with concerns about the loss of jobs due to globalization and jobs moving to cheaper markets such as China, is more than just evidence of a worrying trend. Itâ&#x20AC;&#x2122;s a harbinger of doom if business doesnâ&#x20AC;&#x2122;t heed the data and take the opportunity to lead, particularly on issues that have societal significance. CEO credibility in South Africa dropped sharply from 68% last year to 52% this year, which effectively means that CEOs are on the brink of distrust as a score below 50% is deemed to be generally distrustful. This decline could be blamed, in part, on news stories last year about CEOs earning several million rands in bonuses with some, such as the former CEO of the South African Broadcasting Corporation, Hlaudi Motsoeng, also giving themselves hefty million-rand salary increases. There seems to be a growing divide between rich and poor as the growing income disparity is making it harder for people to empathise with the very rich or the very poor, which in turn is likely to affect trust.

Above average levels of fear about corruption, immigration and the erosion of social values is having an impact on the way South Africans perceive their country Business leaders need to play a more active role in society. About 78% of South African respondents agreed that a company can take specific actions that both increase profits and improve the economic and social conditions in the communities in which they operate. CEOs should also be transparent and give customers a platform to interact with them and their companies as 69% of the general SA population said that listening to customers builds trust in a company. Globally, the Trust Barometer found that investing in employees to make them your spokespeople is a good strategy for the future as people find the average employee to be more believable than official spokespeople. In South Africa, employees are more trusted than CEOs to comment on financial earnings, business practice, treatment of employees and customers, and innovation efforts. To affect change and build trust in the four main institutions, and particularly in business where opportunities exist to retain trust among those sceptical about the system, a fundamental shift is needed from the old model of For The People to a new model of With The People.

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EMERGING MARKETS UAE

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Emerging Markets: UAE

Tod Donhauser CEO Edelman - United Arab Emirates

UAE TRUSTED AT THE TOP

The United Arab Emirates continues to build on high levels of trust, topping the 2017 Edelman Trust Barometer as the world’s most trusting country in government among informed publics, while the country’s leadership presses on with ambitious investment development plans in tandem with a broad economic diversification strategy that charts the future of the country, post oil.

Topping trust among the top Around 87% of informed publics polled expressed a high level of trust in the government – the greatest among the 28 countries polled. Among the general population, the UAE was tied with India as the world’s second most trusting in government, with 75% expressing high levels of trust. However, while general population trust remains high, it did decrease from 2016 and lags informed public trust, suggesting that more could be done to ensure the government’s vision is reaching and understood by all audiences. As the region faces the macroeconomic impact of low oil prices, the impetus increases to demonstrate what the government is doing to protect the future and grow the economy. In 2016, the UAE government launched major initiatives in education, innovation and entrepreneurship, and in parallel, as part of its forward-looking strategy of engaging the youth and promoting pluralism, the UAE leadership reshuffled the federal cabinet to introduce Ministers of Youth, Tolerance and Happiness. Interpreting the survey results indicates that while the intentions behind these long-term initiatives have reached informed publics, the general population is likely more focused on the short term impact of economic pressures.

Trust in a Year of Giving As the UAE embarks on 2017 as a Year of Giving as declared by President His Highness Sheikh Khalifa bin Zayed Al Nahyan, non-governmental organizations (NGOs) are trusted more in the UAE than the global average, especially among informed publics, 75% of whom gave NGOs a high trust rank, compared to the global average of 67% among this population. TRUST 65

Emerging Markets: UAE

Trust in NGOs among the general population was at 55%, on par with the global average of 53%. This indicates further work to be done in reaching the general population to convey the UAE’s leading role in the world on charitable causes, with one of the world’s highest contributions to humanitarian efforts and one of the world’s largest commitments to the six-year Syrian crisis per capita.

UAE trust in media drops Despite the progress and milestones, challenges remain. The UAE’s ability to reach the general population will require continued engagement, as there was a noticeable drop in trust in the media among UAE general population. Trust in the media in the UAE dropped 15 points to 44% of general population having high levels of trust. Similar levels of drops were seen across traditional, social, online and owned media. This represents the largest drop in trust of an institution in any country surveyed this year. It brings the UAE to par with the global average of trust in media (43%), which also fell significantly, by 5 points this year. Trust in media held relatively steady among informed publics. Owned media (company websites) were the least trusted media sources among all survey respondents (44% trusted by general population and 58% by informed publics), and experienced the largest drops among media types this year (13 and 10 point drops respectively). The rapid growth of social media adoption in the UAE and Middle East underscores the need for authenticity in a world of fake news and highly paid social media “influencers,” who were criticized in the UAE in 2016. Trust in social media in the UAE dipped slightly among informed publics, but dropped substantially among the general population, bringing trust in social media closer to global averages.

To the informed public, CEOs are seen as less credible than bloggers The survey measured the credibility of 15 different sources of information about companies, from bloggers to engineers to “a person like me.” In the UAE in 2017, trust in CEOs as spokespeople decreased substantially. CEO credibility in the eyes of informed publics dropped to 54% (-18) and dropped to 55% (-12) among general population. Even then, the trust level still exceeds global averages, but should be a point of concern in a year that promises substantial executive transition with one of the world’s largest mergers between Mubadala Development Company and International Petroleum Investment Corporation as well as the region’s largest bank merger between National Bank of Abu Dhabi and First Gulf Bank. TRUST 66

Emerging Markets: UAE

The most credible sources in the UAE among general population continued to be academics and technical experts such as engineers or scientists. Bloggers, meanwhile, as sources of company information, gained 15 points this year moving up to 58% credibility among informed publics in the UAE. This shows that UAE trust in bloggers exceeds the global average by 33 points, and makes them more credible in the UAE than CEOs, according to informed public perception. The move suggests that moving forward in 2017, as general population opinion catches up to informed publics, bloggers will likely be increasingly seen as credible corporate messengers.

The United Arab Emirates continues to build on high levels of trust, topping the 2017 Edelman Trust Barometer as the worldâ&#x20AC;&#x2122;s most trusting country in government among informed publics

Financial services industry boosts trust The technology industry led in general population trust from among the 15 industries tracked in the survey, followed by the transportation and education industries. The biggest gain year-on-year among all the industries was trust in the food and beverage industry, which rose 15 points to 87% of informed public respondents trusting the industry to â&#x20AC;&#x153;do what is right.â&#x20AC;? The least trusted industry globally, financial services climbed 13 points in the UAE among informed publics to 82%. Along with the energy industry, this is one area where UAE trust exceeds the global averages by the widest margins, followed closely by the transportation, automotive and telecommunications industries. A strong regulatory environment underpinned by the leadership of the Central Bank and progressive monetary and fiscal policies have brought resilience to the financial services sector and wider economy, providing a boon to consumer confidence and encouragement to budding entrepreneurs as well as small and medium sized enterprises. This comes on the back of legislation enacted by the UAE that facilitates access to capital through accelerator platforms and venture capital funds. Confidence could rise further in light of the recent cuts in production that have seen oil prices rally from a two-year slump. As the economy continues to expand and uncertainty over issues like Brexit dissipate, some activity may also return to capital markets with a number of companies from health, retail and financial services going public.

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SOUTH EAST ASIA

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South East Asia

Ian Twine CEO - South East Asia Australasia

An Imagined Conversation about Trust Lucy Kellaway, one of the finer journalists of her generation recently announced a shift from full-time journalist at the Financial Times to become an educator. She will continue to write occasionally for the FT, but, her departure creates a gap in imagined and sometimes real conversations from across the world of politics and business. Given that gap, I humbly submit an imagined conversation between an APAC CEO, a journalist, a NGO boss and an aspiring politician. This conversation was held on a small atoll glistening somewhere in the Pacific Ocean. This august group are actively devouring the 2017 Edelman Trust Barometer. I was lucky enough to be a fly on the wall that day, and the conversation went something like this… Politician: Seems the general population have gotten it wrong again. Across 28 countries, government is distrusted in 75 percent of countries. I am going to have to tweet my disappointment at their stupidity. Journalist: Well, at least the general population trust media more than government. It seems Breitbart, the Russian government, and those pesky Macedonian teenagers didn’t hurt the media too badly with all this “fake news” furor. Maybe the general population has worked out that listicles aren’t fake and pointless. These days that counts for proper journalism, and rightly so. CEO: You try being me. I run a conglomerate across multiple markets. More than one in two people in the general population trust business to do the right thing. Globally, there has been an 12 point drop in credibility in CEO’s, even with the self-styled CEO/Commander/Tweeter-in-Chief now running the show in the USA. People trust my employees more than me. I don’t understand it, I hired them.

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South East Asia

NGO Boss: But you all have a vested interest. You all want something; money, eyeballs and votes. I just want world peace, universal healthcare access, a sustainable environment and the protection of human rights. And, of course the protection of gorillas like Harambe. Yet, even with all of this only 53 percent of the general population globally trust NGOs to do the right thing. Really, what’s an NGO got to do? With that off their chests, the group decided to go for a walk across the small, yet strategic atoll. Politician: I could spin a bottle from right here and wherever it pointed on the compass across APAC, most of my learned friends in government are facing trust drops and deficits. Other than Indonesia and India, not one APAC country surveyed saw an increase in trust amongst the general population. The informed public was more stable. But really, who cares about these elites. Trump and Duterte don’t. Journalist: What about us? You want me to be connected, rapid, fact-checked, visual, in a snappy video form, beamed to whatever device you have in your hand, and all this for free. Yet, when I do all of this, the world calls it fake. I used to be able to resort to some nice celebrity story as filler, usually lined up by some annoying PR person linking their endorsement of a product or brand. Even that no longer works, now that the general population feels celebrities are the least credible spokespeople when forming an opinion about a company. CEO: That data point was the highlight for me. Should save me millions in endorsements. NGO: It’s annoying. I am going to have to text Leonardo Di Caprio and get him to stop shouting about the environment. It’s not helping, or maybe noone is listening?

The disgruntled group continued to stroll around the atoll. Stopping to admire an unidentified and unmarked drone hovering above them. Politician: Maybe we are looking at the Trust Barometer the wrong way. Journalist: Why? CEO: Maybe we should rethink what it means to lose trust, and or what we must do as leaders and institutions to earn the trust of the people. About 83 percent of respondents lack full belief in the system. People are clearly telling us that things have to change. That we have to rethink our relationship with our role in society as institutions and as leaders. NGO: A ‘person like yourself’ is now as credible as an expert. There must be something in that. TRUST 70

South East Asia

Journalist: It’s true. Fifty-five percent believe individuals over institutions. If people are spending an average of one hour a day on Facebook, their lens is swayed by people like themselves. Politician: I feel we have a chance in Asia Pacific to make things work. The three countries with the largest gap between the informed and the mass population are the US, UK, and France. The three countries across APAC with the lowest gap are India, China and Indonesia. This gives me hope that it is not all broken and that maybe these models once derived against western liberal democracies might be what we need to further examine. Journalist: Brexit, a vicious US election, and the multiple terrorist attacks across France versus relatively stable governments, policies that are laser focused on reducing poverty, and broadly an Indonesia, China and India first policy. You can see how these things begin to affect dismay in the mass population. NGO: But, if we shut our doors to the rest of the world, we risk no longer being able to solve problems together. CEO: Maybe in the short term, Asia should double down on protectionism across a variety of policy areas in terms of trade, immigration and social values. But, at the same time don’t isolate your country from the broader debate and the world. Politician: Doesn’t that put us in the same boat as the US, UK and France? Decrying modern internationalist and engagement policies for the benefit of our own nations. If we ignore the international community and we revolt against progressive liberal values, are we any better? The group finished their stroll, left with little consensus on what the world might look like in 2017 and beyond. As I returned to my desk, I was struck by just how difficult it will be to navigate the future for our institutions and its leaders. And to further that, I leave you with a quote that neatly links to a key finding in this year’s study around the fears the general population has about the future:

Fifty-five percent believe individuals over institutions. If people are spending an average of one hour a day on Facebook, their lens are swayed by people like themselves. “It may just be an inevitable part of a trend, whereby, the main political divide of the 21st century is no longer between socialism and capitalism, or even liberalism and conservatism, but, internationalism and localism,” Ed West, The Spectator. Even when it is just an imagined conversation, trust is hard, it is important, and it is something we must build and nurture. Here is hoping for a rebuild in 2017. TRUST 71

SOUTH EAST ASIA AUSTRALIA

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South East Asia: Australia

Steven Spurr CEO - Australia

The system is broken Set against the backdrop of recent international populist results, including Brexit and Trump, the overwhelming global sense that the system is failing is reflected in the Australian Trust findings. When looking at the results for the general population, trust in government dropped 8 points to 37% from 45% in 2016, 10 points in the case of media (from 42% to 32%), 5 points to 52% for NGOs and 4 points to 48% for business in general. Trust levels in Australia have also dropped among the informed public (top 25% income, university educated, actively engaged with news) and the rest of the population – a group we call the mass population - but a significant gap also remains between the two. Although the informed public is more trusting than the rest of the population, they are becoming increasingly less trusting themselves. Australia’s results, however, are far from anomalous. The level of trust amongst the general population globally in four key institutions – NGOs, Business, Media and Government – is at the lowest recorded level since we started collecting general population data in 2012. The disconnect between the actions and decisions of these institutions and those affected by them is widening. Not only has trust dropped, but those surveyed have expressed a desire for greater scrutiny, regulation and taxation of business.

Fear feeds populism Results show that of the five fears driving the embrace of populism - corruption, eroding social values, globalisation, immigration and concern over the pace of change Australians have identified eroding social values, immigration and globalisation as key drivers for their lack of trust. It’s no surprise that these fears have been embraced as key platforms by conservative party One Nation. The Party, led by Senator Pauline Hanson, is becoming an increasingly visible and popular force for the disenfranchised and discontented, attracted by the Party’s commitment to anti-globalization, anti-immigration and protectionist policies. TRUST 73

South East Asia: Australia

Systemic Distrust and Fear Trigger Action Above-Average Level of Fear Above-Average Belief the System is Failing Countries with Multiple Fears and Failing System

Corruption Immigration Globalization Eroding social values Pace of change

10 Countries with above-average belief the System is Failing and multiple fears

UAE

China

Singapore

Hong Kong

India

Japan

Indonesia

South Korea

Russia

Turkey

Malaysia

Argentina

Sweden

Canada

Netherlands

U.S.A.

Ireland

Australia

U.K.

Germany

Colombia

Brazil

Poland

Spain

South Africa

Mexico

Global

Italy

53 72 72 67 67 67 64 62 62 62 60 59 59 57 56 55 55 53 52 51 48 48 42 42 36 35 30 23 19

France

% Who Agree System is Falling

4 Countries with Above-Average belief the System is failing - but lack multiple fears

There is a direct correlation between fear and the belief that the system is broken. Businesses are also to blame for stoking these societal fears, simply because they appear oblivious to the context. Automation may mean innovation to business, but to the public, it can translate to job losses and communities in decline, which exacerbates the disconnect.

Source: 2017 Edelman Trust Barometer. Corruption Q685-687, Globalization Q681-684, Eroding social values Q676 and Q758, Immigration Q685, Pace of innovation Q677. System is failing: Q672-675, 678-680, 688-690. For details on how the societal fears and the â&#x20AC;&#x153;system failingâ&#x20AC;? measure were calculated, please refer to the Technical Appendix. The margin of error for the countries scores was added and subtracted from the global mean. Countries were considered above the global average if their score was higher than the global mean plus the margin of error.

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South East Asia: Australia

News imitates fact; our echo chambers are alive and well But a real standout this year was Australians’ loss of trust in media. Among informed publics (from a 54% trust level last year), media now sits at 40%, a whopping 14-point decline. Among the general population, trust in media at 32% is among the lowest levels globally, 11 points below the global average of 43% and a 10 point drop from 2016. The erosion of trust in media has been accelerated by two significant changes this year. First is the ongoing consolidation of media in Australia, a landscape dominated by a few players (Australian media ownership, and print media in particular, are among the most concentrated in the world). Relaxation of cross-media ownership and ongoing staffing cuts has reduced diversity in perspective, and fact checking is at the expense of speed to market. The second is the universal proliferation of fake news on social media, compounded by the fact that many believe that results from search engines are more credible than information collated by editors or journalists. It seems algorithms are perceived to be more reliable than humans when it comes to delivering the truth. Add to this the impact of self-referential and ‘friend-endorsed’ facts on our social media channels and we find ourselves in a perfectly formed reflective bubble where we place greater value on information from influencers (‘people like me’) than institutions (technical experts and academics).

Leadership in crisis Australians’ trust in business leadership, including the “c-suite”, company directors and boards, is in dramatic decline. The credibility of CEOs as spokespeople dropped significantly, reaching a lowly 26% in 2017 (compared to 39% last year) in the case of the general population, and nine point drop to 36% in the case of the informed public.

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South East Asia: Australia

All-time Low for CEO Credibility percent rate CEOs as very credible, 2016 vs. 2017

Distrusted

CEOs not credible in 23 countries

Neutral

Declines in all 28 Countries

Trusted

- + Y-to Change

India

Mexico

UAE

South Africa

Indonesia

Colombia

Brazil

China

Tu r k e y

Argentina

Spain

Malaysia

U.S. A .

Singapore

Russia

Sweden

U.K.

Italy

Germany

Netherlands

Ireland

H o n g Ko n g

Australia

Canada

S o u t h Ko r e a

Poland

France

Japan

Global 2 8 -Countr y

50%

18 23 23 24 25 26 27 27 27 28 28 28 31 34 36 28 40 40 42 43 44 48 48 51 52 55 61 70

-12

-7 -9 -12 -11 -12 -13 -19 -16 -7 -10 -10 -12 -11 -15 -14 -5 -16 -10 -17 -12 -13 -18 -16 -6 -16 -12 -15 -8

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South East Asia: Australia

So how do we lead from here? When looking at the global results employees are considered the most credible spokespeople on every topic – this is the first time we have seen this result. We are looking for spontaneous, ‘human’ spokespeople and have a thirst for information from ‘people like me’. Business has an opportunity to embrace and empower employees to create a stronger and more authentic alignment between their brand and their corporate narrative.

Fifty-five percent believe individuals over institutions. If people are spending an average of one hour a day on Facebook, their lens are swayed by people like themselves. Business now has a clear opportunity to rebuild trust by recognizing the need to do things differently. We must forget the neat separation of communication and executive function. We need a holistic approach that puts people at the center of engagement, not just as one more audience to reach. Rebuilding trust will be driven by how authentically and effectively all institutions engage with the general population, not just the ‘target audiences’ they define as relevant to them.

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SOUTH EAST ASIA INDONESIA

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South East Asia: Indonesia

Raymond Siva CEO - Indonesia

The Enigma of Indonesia Luar biasa! The results of the 2017 Edelman Trust Barometer Indonesia Report are noteworthy, even extraordinary, in how they differ from the global results. We have heard of the enigma that is Indonesia, of its collectivist and protectionist mind-set, and the sense of unity and multiculturalism that renders this nation at once beguiling yet misinterpreted. The largest economy in Southeast Asia is also home to the world’s largest muslim population, and is moving towards increased transparency, robust debates and public demonstrations.

71% of Indonesians now trust the government, a massive 13 pt increase coming off the trust deficit last year. With Joko Widodo or Pak Jokowi as he is fondly called, entering his third year as President of the Republic of Indonesia, the administration seems to have found its footing and assertiveness. And the results point to the majority of the Indonesian people embracing his vision of ‘Bhinneka’ and ‘Kemerataan’ – translated into National Unity and Equality. Bucking the global decline of trust in 21 of the 28 countries surveyed, Indonesia registered a 7 pt increase in average trust among the general population this year. The President’s populist policies focused on providing equal income opportunities and social infrastructure has resonated well. 71% of Indonesians now trust the government, a massive 13 pt increase coming off the trust deficit last year. The investigative and robust reporting from the fourth estate helped reclaim its influence and integrity, and in the process close the trust deficit from last year with trust in media rising 4 pt to 67%. Nevertheless, there is still some skepticism as most large media groups are owned by political heavyweights aligned to differing interests. In the most social of countries, the power of influencers through social and digital media should not be underestimated.

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South East Asia: Indonesia

As the informed public advance their cause and interests through intimate networking and behind the scenes alliance building, the mass population have counted on the support of the NGO community to defend and protect their rights. And the NGOs have come out swinging. Contrary to the trust levels in NGOâ&#x20AC;&#x2122;s globally, Indonesians have thrown their lot behind the NGOs here with trust levels rising 7 pt to 64%. This is also perhaps a manifestation of the frustration and distrust of the people towards their elected representatives to truly represent them, and not for their own interest. The litany of daily corruption cases involving senior politicians exposed would lend credence to this. And finally, business as an institution continues to gain trust from the local populace. 76% of Indonesians trust business, outpacing neighbors Singapore and Malaysia by nearly 20 pt. The interesting dichotomy here is that while business as an institution continues to gain trust, CEO credibility has taken a dip â&#x20AC;&#x201C; by 6 pt to just 51% and mirroring the global decline in all 28 countries surveyed. This is clearly a time for CEOâ&#x20AC;&#x2122;s to come down to the ground, engage transparently with employees, customers and communities and be seen to champion profit with purpose. It is crucial to note that while the structural economic reforms, populists policies and focus on the wellbeing of the mass population have resonated well, fears remain around the level of corruption and impact of globalization on the wellbeing of the country. That will be the story to watch in 2017.

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South East Asia: Indonesia

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SOUTH EAST ASIA MALAYSIA

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South East Asia: Malaysia

Robert Kay Managing Director - Malaysia

Fixing the system calls for us to be just like you and me

We have become accustomed to seeing Malaysian trust levels dip year after year. However, this trend is not peculiar to just Malaysia. While the trust placed by Malaysians in four key institutions – government, media, business, and non-governmental organizations – have all dropped slightly between 2016 and 2017, it is very much in line with global trends. Without trust, belief in ‘the system’ starts to fail. In addition to declining levels of trust around the world there’s a sense of injustice, a lack of hope, a lack of confidence and a desire for change, as indicated in the Edelman Trust Barometer 2017. Globally, 53 percent of people believe the system is failing them. In Malaysia, that figure is 52 percent, with only 12 percent saying the system is working for them. Malaysians are pointing specifically to corruption and immigration as their main concerns. In Malaysia, more than 80% are concerned that widespread corruption makes it difficult to make the changes necessary to solve our problems and is compromising the safety of our citizens. The concern could, in part, be driven by the higher visibility of success by the Malaysia Anti Corruption Commission, who made several high-profile arrests in 2016. Sabah’s Watergate comes to mind, as authorities arrested two top officials from the Sabah Water Department. During the raid, it took the 30 officers some 15 hours to count RM48 million (USD10.75 million) in cash! In a clear warning to business to do no harm, Malaysians agree that paying bribes was the action most damaging to their trust in a better future, with 66% saying this action would damage their trust.

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South East Asia: Malaysia

Unlike Western countries, the issue of immigration in Malaysia may not be just that the influx of people from other countries can damage the economy and national culture. Largely, Malaysians are warm, inclusive and welcoming to foreigners. Their concerns on immigration are possibly also skewed to socioeconomic factors, such as security and health. The rising levels of crime have been linked to the influx of these migrant workers who enter the country in large numbers to sustain industries such as construction and agriculture, although there is no strong data from the police to substantiate this theory, social media amplifies people’s concerns. Similarly, while Malaysia imposes mandatory health screening for all migrant workers, undocumented migrants give rise to health concerns around transmittable disease such as rotavirus. And the issue of corruption comes back to play again, just how did these undocumented migrants get to Malaysia?

{Trust in government rises among the better educated, higher income Malaysians.} Malaysia’s Informed Public

2016

2017

Government in general

34%

43%

Media in general

59%

49%

Business in general

67%

68%

NGOs

71%

70%

Interestingly, while more than half of Malaysians agree the system is failing, the trust in government by the informed public went up to 43 percent, a rise of nine points. In 2016 there were no new flashpoints that further hurt the government’s credibility while businesses and consumers have accepted that the Goods and Services Tax (GST) is here to stay. Political fatigue from the constant repeat of the same 1MDB allegations may have turned the issue to white noise – the people hear it, but are they really listening?

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South East Asia: Malaysia

The doom and gloom forecast by critics that Malaysia’s economy would tank were disproved by the government. In a climate of global economic slowdown, Malaysia’s economy continues to grow, albeit at a slower pace, with minimal job cuts. The multi-billion dollar trade deals with China have been well received. While the recent move by the government to legalize popular ride sharing platforms Uber and Grab, against sustained protests from the taxi industry, will no doubt have won it brownie points too, and may be indicative of a government that is really listening to the voice of the people.

Business remains the second most trusted but CEO credibility is badly damaged Business remains the second most trusted of the four institutions in Malaysia, but the credibility of business leaders, be they CEOs, board of directors or successful entrepreneurs, took a big hit with CEOs credibility falling by 16 percentage points. Also losing credibility are academic or industry experts, as well as financial or industry analysts. A “person like yourself” now takes the lead in credibility levels. Fueling anxiety and distrust in the system is the emergence of a media echo chamber that elevates search engines and algorithms over editors, reinforces personal beliefs and shuts out opposing points of view. The fear is that we will evolve to become narrow-minded and gravitate towards the extreme, as we only accept views that are in line with our own values.

Are we seeing the green shoots of a recovery of trust in the government? There are clear signals that the sharp decline that started in 2013 has slowed, and in the case of college educated, better paid Malaysians trust in government has improved significantly. Fixing the system however will require more than the government to tend to and nurture Malaysia’s fragile trust. While there is some merit to discussing how to get people out of the echo chamber, we can also take the approach of entering the chamber. CEOs can move to the masses (social media is a good start), and be viewed as more human. Be seen as a person – a father, a foodie, a weekend musician – and eventually you may be accepted as a person just like you or me. It is possible that if they can relate to you, they are more likely to trust you. There is a dramatic shift of influence and trust from all leaders to the people. We saw the inversion of influence last year. The way forward is to bridge the divide that separate the elite, and the masses, and perhaps the divide between the roles of government, media, business, and non-governmental organizations. It’s no longer about doing something for the people. It is time to be with the people. All the people. You and me. We are one, and we’re in it together. TRUST 85

SOUTH EAST ASIA SINGAPORE

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South East Asia: Singapore

Amanda Goh CEO - Singapore

Trust in Singapore Holds Steady:

Majority of Respondents Uncertain if System is Working and Expect Business and NGOs To Do More For the second consecutive year, among the informed publics, Singapore is the fifth most Trusted nation, as measured by the 2017 Edelman Trust Barometer Index, although the nation drops one point. India and China continue to maintain their lead over Singapore in the Index. However, among the mass population, Singapore slips 3 points and moves from the Trusters category to the Neutrals category for the first time. The most significant declines were trust in government (69 percent and 5-point drop) and media in general (54 percent and 6-point drop). Business and non-government organizations (NGO) among both the general and informed publics maintained some positive traction with only an average of 2-point decline. Reviewing each institution and its leaders against external forces that might hinder trust building, there are five broad considerations for 2017 and beyond:

1. Trust in Institutions: Not A Complete Loss of Faith in the System Yet For the first time, we analyzed peopleâ&#x20AC;&#x2122;s beliefs in the system including a sense of justice (e.g., whether there is a bias in favor of elites), hope (e.g., hard work will be rewarded, children will have a better life, country moving in the right direction), confidence in current leaders, and whether there are forceful reformers to bring change. Overall, compared to global averages of more than 50 percent, a smaller percentage of respondents in Singapore believe that the system is failing (30 percent) with the majority being uncertain (43 percent). TRUST 87

South East Asia: Singapore

However, Singapore is not immune to populism. The top three issues concerning Singapore respondents are immigration (64 percent), globalization (59 percent) and pace of innovation (57 percent). These are underpinned by a protectionism or nationalist mindset. Seventy one percent of Singapore respondents believe there is a need to prioritize the interests of the country over the rest of the world. Singapore respondents worry about losing their jobs due to immigrants who will work for less for the same job (69 percent) and cheaper foreign competitors driving local companies out of business (67 percent). There is a communication need here to over index on uncertainties like domestic policy responses, inclusiveness, discourage race segregation and ensuring “no child left behind” – even in Singapore’s advanced economy. Overwhelmingly, 70 percent of Singapore respondents (compared to only 53 percent global average) believe that the pace of change in business and industry today is too fast.

2. Trust in NGOs: A force for good When the system is failing, the uncertainty in Singapore will turn to NGOs as the most trusted institutions at 58 percent. This should be viewed in partnership with government, which at 78 percent is the most trusted institution when the system is working or outlook is uncertain. Singapore’s NGO partnerships focused on training for lower income women for jobs in an underserved eldercare industry are a good example. NGOs also maintained its status as a credible voice at 43 percent.

3. Trust in Business: Companies (in Partnership with Government) are Expected to Act and Lead Seventy six percent of Singapore respondents agree a company can take specific actions that both increase profits and improve the economic and social conditions in the communities where it operates. The top attributes cited by Singapore respondents to rebuild trust when the system is failing are:

1. Treat employees well 2. Offer high quality products or services 3. Has ethical business practices 4. Take responsible actions to address an issue or a crisis 5. Listen to customer needs and feedback TRUST 88

South East Asia: Singapore

Singapore respondents trust companies headquartered in Japan, Sweden and Switzerland the most. Australia, Canada and Netherlands are also seen as trusted HQ company countries, with significant 6 to 16-point increases in trust this year. These rises could be attributed to MoUs and cooperation agreements on key areas: Defence, digital infrastructure, science, innovation, fintech, cybersecurity, R&D, manufacturing, engineering etc. For example, in addition to Dutch PM Mark Rutte’s first official visit to Singapore, SMRT also enters into a technology partnership with Netherlands to bring driverless pods to Singapore and the region. Education and healthcare are the two most trusted industries for both informed and general population. The World Health Organisation praises Singapore’s transparent, swift and successful response to Zika as a “role model”. The nation also increased healthcare financing for vulnerable groups including senior citizens with significant Medisave top-ups. The significant increases in education could potentially be attributed to Singapore students emerging top in Math, Science and reading in the prestigious international benchmarking test Programme for International Student Assessment (PISA), reflecting the nation’s renewed focus on knowledge and skills to solve real-world problems. In addition, its SkillsFuture scheme is seeing a staggering pace of expansion in course range.

4. Trust in People Behind the Institutions: Different Voices Needed to Amplify Among the general population, CEO credibility fell double digits (14 points) to 36 percent. Board of Directors followed closely with a 10-point drop. With high profile CEO and senior executives scandals from Swiber, Keppel Corp and Sembcorp Marine, National Kidney Foundation to ST Marine, this may not be surprising. In addition, weak controls and lapses at Singapore Post’s Board were also highlighted in a special audit report on the Group’s corporate governance. A slight concern is that a high percentage (48 percent) will support politicians they trust to make things better for me and my family, even if they exaggerate. Compared to a company’s CEO or senior executives, its employees are now more trusted in Singapore to communicate about a company’s financial earnings and operational performance, treatment of employees and customers and even business practices and crisis. CEOs are primarily trusted to provide their views on industry issues (33 percent).

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South East Asia: Singapore

Technical and academic experts also continue to maintain their average as credible spokespeople. The voice of the employee increased by 4-points to 43 percent. Considering the rise in education as a trusted industry, this is not unexpected. This further validates the findings that Singapore respondents believe individuals over institutions, reformers more than preserver of status quo and even leaked information over official press statements. This is not dissimilar among the global averages. Interestingly, the Singapore courts recently ruled that the government cannot invoke an anti-harassment law that allows persons to stop the publication of false statements against them. It was ruled that the law applied only to human beings. Compared to global averages however, Singapore respondents want to be communicated to in a diplomatic and polite manner (59 percent) compared to receiving information in a blunt and outspoken way (41 percent). Bias is a major filter. Sixty seven percent do not regularly listen to people or organizations with whom they often disagree.

Overwhelmingly, 70 percent of Singapore respondents believe the pace of change in business and industry today is too fast. Singapore is not immune to populism. The top three issues concerning Singapore respondents are immigration, globalization and pace of innovation. These are underpinned by a protectionism or nationalist mindset. Diving deeper into true fears, the erosion of social values emerged with only two percent of Singapore respondents believing the system is working. 5. Trust in Media: Dynamic Channel Duo of Search Engines and Traditional Media Compared to global averages, the power combination of search engines and traditional media in Singapore continue to be the channels of choice for both informed and general population. This has been consistent for the past six years. This could be attributed to positive reactions to traditional media like Straits Times and the New Paper both restructuring in terms of senior editorial leadership, editorial style and format. On average, there has been a 4-point Trust drop in online or hybrid media, social media and owned media. Among informed publics, online or hybrid media and owned media saw the biggest drops of 12 and 7 points respectively. When it comes to believing company information though, 66 percent of Singapore respondents are more likely to believe a companyâ&#x20AC;&#x2122;s social media over advertising.

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