Perodua_Case_Study (1).pdf

Claudia H. L. Woo prepared this case under the supervision of Professor Ken Peattie for class discussion. This case is not
intended to show effective or ineffective handling of decision or business processes.
© 2008 by The Asia Case Research Centre, The University of Hong Kong. No part of this publication may be reproduced or
transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise (including the
internet)—without the permission of The University of Hong Kong.
Ref. 08/374C
1
KEN PEATTIE
THE ERA OF CORPORATE CITIZENSHIP:
PERODUA’S ADVERTISING WITH A SOCIAL
DIMENSION
Perodua, a home-grown compact car maker in Malaysia, was established in 1993 to meet the
rising demand for affordable cars from local consumers and to further develop the supportive
industry in auto parts and components. Since 1999, the company had been integrating social
messages into its corporate advertisements (“ads”), seeking to enlighten the local audience
about various social issues and values. With the growing interest in corporate social
responsibility (“CSR”) globally, this approach of company advertising with a social
dimension (“CASD”) seemed to be an effective way for Perodua to portray its good corporate
citizen image. Indeed, there had been a relatively unique governmental emphasis on
encouraging the use of commercial advertising to promote social good. However, the direct
and tangible returns of these ads in the form of sales were hard to determine. Besides,
controversies arose easily when social issues, such as race-related topics, were not handled
with sensitivity, due to Malaysia’s diverse cultural context.
Since 2005, trade liberalisation in South-East Asia had resulted in reduced government
protection for Malaysia’s indigenous automotive industry, and more intensive emphasis was
placed on corporate differentiation strategies. In response to the escalating competitiveness
and the increasing interest in CSR, Perodua’s corporate leaders and its management had to
rethink how corporate ads emphasising social aspects could sustain the company’s
profitability and reputation in the long run.
Malaysia’s Cultural Context
Race and Religion
According to the 2000 census, Malaysia had a population of 23.27 million consisting of
Malays (61%), Chinese (30%), Indians (8%) and other ethnic groups (1%) which included
indigenous tribes and Eurasians. Islam was the religion of the federation but all other religions
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08/374C The Era of Corporate Citizenship: Perodua’s Advertising with a Social Dimension
2
could be practised in peace and harmony in the country. As a secular or modernised Islamic
country, Muslims were flexible in accepting other cultures. Islam played a predominant role
in the Malay society and almost all Malays were Muslims. Although some Chinese were
Muslim, the majority of them were Confucianist, Buddhist, Taoist or Christian. Hinduism and
Christianity were common among the Indians, but there were also a significant number of
Muslim followers.1
Without forceful cultural assimilation, Malaysia’s social landscape was
marked by many different cultures of individual ethnic groups with a record of racial, cultural
and religious tolerance. While each of these cultures had strived to preserve its traditions and
community structures, they had also blended together to form a uniquely diverse heritage in
contemporary Malaysian society.2
Language
Despite Malay being the official national language and being widely spoken by Malaysians,
people from non-Malay categories were free to use their mother tongue. Schools which used
Chinese (Mandarin) or Indian languages (Tamil) as the language of instruction were
commonly found in the country. English as the second language in Malaysia was also
commonly used in business and as the language of instruction in higher education. Apart from
Mandarin, the Malaysian Chinese also spoke their own dialects like Cantonese, Hokkien,
Hakka or Hainam. Most Indians in Malaysia spoke Tamil or other regional languages from
the sub-continent (eg, Malayalam). Overall, it was quite normal for a Malaysian to speak
more than one or two languages and it was not unusual to find ads being broadcast in these
different languages, especially in Malay, English, Mandarin, Cantonese and Tamil.
Business Culture
Although the business environment in Malaysia was market-oriented, the government took an
active role in economic and social development within the country. As a result, the concept of
CSR was not unfamiliar to the local business community, although its practice was different
to that in the West.3
With a high level of governmental involvement in business, especially of
big corporation, many issues that companies would normally have to think about were
considered to be part of the national development agenda. Some had argued that the business
culture in Malaysia was one of tending only to do what was mandatory and no more.4
Social and Cultural Concerns in Malaysia’s Advertising
Given Malaysia’s multicultural and multiethnic composition, the mass media in Malaysia
were also diverse and varied, with specific media catering to the needs of certain ethnic
groups.5
Since Muslims, being the largest group in Malaysia, were prohibited by religion to
carry out certain activities such as gambling and alcohol consumption, only Chinese, English
and Indian language newspapers and magazines were legally allowed to carry both gambling
and alcohol ads (but not any television channels). The Malaysian government had stringent
1
Andaya, B.W. and Andaya, L.Y. (1992) A History of Malaysia, The Macmillan Press Ltd: London
2
For example, intermarriage of couples from the local Chinese community and the Malay community formed the “Babas” (for
male) and “Nonyas” (for female) culture which produced a synthetic set of practices, beliefs and arts, and thus a new subculture.
3
Chambers, E., Chapple, W., Moon, J. and Sullivan, M. (2003) “CSR in Asia: A Seven Country Study of CSR Website”,
Reporting, Research Paper Series: International Centre for Corporate Social Responsibility, ISSN 1479-5116.
4
Thompson, Paul (2002) “Corporate Environmental Reporting in Singapore and Malaysia: Progress and Prospects”, Research
Paper Series, Nottingham University Business School, University of Nottingham, No.11/2002. Also refer to Perry, M. and Singh,
S. (2001) “Corporate Environmental Responsibility in Singapore and Malaysia: The Potential and Limits of Voluntary
Initiatives”, Technology, Business and Society, Programme Paper Number 3, April (New York: United Nations Research
Institute for Social Development).
5
Ngu, T.H. (1996) “Malaysia Advertising in a Multiracial Society”, in Frith, K.T. (ed.) Advertising in Asia: Communication,
Culture and Consumption, Iowa State University Press: Ames, pp. 241–257.
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censorship laws and reviewed the advertisement contents before they were broadcast to
ensure their compatibility with the moral sensibilities of the community. This system of
censorship was very different to the system in countries like USA and UK which was set up
on the basis of broadcasting first and then responding to any complaints, and when complaints
were upheld, the ad would then either be withdrawn or amended.
Since changes to social values in Malaysia were inevitable because of the pervasive force of
globalisation (particularly of technology and culture), the Malaysian government was striving
to retain the traditional culture to serve as an example of how the country could adapt
harmoniously to modern life while preserving the essence of the local cultures.6
One way of
doing so was imposing control on advertising content by restricting certain scenes from being
shown such as those that had a sexual appeal so as to ensure the ad’s reflection of Asian, or
more specifically, Malaysian, culture and values such as humility and modesty. Advertisers
were strongly reminded by the regulations to ensure decency of ads and to be mindful that
they should not contain elements that were likely to cause serious or widespread offence to
social norms, or create racial tension, in particular. One of the preambles abstracted from the
Malaysian Code of Advertising Practice and Advertising Code for Television and Radio
(1990) stated that:
Ads must project a better quality of life for all Malaysians, inject civic
mindedness and desired behavioural attitudes in life, such as queuing up
when boarding a bus etc. and keeping public places clean. Other than the
commercial objective all ads must convey a second message such as
messages calculated to bring about discipline, cleanliness, healthy living or
industrious attitudes.
Such a statement highlighted the responsibilities of corporate advertisers to fulfil both social
and economic objectives. It was therefore not surprising that Malaysian television advertising
was described as “a media world where popular culture communications carry social
messages and where the promotion of correct public values was part and parcel of the
promotion of product sales”.7
Social themes lying barely beneath the surface in Malaysian
television ads were those of family, civic mindedness, cultural integrity, racial harmony and
national identity. Nevertheless, some argued that few advertisers adhered to the “second
message” requirement in their ads or that they did so light-heartedly.8
In fact, from the
government’s perspective, the advertising code was not an end in itself, requiring complete
and literal compliance,9
but a means of satisfying and balancing the demands of various
environmental forces.10
Festive Advertising
“Festive Advertising”, a term widely used among advertising practitioners in Malaysia, was a
distinctive Malaysian genre of advertising created for the celebration of Malaysia’s national
day, Hari Raya Aidilfitri (Malay lunar new year), Chinese lunar new year, Deepavali (Indian
lunar new year) and other festive occasions. Over and above the conveying of festive
greetings, some ads included messages aimed at influencing people’s attitudes and behaviour
6
Holden, T.J.M. and Husin, A. (2002) “Moral Advertising: Messages of Development and Control in Malaysian Television
Commercials”, in Craig, T. and King, R. (eds.), Global Goes Local: Popular Culture in Asia, University of British Columbia
Press: British Columbia, pp. 138–159.
7
Holden, T.J.M. and Husin, A. (2002) op. cit.
8
Ngu, T.H. (1996) op. cit.
9
According to Malaysia Communications and Multimedia Act 1998, Section 99, compliance with a registered voluntary industry
code should not be mandatory and should only be a defence against any prosecution taken against the related body regarding a
matter dealt with in that code.
10
Holden, T.J.M. (2001) “The Malaysian Dilemma: Advertising’s Catalytic and Cataclysmic Role in Social Development,
Media”, Culture & Society, 23, pp. 275–297.
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towards certain social issues. Petronas, Malaysia’s national petroleum corporation, was the
first company in Malaysia to adopt this approach in its company ads wherein social messages
had primary rather than secondary importance. During different festive occasions after 1996,
the company had constantly advocated racial integration in its corporate advertising. This was
regarded as a turning point by advertising agencies in Malaysia as it reflected a new facet of
generic advertising where apparent instead of inconspicuous social messages were integrated
into commercial ads. This practice started becoming popular during festive occasions and was
adopted by several big local corporations, such as Malaysian Airlines and Telekom (the
national telecommunication company of Malaysia). However, not all festive ads were
regarded as CASD because some simply conveyed festive greetings without highlighting a
social issue. The candidates most often found to have developed a CASD strategy were large
local companies operating in markets that consumers were familiar with, and Perodua, the
national car maker, was one of them.
Perodua and Malaysia’s Automotive Industry
Market History and Position
In line with the Industrial Master Plans of the government, Malaysia had developed the
automotive sector as a platform for its economic growth to help the creation of employment
opportunities and the development of local supportive industries in auto parts and components.
Being the first developing country in the world to have its own national car design and
engineering capabilities, Malaysia became the largest producer of passenger cars in South-
East Asia in 2004, accounting for 24.4% of the region’s total production.
Perusahaan Otomobil Kedua Sdn Bhd (“Perodua”) was set up in 1993 to undertake the second
national car project after Proton, the first national car manufacturer established in 1985.11
With protection from the Malaysian government through the imposition of extremely high
import taxes (60–300%) on fully imported vehicles and higher excise taxes on locally
assembled foreign-branded vehicles than on national cars,12
Perodua and Proton gained a price
advantage over their competitors and accounted for 90% of the vehicles sold in 1998 [see
Exhibit 1 for a list of the motor vehicle assemblers in Malaysia].
In 2001, Perodua set up a joint venture with Daihatsu Motor Co. Ltd (a Toyota subsidiary)
and Mitsui & Co. Ltd, resulting in the establishment of a new holding subsidiary company,
Perodua Auto Corporation Sdn Bhd (“PCSB”). This joint venture agreement was premised on
apportioning control of the manufacturing and engineering operations to the Japanese partners
and giving the Malaysian partner the larger shareholding. The Malaysian ownership of
Perodua was 57% and 43% was Japanese, which meant Malaysia had majority ownership of
equity13
[see Exhibit 2 for Perodua’s shareholding structure].
11
Prime Minister’s Department (19 October 2005) “National Automotive Policy Framework”,
http://www.maa.org.my/pdf/National%20Automotive%20Policy%20Framework.pdf (accessed 15 August 2007).
12
In Malaysia, cars were separated into two categories: completely built up (“CBU”) vehicles and completely knocked down
(“CKD”) vehicles. CBU vehicles were fully imported from abroad and, in principal, were prohibited unless an approval permit
was obtained. Prior to 1 January 2004, CBU vehicles, despite being exempt from excise duties, attracted very high import taxes,
ranging from 60% for commercial vehicles to 300% for passenger cars, depending on the vehicle segment and engine capacity.
Under the Local Material Content Policy (“LMCP”), CKD motor vehicles were required to have a certain amount of local
content to ensure a market for the local auto parts makers. They were taxed at much lower rates of between 5% and 80%, and
only on the imported content, whereas local content was not taxed. However, CKD vehicles attracted excise duties based on the
value of the vehicles after the imposition of import tax, ranging from 25% to 65%. Since the excise duties were levied based on a
progressive tax basis, the more expensive the car was, the higher the excise duties were. National cars like Proton and Perodua
paid only half of the excise duties imposed on the non-national makes.
13
Bernama.com (5 August 2005) “Perodua Fulfils Requirements of National Car Company”,
http://www.bernama.com.my/bernama/v3/news_business.php?id=148666 (accessed 5 August 2007).
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Perodua’s strength was in the small-car segment, and the company aimed to serve the local
and overseas market’s demand for compact, affordable and reliable vehicles with excellent
standards and quality [see Exhibit 3 for Perodua’s various car models]. Its mission was to be
a world class automobile company renowned for excellent quality and reliability through:14
• Professionalism in all its operations
• Efficiency in utilising technologies and available resources
• Resilience in meeting challenges
• Optimising benefits to customers and stakeholders
• Dedication towards social responsibility to community, the environment and development
of competent workforce
• Uniqueness of products
• Aspiration to glorify the name of Perodua.
Development and Growth
In order to enhance efficiency and cost competitiveness, Perodua introduced best practices
such as the Toyota Production System (“TPS”)15
and self improvement activities, or jishuken,
in order to eliminate over-production, lower excessive lead-time, lower inventory levels, and
reduce costs and any non-added-value components found in the system. While the
government’s Local Material Content Policy required all locally assembled vehicles to
contain a minimum of 40% locally made materials so as to ensure a market for the local auto
parts producers, Perodua was able to make use of 75–90% of local material content in its
company-made cars. By 2006, Perodua had the capacity to produce 250,000 vehicles annually,
with a workforce of approximately 8,114 employees nation-wide.
One of the most important developments in Malaysia’s automotive industry was tariff
deregulation among member countries of the Association of South-East Asian Nations
(“ASEAN”) 16
under the Common Effective Preferential Tariff (“CEPT”) in 2005. This
measure of the ASEAN Free Trade Area (“AFTA”) pushed for greater trade liberalisation to
attract investment and to cut down artificially high car prices for consumers in the region. The
most obvious consequence of implementing CEPT for Malaysia’s car producers was that
because Malaysia’s protective automotive policy would have to be minimised, their price
advantage would disappear, leaving them to face much greater competition, especially from
other ASEAN countries, such as Thailand, Indonesia and Philippines, which were major car
producing countries in the region. Since the free trade bloc expanded towards other emerging
economies in Asia, such as India and China, it also stimulated increasingly fierce competition
within Asia Pacific. Studies showed that Asia would lead the world in terms of car ownership
aspirations [see Exhibit 4 for the aspiration index listing], implying a huge potential for
further growth in car sales in Asia.17
Thus, Asia’s car producers emerged as a great export
power fuelled by low cost labour, abundant raw materials and strategic partnership with
industrial players from developed nations. Global players also saw the great opportunities in
these economies especially in the low cost vehicles segment.
14
Refer to Perodua’s official homepage: http://www.perodua.com.my.
15
TPS is sometimes referred to as a “lean manufacturing system” or a “Just-in-Time (“JIT”) system” and is built on two core
principles, ie, jidoka and just-in-time production. Jidoka means that when a machine detected a quality or equipment problem, it
safely stopped on its own functioning to prevent further defective production. For further information on TPS, see
http://www.toyota.co.jp/en/vision/production_system/ (accessed 2 August 2007).
16
ASEAN member countries include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore,
Thailand and Vietnam, with combined economies of US$1 trillion in 2004. Given the growing average GDP in ASEAN and
further expansion of the free trade block into other Asian countries like China and India, foreign players from American,
Japanese, Korean as well as some European companies had established manufacturing bases or formed strategic partnerships
with the local companies in the region.
17
Matsuoka, Midori (2005) “Asia Leads Global Car Ownership Aspirations”, ACNielsen International Research,
http://www2.acnielsen.com/pubs/2005_q1_ap_car.shtml (accessed 10 September 2007).
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Perodua’s joint venture arrangement in 2001 gave Daihatsu a greater role in getting Perodua’s
performance in shape for the liberalisation of the automobile industry post-AFTA. This gave
Daihatsu the opportunity to be more involved in upgrading expertise and research and
development experience in Perodua.Perodua controlled about 30% of the local passenger car
market and used to be ranked as the second biggest seller after Proton, which was also the top
seller in South-East Asia. However, Proton had continued to lose market share since 2004 to
locally assembled models made by foreign rivals, such as Hyundai, Toyota and Nissan, which
offered competitive prices and better quality.18
In 2006, Perodua overtook Proton’s sales and
became the biggest car seller in the country. During the first six months of 2007, Perodua’s
domestic market share increased to 34.2% from 31.7% ,for the same period in 2006 while,
Proton’s market share dropped to 21.3% against 24% in the first half of 2006.19
Future Direction: King of Compact Cars
Although Perodua had exported to overseas markets such as UK, Egypt, Nepal, Saudi Arab,
Fiji Island etc, most of its sales came from the local market. Despite having virtually no local
competition in the sub-1,000 cc motor vehicle segment, the increasingly liberalised Asian car
industry posed an immense challenge to the company to be competitive on quality and design
in addition to price. Apart from improving quality and lowering costs, its strategic partner,
Daihatsu, planned to make Perodua’s plant the hub for its penetration of the ASEAN market
in the sub-1,000 cc motor vehicle market. According to the company’s top executive, Perodua
was expected to become the king of compact cars in the region.20
Perodua’s Corporate Culture and Social Commitment
Perodua perceived corporate social responsibility (“CSR”) as a dynamic, relationship-based
caring process based not only on corporate values but on the human conscience. The company
believed that CSR should be the starting point of its business activities. It believed that a good
corporate citizen should assist in developing—within the country, company and individuals—
positive values that underlined the essence of a humanised corporate culture in their
workplace. Perodua practised CSR and it was reflected in its relationship-based caring
approach in its business and social activities towards its internal and external stakeholders.
Relationship with the Government
Perodua was a product of Tun Dr. Mahathir, the former Prime Minister’s vision for the nation:
to emerge as a major automobile manufacturer in order to compete in the global market. In
addition to its dedication to the research and development of automotive technologies,
Perodua contributed substantially to local manpower training. Although it was cheaper to
import foreign labour from neighbouring countries, Perodua insisted on having local people,
except for some technical advisors and experts that needed to be brought in from overseas.
The company also helped to develop the local auto components and parts industry. By 2005,
there were about 165 local vendors supplying to Perodua, compared to a mere 31 in 1994. In
Perodua’s view, attending to the social and economic needs of the country in which it
operated was part of its corporate responsibility.
18
Edwin, Joseph (27 July 2005) “Malaysia Auto Sales Are Expected to Set Record”, Dow Jones Newswires.
19
Bernama.com (25 July 2007) “Vehicle Sales Drop 12 Pct in First Half, Perodua Tops Sales”,
http://www.bernama.com.my/bernama/v3/news_lite.php?id=275372 (accessed 31 July 2007).
20
Ng, Eileen (30 June 2006) “Perodua Wants to Be King of Compact Cars”, International Business Times, Australia,
http://au.ibtimes.com/articles/20060629/perodua-wants-to-be-039-king-of-compact-cars-039.htm (accessed 30 July 2007).
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Corporate Philanthropic Activities
Perodua supported various causes, both financially and in kind, responding to the needs of the
less privileged, for instance, orphans and elderly. Every year the company allocated a portion
of its budget for this purpose which was planned and implemented by the company’s public
affairs section. Perodua monitored how the beneficiaries utilised the company resources to
ensure they were well spent and to check on the impact the company intended to have on the
community. One of its community projects included a training programme for youth living in
the company’s vicinity. Those who attended the programme were presented with various
career options; they were not bound to work for the company after completing the programme.
Exhibit 5 shows some philanthropic events the company was involved in from 1998 to 2002.
Environmental Concern
As car companies came under increasing pressure globally because of concerns about carbon
dioxide emissions and climate change, environmental conservation became one of the most
important issues in Perodua’s corporate philosophy. Stringent environmental audits were
regularly conducted to assure environmental safety. The waste water treatment plant utilised
by Perodua was designed to be a zero-discharge system to prevent effluent from being
released into the environment; air pollution was controlled through a dust particle filter
system. The company was determined to set a good example of how manufacturing processes
should not pollute the environment. In 2004, it was awarded the International Organisation of
Standardisation (“ISO”) 14001:1996 certification by Vehicle Certification Agency (“VCA”),
United Kingdom.21
The award acknowledged the company’s environmental management,
making Perodua the first national car manufacturer in Malaysia to achieve such a certification.
Suppliers and Dealers
Perodua created a win-win ground on which the relationship with its suppliers and dealers
was built. A quality audit system was developed to optimise local vendors’ performance and
to assure the quality of components supplied to the company.22
During the Asian financial
crisis in the late 1990s, the whole automotive industry bore the brunt of the crisis. Inevitably,
Perodua’s operation, as well as that of its vendors and dealers, was severely affected because
of the sudden drop in demand. Perodua put immediate counter measures in place—the
management assisted its dealers by introducing basic, no-frills cars to increase sales volume,
by giving additional commission, and by relaxing credit terms. Alternatively, in order to
ensure that vendors had sufficient working capital, Perodua allowed them a price increase,
provided assistance in tooling cost investment, reduced credit term from 60 days to 30 days
and purchased their excess stock.
Employees
Acknowledging the importance of its employees, the company constantly invested in its
workforce through training, counselling and providing a healthy and conducive work
environment as well as employment benefits. Starting with about 10 engineers in 1995 whose
main functions were merely co-ordinating between Perodua and Daihatsu for localisation
activities, the company successfully trained 222 research and development engineers within
ten years whose expertise covered design development, concept car development and clay
modelling. In order to cultivate and share the caring culture of the company, employees were
21
ISO 14001:1996 is an international recognition of the company’s Environmental Management System which emphasises the
“assurance of a clean and sustainable environment for the future generation, caring and environmental-conscious employees,
operational cost and energy cutting activities based on the 3 ‘R’ concept – Reduce, Reuse and Recycle”. Refer to Perodua 2004
News & Event Achives, http://www.perodua.com.my/index.php?section=news&year=2004&page=details&id=41 (accessed 31
August 2007)
22
It utilised its own team of quality resident engineers (“QRE”) to audit vendors’ quality systems and had its supply part tracking
team (“SPTT”) to ensure smooth co-ordination with suppliers’ activities and preparation.
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encouraged to participate voluntarily in philanthropic activities organised by the company.
The company believed it was vital to let the employees grow with it and to train them to
develop the culture to which Perodua aspired.
Consumer and Public
The company’s first car model, Kancil, launched in 1994, was regarded as the most
economical car in Malaysia. The company intended to provide more affordable vehicles, or an
entry level car, especially for those with lower incomes and those in rural areas. In addition to
delivering economical and reliable products and services, it also felt responsible for
increasing the awareness of consumers regarding safe driving and to share its thoughts of
positive social values with consumers and the larger general public through its corporate ads.
Starting in 1999, Perodua began making creative corporate ads to spread socially beneficial
messages that the company believed in through the mass media.
Perodua’s Advertising with a Social Dimension
Perodua’s desire to become a socially responsible corporate citizen was a major factor in the
integration of a social dimension in its corporate ads. It appointed two ad agencies, one to
handle its corporate ads and the other its product ads. The marketing section of the company
dealt with the development of product ads, whereas the public affairs section took the main
role in corporate advertising. Ad proposals suggested by the agencies were usually taken back
to the company where the manufacturing, sales and marketing department shared their views
about the proposals and decided on one.
Social messages were mainly found in the company’s festive-style corporate ads through
various mass media, ie, television and newspapers. Perodua produced its first TV corporate
ads with a social dimension in 1999 for Malaysia’s National Day. The ad featured its
employees spreading the message of nationalism [see Exhibit 6]. It served to instil a moral
virtue and sense of patriotism in its employees and to remind Malaysians of the “Rukun
Negara”,23
the five national philosophical principles of Malaysia. Several other corporate ads
with social messages were broadcasted during different festive occasions in Malaysia,
including Christmas day and the lunar new year of the three main ethnic groups.
The relationship between Perodua and its ad agency was a major motivational factor in the
agency’s dedication to blending social messages into Perodua’s corporate ads. The agency felt
that the sentiments of the people heading Perodua had determined its social stance and had
also affected the self esteem of the advertising team that had worked with Perodua for years.
Perodua’s leader was described as friendly, supportive and someone who knew what he tried
to project in the company ad.
Target Market
Ethnic origin was an important concern in profiling the target viewers, especially when
developing ads with social dimensions during festive seasons. Since ads of this kind were
broadcast during festive seasons like the new year celebrations of different ethnic groups, the
concerned ethnic group inevitably became the target. Thus, the cultural characteristics of the
racial group became a source of inspiration for developing the ad. The personality of the
company’s potential buyers was also a core consideration in developing the corporate ads.
23
The “Rukun Negara” was first introduced after the communal clashes of 13 May 1969. They were the five national principles
of the country, representing an attempt to base national unity on certain concepts which were universal and acceptable to all
citizens of Malaysia, regardless of their ethnic origin or religious affiliation, including: 1) belief in God; 2) loyalty to King and
country; 3) supremacy of the constitution; 4) the rule of law; and 5) mutual respect and good social behaviour.
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Although the festive ads targeted a specific ethnic group, Perodua hoped that the ads’ social
messages could transcend racial boundaries to leave a positive impression on other races with
a similar personality.
In order to get the message to transcend racial boundaries, the understanding of the
psychographic characteristics of the target buyers, regardless of their ethnic origin, was
thought to be essential by the ad agency. For instance, being a compact car producer, Perodua
was well aware of the inferiority complex of some small-car owners in the country. Hence,
Perodua made a corporate ad during the Malay new year promoting the idea that one’s value
should be decided by his or her personality rather than the size or value of the car he or she
owns. The ad [see Exhibit 7] showed a small-car driver adjusting his side mirror to let a big
car pass on the narrow road; he even smiled to the other driver who had earlier been rude but
was later shown to be ashamed of his own attitude and behaviour.
The agency believed that a better understanding of their target market would affect the tone
and style to be adopted in communicating a social message, and the tone could also decide
whether such a message would be understood and accepted by the target buyers. In the words
of one of their creative writers:
Our target market is Malaysians of all creed and colour but they belong to a
group called “realists”. They do not relate to “padded-up” messages or
glamorous pictures. We are talking to a specific class of people, we need to
understand how they view life … Every piece of communication must speak
on behalf of, or to them.
Positioning and Ad Objectives
Perodua and its advertising agency agreed that the message should reflect that it was part of
society. Instead of telling viewers how to behave, Perodua wanted the ads to portray how
people were in actuality. Consequently, the ad agency created an ad that highlighted its brand
as “The People Car”. The ad was made to draw the company closer to its target buyers who
considered things in real terms from a street perspective and were practical in life.
As much as the company wished people to enjoy festive moments, its intention was to remind
viewers of the problems in society or in the world. For example, a corporate ad broadcast
during the Indian new year highlighted the stereotypical impressions held by other races
towards Indians in the country, and which reminded the nation to “see beyond the race” [see
Exhibit 8]. Perodua also showed that it needed support from the society in order to be able to
make its own social contributions. One of its corporate ads shown during Christmas day
highlighted the safety features of a Perodua car while advocating against drunk driving. The
ad ended with the tagline: “Not even the most sophisticated safety features can protect you
from alcohol” [see Exhibit 9]. Its corporate ads were more reflective of the existing social
phenomenon instead of the desired or embellished facet of society. They were also intended
to create awareness amongst the consumers as well as the general public about certain moral
or spiritual values the company believed in.
Social Issue and Media Selection
In designing Perodua’s corporate ads, the ad agency needed to identify topical issues that
could most represent Perodua, or that would demonstrate the target consumers’ interest or the
concern of the nation as a whole. Their choice of social issues or messages was based on one
or more of the following elements:
• Related to the company’s product, ie, cars (eg, messages related to driving etiquette)
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• In line with the government’s vision (eg, nationalism, inter-racial respect)
• Reflecting ethnic traditions and virtues (eg, family reunion, forgiveness)
• Global issues (eg, against drunk driving, or for world peace24
).
The company mainly used television for its corporate ads with social dimensions because
television was seen as a more dynamic mass medium than print. However, newspapers were
used to provide supplementary coverage. Since Malaysia had newspapers in many different
languages, it was the language used by the targeted ethnic group that determined the choice of
newspaper.
Message Development and the Competitive Environment
Although Proton was Perodua’s biggest competitor, the overall competition Perodua faced in
the market was less intense than what Proton faced. This was because Perodua’s competitive
strength lay in the small-car segment, and there was relatively less direct competition in the
sub-1,000 cc motor vehicle segment. Moreover, Perodua was able to outperform other car
producers in terms of price. Hence the ad agency had to keep in mind the market position of
Perodua’s competitors and their advertising approach. It also had to take into account all the
other festive-style corporate advertising broadcast in the media, even that for other products
or industries. Examining other companies’ CASD campaigns helped it to create unique
corporate communication messages for Perodua. The agency perceived other advertisers who
were attempting to portray a corporate citizenship image, and particularly those who had
made festive ads or adopted a similar CASD approach, as competitors regardless of their
business’s nature. It was important for the ad agency to build an exclusive image for Perodua
that could stand out among rivals from within the industry and without.
Petronas, the festive ad pioneer, had established the brand’s unique story-telling style, and
hence Perodua made use of other styles in its CASD. For instance, using the individual as the
focus or using its product to bring out the social messages in the corporate ads. Both negative
and positive emotional appeals were used in a single ad to produce “twists” or unexpected
effects. For example, one ad depicted an elderly woman who was excited about the traditional
family dinner on the eve of the Chinese new year. However, she was later shown sobbing and
it was revealed that she was an abandoned mother [see Exhibit 10]. Although the issue was
not directly associated to the car industry, the ad ended with the tagline “There are some
distances only you can bridge”, providing viewers with a link between the message and the
corporation. According to the creative writer:
We know certain things we can do to make the world a better place, but we
have our limitations too as anyone of us do in reality. It’s humble for a car
maker to admit that even they can’t help to close the distance if the driver
doesn’t want to drive.
Controversies
Perodua’s corporate ads were not without controversy. The company was criticised for its
portrayal of the Chinese community in two of its corporate ads broadcasted over national
television during Chinese new year in 2002 and 2003. The ads were shot in black and white,
featuring Chinese opera-style characters, reminiscent of the 1950s. The ads were meant to be
humorous. One ad depicted three Chinese women showing off their jewellery; the second one
24
In one of Perodua’s corporate ads broadcasted over television during Christmas 2003, a man was shown sitting in front of the
television changing channels. As he zapped from one channel to the other, he saw explosions, demonstrations, armies, machines
and violence, and eventually got tired. He then switched off the television and walked away. Then, suddenly the screen showed a
Christmas tree, and a word came out from the tree: “PEACE”, and it ended with the tagline “Give peace a chance”.
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showed a Chinese family ignoring the arrival of a poor relative but giving a grand reception to
a rich one. Both ads ended with a banner which read “We are one family, let’s stop
pretending.” The youth wing of the Malaysian Chinese Hall, a Chinese association, claimed
that these ads gave the impression that Chinese people were boastful, materialistic and
pretentious, thus hurting the feelings of the Chinese community. A Chinese branch from an
opposition political party in Malaysia, together with other Chinese business groups, also
urged the ads to be banned and required Perodua to apologise to the Chinese community as
the ads had not only failed to deliver festive greetings but had insulted them.
Eventually, the company’s managing director, Datuk Abdul Rahman Omar, apologised
publicly at a press conference in 2003 to those who had been offended by the ads.
Nevertheless, he clarified and stressed that those ads were not directed against the Chinese
community as these traits could also be found in other communities. He said that the ads were
meant to bring out the message that people should be treated alike without discrimination
regardless of their status and background. The company’s public affairs representative also
defended the ads saying that opinions from members of the particular ethnic group were
sought before each of the corporate ads was used to avoid offence to any race. The managing
director added that the uproar was probably caused because of the ad’s setting: Chinese opera
was strongly tied to Chinese culture. If a different setting had been chosen, he supposed the
response would have been different. The company also promised that the same ad would not
be used again, in order to pacify those who were offended. In fact, the ad had generated
different opinions among the public, especially Chinese viewers. Those who accepted the ad
regarded it as uplifting and supported the message that power and materialism should not be
heavily weighted and people should be treated equally. Some also felt that the truth was
always hard to swallow but it made us tackle our shortcomings.
Another ad about the elderly Chinese lady shown during the 2004 Chinese new year [refer to
Exhibit 10] was also felt to be improper by some viewers. They thought that showing an old
lady’s sad experience was inappropriate during auspicious occasions, which were supposed to
symbolise moments of joy. In spite of the minor complaint, the ad touched the hearts of many
viewers and invited a lot of nation-wide publicity. The “twist” effect in the ad was widely
discussed and there was a lot of curiosity about the identity of the Chinese actress and the
location of the old-age home shown in the ad. A local news journalist went on to interview
the old lady about the truthfulness of the ad and her background. She told the media that she
really had been staying in the old folks’ home for more than eight years and had an adopted
son who seldom visited her. 25
According to the report, her adopted son had actually paid her a
visit after the ad went on air. This ad raised the public’s concern about elderly citizens and a
number of people made donations to the old-age home, even though donations were never
mentioned in the ad.
The Challenges of Company Advertising with a Social Dimension
Perhaps the greatest challenge of CASD for Perodua was its uncertain impact on the company,
particularly on sales, because no actual evaluation had been conducted to measure the effect
of such corporate advertising on this short term goal, ie, sales after ad exposure. When the
market became more competitive, would these ads be effective in sustaining the company’s
profitability in the midst of global and regional liberalisation of trade?
The growing concern about CSR posed many interesting questions about how companies
compete and the type of image they sought to project. Studies indicated that brand
25
Anonymous (14 May 2001), “The Story of Perodua’s Ad Model”. Sinchew Daily, Malaysia’s Chinese Newspaper.
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image/prestige was much emphasised in a number of markets within Asia Pacific.26
Hence,
would a car manufacturer adopting a corporate advertising approach built on a good
citizenship orientation gain a unique position on the world stage?
Finally, since the development of CASD was not without controversies, one wonders whether
Perodua is the right candidate or has the responsibility to get viewers to re-examine their
values through its ads.
26
ACNielsen’s 2004 findings on factors driving global car sales indicated that brand image/prestige was emphasised more in a
number of Asia Pacific markets than in other regions, suggesting that manufacturers must also focus on brand building to drive
sales especially in countries like China, Indonesia and Taiwan. Refer to Matsuoka, Midori (2005) “Asia Leads Global Car
Ownership Aspirations”, ACNielsen International Research, http://www2.acnielsen.com/pubs/2005_q1_ap_car.shtml (accessed
10 September 2007).
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EXHIBIT 1: MOTOR VEHICLE ASSEMBLERS IN MALAYSIA
Assembler Make of Vehicles
* PROTON Proton
* PERODUA Perodua
* INOKOM Atos, Permas, Lorimas
*^ Malaysian Truck and Bus (MTB) Isuzu, Mitsubishi, Hicom MTB,
SsangYong
Asia Automobile Industries Mercedes-Benz, Mazda, Kia
Assembly Services Toyota, Hino
Associated Motor Industries BMW, Ford, Mazda, TATA, Scania,
Suzuki, Land Rover
Automobile Manufacturers Malaysia Citroen, Proton
Honda Malaysia Honda
Kinabalu Motor Assembly Isuzu
Oriental Assemblers Honda, Peugeot, Mercedes, Hyundai
Swedish Motor Assemblies Volvo, Suzuki
Tan Chong Motor & Sons Audi, Nissan, Peugeot, Renault
Note: * national motor vehicle manufacturers.
^ MTB is entrusted to spearhead only the manufacturing and assembly of commercial vehicles.
Source: Ministry of International Trade and Industry27
27
Table extracted from Ariff, Mohamed and Chow, Lai Mun (2004), “Regional Production Networks and their Implications on
Malaysia’s Trade and Investment Policies and on Regional Cooperation in Asia”, presented in The 6th Asian Development
Research Forum (“ADRF”) General Meeting, 2004 Bangkok, Thailand.
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EXHIBIT 2: PERODUA’S CORPORATE SHAREHOLDERS
38%
20%
20%
10%
7% 5%
UMW Corporation Sdn. Bhd.
Daihatsu Motor Co. Ltd
MBM Resources Berhad
PNB Equity Resources
Corporation Sdn. Bhd.
Mitsui & Co. Ltd
Daihatsu (Malaysia) Sdn.
Bhd.
EXHIBIT 3: PERODUA’S CAR MODELS
• The Perodua Kancil (659cc and 847cc), 1994
• The Perodua Rusa (1296cc and 1590cc), 1996
• The Perodua Kembara (1298cc), August 1998
• The Perodua Kenari (989cc), June 2000
• The Perodua Kelisa (989cc), August 2001
• The Perodua Myvi (989cc and 1298cc), May 2005
• The Perodua Viva (659cc, 847cc and 989cc), May 2007
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EXHIBIT 4: ASPIRATION INDEX28
High
(AI > 60%)
Medium
(AI 30–60%)
Low
(AI < 30%)
China Malaysia USA
Indonesia Singapore Sweden
India Taiwan Germany
Thailand Spain Norway
Korea Australia Austria
Hong Kong France Netherlands
Philippines Italy Finland
UK Denmark
Belgium Japan
Portugal
New Zealand
Source: Matsuoka, Midori (2005) op. cit.
28
ACNielsen’s aspiration index (“AI”) measured the relationship between current ownership levels and future intentions to
purchase a vehicle among several countries towards the end of 2004. China represented the most aspiring country with over 60%
of desire to own a car, followed by Indonesia, India, Thailand and others which were all placed in the “high” category. Malaysia
headed the “medium grouping”, indicating 30–60% intention to buy a new vehicle. In contrast, the US, Japan and many northern
European countries had a low AI (less than 30%), reflecting higher levels of existing ownership and lower intention for future
purchase. Refer to Matsuoka, Midori (2005) “Asia Leads Global Car Ownership Aspirations”, ACNielsen International Research,
http://www2.acnielsen.com/pubs/2005_q1_ap_car.shtml (accessed 10 September 2007).
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The
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Citizenship:
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Advertising
with
a
Social
Dimension
16
EXHIBIT
5:
*PERODUA’S
CORPORATE
PHILANTHROPIC
ACTIVITIES
1999-2002
Year
Activities
Beneficiaries
Level
of
involvement
Objective
Motivation
1998
Nov.
Sponsoring
RTM
Radio
coverage
of
the
13
th
Asian
Games
in
Bangkok
RTM
(Radio
Television
Malaysia)
Sponsor
-
3
Personnel
-
5
Kembaras
(a
Perodua
car)
-
Strengthen
ties
with
RTM
-
Test
car
performance
-
Strengthen
ties
and
foster
closer
co-
operation
between
RTM
and
Perodua
1999
Mar.
Celebrated
Chinese
new
year
and
Malay
new
year
with
sick
children
at
the
Paediatric
Institute
Sick
children
Organiser
-
Cash
and
goody
bags
-
Gifts
-
Entertainment
-
Lunch
-
Bring
festive
cheer
and
joy
to
sick
children
-
Support
the
government’s
call
for
the
private
sector
to
address
issues
of
the
underprivileged
and
the
development,
health
and
welfare
of
youth
and
children
1999
Nov.
Launched
its
first
youth
community
relations
project,
ie,
Perodua
Youth
Training
Programme
(“PYTP”)
Youth
school-
leavers
from
secondary
school
in
the
factory’s
vicinity
Organiser
-
Training
centre
-
Certificate
accredited
by
the
National
Vocational
Training
Council
-
to
provide
skills
in
automotive
related
areas
for
school
leavers
in
its
community
-
Be
good
neighbour
and
assist
the
community
in
improving
the
quality
of
life
-
Support
the
government’s
call
for
the
private
sector
to
address
issues
of
the
underprivileged
and
the
development,
health
and
welfare
of
youth
and
children
2000
Jan.
Took
children
from
Asrama
Damai
Orphanage
for
a
shopping
spree
Orphans
Organiser
-
Cash
(goody
bags,
new
year
outfits
and
meals
at
McDonald)
-
Volunteers
from
Perodua
-
Ensure
these
children
are
not
forgotten,
especially
during
such
occasions
-
Be
good
neighbour
and
assist
the
community
-
Support
the
government’s
call
for
the
private
sector
to
address
issues
of
the
underprivileged
and
the
development,
health
and
welfare
of
youth
and
children
2000
Jan.
Launched
Malay
new
year
road
safety
campaign
at
its
premises
All
Perodua’s
staff
Organiser
-
Stickers
and
pamphlets
on
road
safety
-
Exhibition
held
by
Perodua’s
Environmental
Health
and
Safety
Department
on
road
safety
awareness
included
safety
tips,
do’s
and
-
Create
awareness
amongst
staff
to
prevent
road
accidents
during
festive
seasons
-
Prevent
and
minimise
road
accidents
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The
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Perodua’s
Advertising
with
a
Social
Dimension
17
don’ts
for
motorcyclists
and
statistics
on
accidents
2000
Mar.
Organised
one-day
blood
donation
drive
at
its
premises
in
collaboration
with
the
Blood
Services
Centre
of
KL
Hospital
(This
drive
has
been
organised
every
year
since
1997)
Community
Collaborator
-
150
employees
donated
blood
-
Instil
a
caring
nature
among
Perodua
employees
as
well
as
create
responsible
corporate
citizens
-
Desire
to
kindle
kindness
in
every
individual
-
A
noble
effort
to
help
the
community
2000
May
Perodua’s
new
product,
Kenari,
auctioned
online
for
charity
Various
charitable
organisations
through
BAKTI
Organiser
-
Introduce
new
products
through
auctions
for
charity
2001
June
Title
sponsored
Japan
GT
Race
2001,
agreed
by
Sepang
International
Circuit
Sdn
Bhd
Sport
lovers
and
general
public
Sponsor
-
Hope
this
world
class
event
will
become
popular
and
supported
by
Malaysia
-
Part
of
its
contribution
to
the
development
of
motor
sports
in
Malaysia
2002
Jan.
Held
one-day
“rally
clinic”
at
its
branch
and
service
centre
in
Shah
Alam,
organised
by
Wheel
Sport
Management
Sdn
Bhd,
with
the
assistance
of
Kelab
Sukan
Motor
Perlis
Sport
lovers
Sponsor
-
Introduce
rallying
as
an
alternative
motor
sports
activity
to
the
public
-
Increase
number
of
participants
in
the
sport
-
Educate
participants
on
how
to
begin
rallying
and
become
successful
rally
drivers
or
co-drivers
*
note:
Information
above
was
extracted
and
compiled
from
Perodua’s
News
Archive
for
1998-2002
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EXHIBIT 6: PERODUA’S TV AD WITH THE NATIONALISM MESSAGE
Type of advertisement: Corporate Ad—Festive Advertising for National Day, 1999
Title: Saya Anak Malaysia (I am a child of Malaysia)
Social Responsibility Theme: Nationalism
Duration: 40 seconds
Language: Malay
Character: I believe in
God.
Character : I am loyal to
the king and the country.
Both Characters: I
abide by the rules of
law.
Character: I uphold the
constitution.
Both characters: I
practice good moral
behaviour and attitude.
(View of Assembly
workshop)
Character: I am child of
Malaysia.
Malaysia.
(Side view of company
building)
Character: We are
children of Malaysia.
(Servicing a company
car)
Malaysia.
Malaysia, a beam of the
country.
Male Voice-over:
Malaysia, the pride of
everyone.
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EXHIBIT 7: PERODUA’S TV AD WITH THE SOCIAL MANNER MESSAGE
Type of advertisement: Corporate Ad—Festive Advertising for Malay new year, 2001
Social Responsibility Theme: Developing a generous mind, Returning good
Language: Malay
Scene: A rural village
Background music: Malay
New Year song.
A big (black) and a small
(white) car come from
opposite directions on a
narrow road.
The big car driver sounds
the horn rudely signalling
the small-car driver to
give way.
Both drivers look at each
other.
The small-car driver
adjusts his side mirror.
Both cars are able to get
through after the mirror
has been adjusted.
The small-car driver and his
wife return a friendly smile
and greet the other driver.
Small-car driver: Selamat
Hari Raya (ie, Happy New
Year).
Both the big car driver and
his wife feel ashamed. The
man is ashamed of his
previous behaviour and
the wife is ashamed of her
husband.
Read: “Pulanglah dengan
hati yang mulia di Hari
Raya ini.”
(Translation: Return with
good during this festive
season.)
Showing the family
reaches home.
Read: Glorifying the spirit
of generosity.
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EXHIBIT 8: PERODUA’S TV AD WITH RACIAL ENLIGHTENING ISSUE
Type of advertisement: Corporate Ad—Festive Advertising for Deepavali (Indian new
year), October 2000
Social Responsibility Theme: See beyond race/Go beyond stereotyping
Language: Music only with two versions ie, English and Malay subtitles
Read: This man drinks too
much.
(Indians in Malaysia were
stereotyped as being heavy
drinkers. In this shot,
viewers may first think
they drink excessive
alcohol.)
Read: You know what they
say about caffeine.
(The ad revealed that they
drink a lot of coffee.)
Read: This man beats his
wife.
(Indians in Malaysia were
stereotyped as being
physically abusive.)
Read: She’s terrible at
chess.
(The ad revealed that the
man actually beats his wife
in a chess game.)
Read: This man works in a
factory.
(Some Malaysians tended
to think most Indians were
factory workers.)
Read: He’s the Head of
Engineering.
(The ad revealed that he
actually held a high
position in the factory.)
Read: This man cuts grass.
(Indians were stereotyped
as being estate labourers.)
Read: For his wife, her
mother and her sister.
(The ad revealed that he
was actually cutting grass
for his family in his own
garden.)
Read: See beyond the race. Read: And you’ll start to
see the individual.
Read: Enlightenment by
PERODUA
Selamat Hari Deepavali
(Happy Deepavali).
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EXHIBIT 9: PERODUA’S TV AD AGAINST DRUNK DRIVING
Type of advertisement: Corporate Ad—Festive Advertising for Christmas day, 2000
Title: Car Test
Social Responsibility Theme: Anti Drink-Driving
Language: Music only with English and Malay titles in two versions
Car testing scene. Read: ABS. It shows the ABS system
is functioning well.
Car loses control at a
puddle of water (in this ad,
water symbolises alcohol).
Read: Airbag. Airbag functioning well. A drop of water/alcohol
drips onto the airbag.
The airbag bursts.
Read: Side Impact Bars. Water splashing on the car
and the door crashes.
Showing a toppled glass of
beer on the road .
Read: Not even the most
sophisticated safety
features can protect you
from alcohol.
Read: If you’re drinking
this festive season please
don’t drive.
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EXHIBIT 10: PERODUA’S TV AD WITH MESSAGE RELATED TO FAMILY TIES
Type of advertisement: TV Corporate Ad—Festive Advertising for Chinese new year, 2001
Social Responsibility Theme: Family Ties
Language: Cantonese (with English and Malay subtitles in two versions)
Old lady says, happily:
Time flows like water.
Old lady says: A blink
of the eye and it’s
Chinese new year once
more.
Wipes her family
photo.
Old Lady says: During
this festival, we usually
buy lettuce—it
symbolises “life”.
Voiceover: Personally, I
like steamed chicken
with little chopped
ginger and oyster sauce.
(Show the old lady
taking a bowl of rice)
Old lady: Yes, the
reunion dinner is very
important.
(Show her favourite
dish and only a pair of
chopsticks and a bowl
of rice for herself.)
Old lady: No matter
how late…we still wait
for everyone to come
home.
(Starts to eat but soon
puts down the
chopsticks and becomes
silent. She is thinking
of something.)
(Sobbing silently.) (Choking with sobs.) Old lady: My son
hasn’t visited in a long
while.
(Silence.)
Continued…
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Old lady: I dare not think
about it.
(Voice falters while
trying to speak.)
Old lady sounds
helpless: I’ll take each
day as it comes.
(She is shown to be in
an old-age home.)
Male voiceover: There
are some distances only
you can bridge.
The old lady’s voice:
This Chinese new year,
I’d like to wish
everyone good health.
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