The Campaign

2010 was a pitch-dark year for GOME as China’s largest electronics retailer faced two major blows: First was the indictment and subsequent jail sentencing of founder Huang Guangyu for insider trading and bribery. Then Mr. Huang was exerting control from jail and engaging in a board proxy battle. The situation created near-total chaos as foreign investors – then half of GOME’s shareholders – began selling off in droves and stock tumbled to a bottom-low of HK$2.2 as more questions surfaced about governance and the opaqueness of the company’s reporting. In early 2011, with new leadership in place, investor relations helped bring GOME out from this dark chapter through rebuilding its reputation by completely embracing and demonstrating a new model of openness and transparency that historically has been associated with Western companies. Could this set an example for other publicly-held Chinese companies as the market develops? Quarterly perception audits provided feedback from overseas investors that helped shape a communications plan and messaging to address concerns. Investor and media relations strategies shined a bright light on the new leadership team to demonstrate the sharp break from the previous ones while targeting opportunities to convey GOME’s messages regularly, consistently and transparently. In late 2011, average share price climbed to a three-year high of HK$3.5. Foreign investment levels increased to 82 percent in early 2012 from 50 percent during proxy fight and 65% before the crisis. Investor perceptions scored at 8.8 from 4.4 at perception audit earlier in the year. GOME was named the only Asian retailer in Forbes’ “2011 Asia’s Fab 50 Companies.”

The Brief

With survival at stake, GOME put in place a new leadership team and an investor relations program aimed at overseas investors to: - Burnish GOME’s corporate reputation and strengthen confidence that it is a well- managed company with high standards of corporate governance and ethics. - Restore the company’s base of foreign investors and stock performance. - Build acceptance and enthusiasm for new leadership team. - Ignite more interest among overseas institutional investors.

Results

GOME’s investor relations program has been a critical part of the company’s turn-around in less than one year. - GOME’s average share price in 2011 rose to a three-year high of HK$3.5, versus the bottom-low of HK$2.2 in mid-2010. - In early 2012, overseas institutions held 82% of GOME’s public floatation, versus 50% during proxy fight and 65% before the crisis. - Ratings for GOME’s corporate governance rose from 4.4 at perception audit in early 2011 to 8.8 in late 2011, reflecting that investors’ perception needle has shifted to positive. - Forbes Magazine named GOME as the only Asian retailer in its “2011 Asia’s Fab 50 Companies” list. - Kantar Retail ranked GOME as the only Chinese retailer in its “Top 50 Global Retailers”. - Media coverage in tier-one outlets including WSJA, FT, Dow Jones and Reuters and beyond achieved 80% message pull-through and played a significant role in the company’s triumphant resurgence.

Execution

In March 2011, GOME launched a highly targeted corporate and investor relations campaign to rebuild confidence in the company. - Quarterly investor perception audits to keep GOME’s team abreast of current perceptions and concerns and enable communications to create and fine-tune messaging, Q&As and tactics to address these concerns in a timely manner. The audits also provided a way to track changes in perception over time. - 360-degree stakeholder mapping identified 50 key investors, analysts and media for GOME communications outreach. - Executive visibility through meetings with 150 media, investors and analysts emphasized the leadership and experience of the new chairman, reinforced GOME’s new and unified identity and boosted overseas investors’ confidence. - Quarterly earnings provided opportunities to meet with international press and investors. - Regular updates provided to financial community on its alliances with overseas players (e.g. Electrolux, Sanyo), positioning GOME as a strong player to keep growing its business in China.

The Situation

China’s unbridled growth is a complex proposition for foreign investors eager to follow the glow and equally eager to run the other way at signs of trouble, especially in the absence of regulation. And trouble was deep as China’s largest electronics retailer GOME faced myriad reputational issues in 2010. The company’s founder Huang Guangyu, jailed for insider trading and bribery, was fighting a proxy issue and appeared to still exert influence on the operations of GOME, raising serious concerns about governance and ethics. Skittish foreign investors sold in droves, and share price hit a bottom-low of HK$2.2.

The Strategy

To achieve these goals, communications focused on rebuilding GOME’s credibility with an overarching strategy to demonstrate GOME’s unwavering commitment to honesty and transparency and doing what is right for shareholders. This would stand in stark contrast to issues of opaqueness and other governance issues that marred GOME under Mr. Huang’s management and later association. Supporting strategies included: - Actively and regularly soliciting feedback from the financial community and utilizing this information to address concerns in campaign messaging. - Showcasing the integrity and experience of the new leadership team. - Reinforcing that GOME is operating in a “best practices” mode from corporate fundamentals and operational perspectives. - Signaling GOME’s focus on transparency through frequent and full disclosure in communications (overcoming Chinese companies’ taboo of not communicating frequently and openly). - Supporting financial communications with English-speaking professionals to ensure messaging and tactical communications such as earnings calls are clearly and consistently conveyed to foreign investors and analysts.