It has been decades since U.S. Congressman and Speaker of the House, Tip O’Neill, made his famous and much-repeated observation, “All politics is local.”Nearly a century of steady globalisation after Mr. O’Neill made his first run for City Council of Cambridge, Massachusetts, the saying remains true.
As more and more companies start to operate on a global scale, the need to link up public affairs activities in different markets has become steadily greater. It is perhaps most evident in high-profile areas, such as merger clearances or trade cases, but in reality, any political or policy activity incompatible with a company’s overall global strategy creates a risk to its reputation and relationships. Most of us would agree, however, that a global public affairs strategy must also be tailored to each of the markets in which the company operates.
Executives are often daunted by the prospect of conducting public affairs work in China. What are the keys to successful public affairs in the world’s most populous country? At risk of over-simplifying one of the most dynamic and complex markets in the world, this article outlines some ideas for ensuring an effective strategy in China.
Respect the system
The question of how to influence the Chinese system is the first hurdle that many public affairs practitioners face. For those accustomed to the inner workings of a democracy, China’s one-party system can seem impenetrable and full of risk. But while the system itself may operate according to different rules, it is still a political machine, and is therefore open to influence.
The cardinal rule is to understand the Chinese concept of face – in effect, the pride of the party and its leadership – and to conduct affairs in a way that holds this principle paramount. Negative, aggressive or badly-considered comments against a policy, a politician, or a political situation can set a company’s mission back months, even years. This is not to say that honest debate and discussion is not allowed; rather that it must be done with sensitivity to local circumstances, and in a way that is seen as helpful to the government’s objectives.
It is also important to understand that, like all governments, Chinese officials need reliable information by which to inform the policy-making process. Much of this can come from an individual’s own views and those of recognised stakeholders, but decision-makers also rely increasingly on blogs and social networks to measure the public ‘temperature’. Major policy initiatives, such as food safety, can be subject to lengthy public consultations. As with any other market, the specific mix of tools will be different for each situation.
Take the time to build relationships
The concept of guanxi describes the personal networks on which the Chinese seems to depend for many things in life, from policy-making to the development of productive business relationships. The term sometimes has dark overtones in the west; many associate it with unfairness, corruption or the inappropriate exercise of influence.
In China as in any political system, corruption or influence-peddling can happen, but guanxi is not in itself a negative concept. It is a by-product of China’s highly social society, and is an indispensable part of getting things done in a country where sheer size prevents many of the principles that guide ‘open’ systems in many western countries.
A basic public affairs component anywhere, requires companies hoping to do business in China to spend considerable time building relationships. The real issue is the fact many western companies still underestimate the time and effort it takes to build real guanxi. Longevity is a highly-prized value in China. For many senior executives in China the development and maintenance of their personal networks is itself a full-time job.
Understand local dynamics
The key to succeeding in Beijing is to tie one’s corporate agenda to the government’s objectives. However, unless your issue set slots directly into high-profile matters like food safety, environmental protection or any of the top-line priorities outlined in the Party’s 5-year plans, getting intelligence on these outcomes can be time-consuming and challenging.
This, of course, is one of the major areas where guanxi can come in handy – a primary purpose of these relationships is to facilitate the free flow of information. The media can also be an important source of information, although government involvement ensures that the stories you read mainly reflect official positions. Those with time and resources can also monitor the blogosphere, and China’s state-sanctioned trade associations, as well as professional chambers of commerce and other such venues, all of which can provide a wealth of insight.
In addition to intelligence, companies hoping to operate in China will need to understand the country’s outlook on the future. How officials and citizens view the needs of their society, and their attitudes toward foreign business, can be very important. For instance, the recent trend towards buying local – and the resulting ostracism of government officials, in online discussion forums, for buying foreign luxury vehicles over Chinese marques – will have a meaningful impact on a company’s China strategy.
Similarly, the Chinese are showing increasing confidence in their ability to take on complex challenges where they previously depended on foreign know-how. This can inform many things about the way a foreign company approaches, staffs and sells in China. Taking on reliable local staff or agents will provide the company with invaluable insight into how best to position themselves and their products.
Coming to terms with how to deal with China as part of a company’s global public affairs strategy can be a challenge. But in a country where the government’s hand is evident in every sector of the economy, it is also essential. By focusing on a few simple rules of engagement, any company can localise its global strategy effectively, and in so doing, will be able to engage much more quickly in the many opportunities that exist in the world’s fastest-growing market.
Dan Baxter is Senior Vice-President of Fleishman-Hillard, based in Beijing. He has been a public affairs practitioner, political analyst and CSR advisor for organisations based in North America, Europe, Africa and Asia.