PUBLIC AFFAIRS IN CHINA

Interel has just announced the opening a new office in Beijing, China. This office will be led by Managing Partner, Mark Pinner. We reproduce hereunder an article written by Mr. Mark Pinner on Public Affairs in China. The opinions expressed in this article are only those of Mr. Mark Pinner.

"The idea of communicating and collaborating with the Chinese government can scare away even the most seasoned of public affairs professionals in western countries, not to mention the average businesspeople. After all, they wonder, isn’t China a monolithic, centralized, communist one-party state? How could public affairs and its corollary, public policy work in such an environment?

The answer is that, this impression is seriously misconceived. Despite substantial cultural barriers like language, culture and history, operating in public affairs in China is becoming more familiar to public affairs professionals in western countries.

To start, let’s examine the above misconceptions about China.

China is not a communist country, at least not in the commonly understood use of this term. Although China is led by the Chinese Communist Party, as any visitor to China can see for their own eyes, on the surface it is more akin to an economic ‘free-for-all’ than the image of a 20th century radical left-wing communist government. Indeed the switch to a market economy since the Reform and Opening policies instigated by Deng Xiaoping in the late 1970’s has precipitated the rapid development of a modern regulatory system in a very short space of time. However, China does take an active role in guiding the economy and directing investment to desired areas. Government bodies frequently intervene in industry in the pursuit of this aim.

China is not a centralized state. China is, in fact, a highly decentralised state, having 34 provincial-level administrative units which range in political organization from full provinces such as Sichuan (origin of the famous spicy “szechuan” style of cooking), the autonomous regions of Tibet and Xinjiang, autonomous cities, and the special administrative regions of Hong Kong and Macau, not to mention a myriad of autonomous counties and villages, most inhabited by ethnic minorities. As is similar with European Union directives, Chinese central government regulations are often deliberately drafted in a general manner so that they can be interpreted and implemented in a more appropriate way at a local level. Further, what is requested in the centre may well not be implemented effectively in the regions. As the Chinese saying goes: “The mountains are high and the emperor is far away”

China is not a monolithic state. China is ruled by the Communist Party, but the Party stays out of private life and, under a framework of what is considered acceptable, allows large room for many government bodies, social organisations and even the media to have their own agendas. The government is more analogous to a flexible multi-headed hydra than a single-headed dragon. As has been the case for ages from kingdom to empire to republic the Chinese central government has less control over the country’s strategic direction than is commonly thought in the west; the government may be in the saddle, but the hydra’s heads are ‘chomping at the bit’.

Nonetheless, China is a one-party state. The Party is deeply embedded throughout the government and civil society. It is in charge of the legislature, administration, and the judiciary; it guides the proposition of new laws as well as implementation and adjudication. Civil servants are often Party members, especially at more senior levels. With little need for democratic ‘checks and balances’ official decision-making is often opaque, and can be quick, sudden and comes with no or little recourse for those effected.

Akin to the speed of economic changes is the speed of the legislative process and decision-making, which can be strikingly faster than in the Western democracies. An example is how China periodically builds whole new swathes of regulation from scratch in a relatively short period of time. This can be a boon, as a well-engaged MNC can provide input to this process, but also a danger, as implementation can be sudden and unpredictable.

Chinese Stakeholders

And what are these bodies? A brief overview of Chinese stakeholders in the public affairs space appears in many ways similar to what one might see in the West, although with some subtle and important differences.

The Central Government, based in the capital Beijing, has at its top the State Council, which takes the most important governmental decisions. Underneath that are ministries responsible for policy-making and administration.

Each ministry has a local equivalent in the 34 provincial-level administrative units. These may take different views from their central parent on account of local conditions and pressures.

China has a plentiful range of Industry Associations covering many sectors. Unlike in the West, where their equivalents are independent bodies, Chinese industry associations always have official links to one or more government bodies. Although they will follow the overarching lead of the government and the Party, they will take a role representing their Chinese industry and, being ‘inside’ the system, are a useful guide to government thinking.

Similarly, Chinese NGOs usually take the form of ‘Government-Organised NGOs’, nicknamed ‘GONGOs’. Similar to industry associations, they also have official links to the government, but nonetheless will take a role within the party and government to push the case for their cause.

China has its own, extremely popular, social media channels. These are hugely influential and are an important channel to audiences. The high degree of censorship amongst the official media raises the credibility people attach to word-of-mouth comments. This means that issues, especially amongst social media, can spread very rapidly.

Some international/independent stakeholders have a voice, especially the biggest international chambers of commerce such as the European Chamber and the American Chamber who, like embassies, have the influence to raise issues on a pan-industry level.

China does have fully independent local and international NGOs, but they are restricted to certain less controversial areas, such as the environment or development.

A More Complex Political Economy

At a macro policy level, the government aims to shift China up the economic value chain to a higher-end, high-tech, high-skills and sustainable economy, with greater emphasis on service and away from low-cost, low-value, energy-intensive manufacturing.

Foreign investment is no longer as popular in China as it used to be, and MNCs need to demonstrate that their interests are aligned with those of the central government, and are seen as a force for good for China.

China has an increasingly sophisticated regulatory system, although it still has teething problems. An example is the enforcement of the Anti-Monopoly Law which began in force in 2013, leading to many high-profile investigations into MNCs, but also accusations of unfair treatment from those concerned.

Fortunately the government recognises that creating effective laws and regulations needs input from stakeholders. Foreign companies, with advanced expertise, can offer insights into this process.

How can I conduct public Affairs in China?

In the Chinese public affairs space it is not sufficient to demonstrate your commitment to society in general; a successful public affairs campaign in China demonstrates that they are committed Chinese corporate citizens. Campaign channels are quite similar to those found in the West.

Direct contact with stakeholders is of course necessary. Relations with government needs to be managed by Chinese nationals who have an understanding and empathy with their counterparts. However, engagement should not only be with their head of government relations, and should embed contacts throughout their organisation, including among senior executives both in China and with global heads when visiting China.

But this is insufficient to stand out from the crowd. To build a significant reputation, MNCs should consider demonstrate value with broader Chinese society by building constructive, meaningful opportunities to demonstrate their value and enable dialogue with stakeholders. These can range from public engagements, discussion fora, corporate social responsibility programs, media announcements, consultation responses and more.

Underpinning all of these is the need to identify issues: a need to fully understand and react to the government’s policy initiatives, both at a sector and at a macro policy level.

MNCs should build up facilities to monitor, comprehend and react to changes in policy and current events with well-integrated public affairs/corporate affairs functions that can direct information quickly and effectively.

Conclusion

China is often not what people think. First impressions are often not justified and cause confusion. Nonetheless, basic mechanisms for public affairs are comprehensible. As in the West, Forewarned is forearmed. MNCs investing in China or considering to do so should prepare. Building a system to understand your environment friends takes time, but when a crisis hits, trying to turn a stranger into a friend can be too late."