by Charles Shen
March 15th, 2016

Ahead of the launch of the agenda for The 2016 China Government Affairs Forum, Weber Shandwick China’s Charles Shen explores how government affairs in the PRC is evolving and charts ways to drive effective engagement.

Most government relations practitioners have felt the profound changes currently underway in China and understand their implications. The stakeholder and business environments are evolving at a rapid pace and continue to create huge uncertainty and complexity. Because the government still sits atop this unique landscape, the role of government relations practitioners has also grown in strategic importance to any business wanting to operate successfully in China.

And yet, although government relations practitioners may understand the profound nature of these changes, many have been slow to recognise the changes required of them to operate effectively. An effective government relations practitioner must now embrace a broader approach and utilise a wider range of skills such as compliance and regulatory analysis, community and stakeholder engagement, and social media – a reality that has become ever more important in China’s dynamic stakeholder and business environment.

Recipe for uncertainty: Big societal shifts, market forces, and “winner takes all”

Big societal shifts are underway as China attempts to transition from an administrative, bureaucratic society functioning largely through interpersonal relationships to one that is mutually beneficial and rule-based. The country also continues “opening up”, with many economic sectors already highly competitive. But in spite of these changes, uncertainty still surrounds the government’s “decisive role” in the market, and many areas of reform – especially those surrounding SOEs – still remain largely aspirational.

The government also continues seeking cooperation rather than competition, and remains focused on supporting domestic “champions”. These economic and societal forces have given rise to an increasingly diverse array of stakeholders, who in turn possess ever-increasing expectations and demands of government and business. Empowered by technology, they are more assertive than ever, working to raise concerns and defend their interests through government advocacy, class-action lawsuits, and social media.

Seemingly in an effort to counter the growing strength of these newly-empowered stakeholders, the central government has consolidated and grown its power base. Like business, the government must also respond to their own stakeholder expectations. But in this case, when both the government and Party operate with the full support of the State apparatus, the stakes are raised and it becomes a “winner takes all” scenario.

Foreign firms have become an especially vulnerable target as the government seeks to raise domestic business standards by rigorously highlighting the compliance and quality failures of MNCs. In the past, these types of issues may have been dealt with discreetly via traditional government relations approaches and by utilising government contacts.

Today, just paying lip-service to compliance and the rule of law is no longer acceptable. Businesses must proactively and continuously seek to lift their own standards and keep them high. This is a positive development for the country.

New demands on government relations professionals

As is always the case, the new protocol creates both challenges and opportunities. The complexity of the situation outlined above obviously makes the job harder today. But it also means government relations professionals have unique, relevant and valuable insight to offer. Today, providing an understanding of the country’s business and policy landscape, as well as a perspective on future trends, is vitally important given the all-pervasive impact of government in China. This insight has also become more strategic than ever, and has helped proactively transform government relations officials into more than just “troubleshooters” making use of government contacts – an advantage that is slowly eroding in the wake of the country’s ongoing anti-corruption drive.

Given the evolving role of government relations professionals, then, here are a few areas which will only grow in importance over the next few years: 

  • Alignment and compliance: Finding opportunities to align with government initiatives and priorities is prudent for any business in any country, and will remain so in China. The same applies to ensuring high levels of compliance while raising the bar through active engagement with trade associations and government agencies. Implementing a compliance strategy and proactively understanding how regulators are likely to interpret and apply regulations will feature more prominently in the government relations skill set. This may require stronger legal and regulatory acumen, the ability to influence regulators, and insight into how these individuals see potential issues, which together can help identify areas of concern before they ever become a problem.
  • Winning hearts and minds: Beyond merely just aligning with government, government relations professionals best serve their businesses through a willingness to influence and advance the government agenda to win the “hearts and minds” of stakeholders and the general public. This means that the government relations skill set in China must expand to include stakeholder management and facilitation, a desire to understand and nurture public opinion drivers and key opinion leaders, and a mastery of community relations, social media, and CSR. Ignoring the public and stakeholders outside of government is no longer an option.
  • International, campaign-based style: The current political and business landscape has necessitated a more international and campaign-based style of government relations. Greater public engagement does not mean being in conflict with the government; to the contrary, there are many situations in which business can support government policy and find win-win outcomes. A cautious approach is indeed required, but caution should not become an excuse for inaction.
  • Aggressive advocacy: The involvement of government and their “winner takes all” approach means that some companies will be forced to take a more aggressive stance towards government decisions rather than the traditional “toe the line” posture. For example, strategies are likely to include being willing to publicly contest regulatory or court decisions or seeking public opinion and support through social media and online campaigns for policy positions that the government is reluctant to accept.
  • Creativity and social media: The creative use of social media is important to effectively engage with stakeholders at all levels. Equally important is creativity, and the ability to engage the public around an idea, mobilise multi-stakeholder support, and use all available channels to ensure effective community relations management and audience engagement.

This article first appeared here on Public Affairs Asia.

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