Managing Government Relationships in China

Wednesday, July 20, 2011 9:17

Meeting government officials, and getting a picture with them in China, is one thing.  Working with them is a whole different animal, and over the course of my time in China I have had a number of experiences for both (although I am not one for pictures).

In many ways, the interactions that I have had with officials have been some of the most interesting in my time here, and with a number of my clients and my own projects involving government agencies on some level, I thought I would share a few things about what I feel makes for successful government relationships.  Or at least provides for the best chances:

1) Having a clear value proposition (product, project, or partnership) that is aligned with the objectives of the organization you are in discussions with.

This is a lesson I learned most recently with one client as we discussed a nationwide program with two agencies.  Agencies one was operationally the better partner, had more experience with the type of partnership we were discussing, but the alignment was not there as the goals of the organization (and the way they were measured by their superiors) were quite different.  which for the managers we were speaking with there was nothing but risk.  If the partnership succeeded, they would not be rewarded, but if there was a failure.. then they would be punished.

So, make sure there is alignment.

2) Understand the scope and scale of the potential partnership

Imagine being a cleantech firm with the most attractive technology, terms, or price.. but because your manufacturing is based in the EU.. and you can only supply a fraction of the need.  Why would a government who is looking for scalable solutions buy your product?  This is an issue many firms face, and really fail to realize that they face it.

The fact is that there are areas where foreign partnerships are needed, and needed in a big way, but if a firm cannot support the market for that need then it is not a solution that will rank as highly as a local firm who will risk it all to scale to the government need.

3) Have the necessary internal structures ready to manage the relationship.

Working with the government requires meetings.  a LOT of meetings, and if there is anything that adds to those meetings is it when the organization that they are working with is lacking the size, structure, and coordination that they are looking for.  If they are working with you, then there is likely a measure of risk that they are facing, and the best way to overcome their fears of instability (or failure) is to have a tight reporting structure who is geared up, anticipating the government needs, and is walking into the room with all the answers.

Walking into a meeting any other way will result in more meetings.. and more oversight… until the partner is comfortable again

4) Learn the difference between what official say, and what they (can) do

This is honestly one of the ones that  I have the hardest time with.  I am someone who (typically) acts first, and then speaks, but in a number of my interactions what I have found is that a lot of brainstorming occurs in meetings .. brainstorming that are in some ways used to place pressure on the counter party..  pressure that, if appropriately identified and deflected, can deflate through a range of responses

In the meeting, they are the master of their domain, but when it comes to actually executing, it will be their teams doing the work..  so, it is important to remember that there are things that are simply easier said than done… and things that are very difficult to speak about, but easily accomplished.

5) Be Prepared to Give

I was recently in the audience where James McGregor was speaking to a group of students and by far the best line of the speech was when he recounted the words of a leader he was speaking with…. that “If western firms want to be treated like Chinese firms, they should start acting like one”

I was once naive to think that I could ask for the moon and give nothing for it.. and many firms are no different.  Being accepted is something that can be very rare, and the opportunities once accepted can be very interesting, lucrative, etc… but there is a cost.  Perhaps it is giving up a bit of IP, or accepting the resumes of friends, or working with organizations that (while somehow aligned) you’d rather not… it is part of the game

Beyond these, and these are perhaps my top 5 for now, keeping an open mind when meeting with officials is really the only way to proceed forward. In one of my recent partnerships, what started off as a small and well defined project resulted in a partnership that is now growing in ways never imagined. It is one of those cases where the precedent was set, the partnership proved itself, and the curtain was lifted.

So, while there are certainly times where the partnerships can be tenuous and demanding, there are times where they can be rewarding.

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5 Responses to “Managing Government Relationships in China”

  1. Chris Devonshire-Ellis says:

    July 21st, 2011 at 9:19 am

    “Don’t take pictures with them” Ha ha. Especially not when quoting RMB/USD currency movements that they meant to be secret and off the record. Very droll. – Chris

  2. Rich says:

    July 21st, 2011 at 9:28 am

    HAHA.. yeah. That has certainly been proven to be one of the most interesting ways to develop a relationship!

  3. Andeli says:

    July 24th, 2011 at 6:13 am

    One could also go the other way: “The best way to maintain a good relationship with government employees is to avoid them as best as possible”.

    I think that one has to view government agents as someone that has to exercise a function. In countries where public procurement or public work is not completely transparent this function and personal interests are entwined. This means that you never know if you are talking to the government official or the private individual. This is why officials who do not clearly separate their function and their personal life will be schizophrenic as regards to the issue mentioned in 4). In China so many rules, laws and regulations change or are rewritten all the time that no official will be able to keep a promise or exercise his function in the agreed manner for more then 6 months. The best way to maintain a relationship to a government agent is the ask direct questions and at best let them know you know the laws and regulations that applies to their area. Besides this one should just stay away from them as best possible. To start maintaining relationships or doing any of the things mentioned in 5) is to start asking for a world of trouble down the road as the officials personal interests suddently become more and more important. What one needs from officials is a legitime proof of right to operate. After getting that, one should be on his way.

  4. Bob Shead says:

    July 30th, 2011 at 2:32 am

    @Chris – great to see your sense of humor is still well intact! Good to see you alive and well and thriving. Cheers

  5. Chris Devonshire-Ellis says:

    August 9th, 2011 at 4:56 am

    In my case, having upset a Minister – even though the issue was largely caused by him – the best policy was to publically apologise. That may have been humbling and embarrassing, however it did put a lid on the issue and prevented the situation getting worse. The last thing any foreign business wants in China is to be crossing swords in China, in public, with (very) senior government officials. As a result, I survived what could have degenerated into a very damaging and potentially fatal disagreement over who said what. Lessons learned indeed. It’s survival that is key, face can always be rebuilt. – Chris