Knowing Why You Want to Connect with the Chinese Government

The Chinese government’s formal policy is to welcome new foreign investment with open arms. Under the surface, the reality is sometimes different. Government officials are under a lot of pressure to give Chinese companies more attention.

Your Chinese competitors are trying to influence behaviors from government officials. They’re attempting to strengthen their position and/or weaken yours. Therefore, you really need to develop and manage key influencers within the Chinese government. In this section, we explain what the government can do for you and point out some resources available to you.

Government relations can be more important in certain industries, including highly regulated ones, those using newer technologies, or those offering nontraditional selling mechanisms. For example, financial services, Internet companies, and telecommunications companies come under much closer government scrutiny. If you’re in these industries, you need to spend a lot more time staying on top of your government relations.

Getting official assistance

The Chinese are trying pretty hard to make investing in China easier for foreigners. Here’s how:

✓	China’s Ministry of Commerce (MOFCOM) has set up a division called the Investment Promotion Agency to cater to foreign investors.
✓	Provincial governments have special services to assist foreign investors. For instance, Sichuan Province has set up the Sichuan Provincial Investment Promotion Bureau (SIPB).
✓	China has created special zones to attract foreign companies through incentives. For example, the Tianjin Export Processing Zone (TEPZ) waives import duties on machinery that’ll eventually be used for manufacturing products for export from the zone.
✓	Trade shows and fairs routinely take place throughout the country. Many Chinese cities even send trade and investment representatives on missions overseas to drum up new investment. The largest and most famous Chinese trade fair — the China Import and Export Fair — has kept going for more than 50 years. Sponsored by the Chinese government, this so-called Canton Fair is held in Guangzhou in the south of China twice a year, in spring and the fall.

For more information on agencies, trade shows, and other government services related to investment, visit www.fdi.gov.cn.

Gaining guidance and support

Often, government officials can guide you well. They can help you set up your company and keep your business running smoothly. For example, they may be able to help you get more electricity to keep you going 24 hours a day. Government officials often have the final say in approving your business venture or approving your new building site, so cultivating relationships with officials can help these processes along. In addition, many local governments also are the decision-makers when giving out incentives to set up shop in their city.

Don’t let government relations drive your business strategy. Sometimes foreign companies get so awestruck about the potential opportunity in China that they place too much emphasis on what government officials tell them. But you shouldn’t, for example, choose the location of your factory based solely on incentives offered by local officials. Don’t get fooled into believing that government officials can make all your problems go away. Decide for yourself what’s best for your business.

Some government officials can talk a good game and make certain promises when they’re courting a foreign company. Before you make any commitments, check around with other foreign companies that recently may or may not have made an investment there. (Of course, you may not want to contact your competition while checking around!) That way, you can check the local government’s reputation before you make any plans.