Aligning Your Government Relationships
One of the most challenging notions for foreign companies to grasp is the need to manage your network of government relationships. For small companies, it’s pretty easy to manage. For mid-tier and larger companies, this is no easy task. But don’t get too hung up on the complexities of it all. This section can help you understand the way you need to operate at certain levels within government circles.
Taking the bottom-up approach for smaller firms
For a small foreign company that’s likely operating in one location, take a bottom-up approach to developing relationships with government officials. You’ll likely be working with more junior people in the government ranks when you first get started in China. Over time, you eventually want to make connections to the highest level of the local government. Usually, this highest level is the mayor of the city or town where you’re establishing your business. Meeting the local officials and getting alongside them is the right thing to do.
You’re likely not obliged to follow the formal protocols you’d likely find at the higher levels of the Chinese government, so be sure your team on the ground makes an effort to socialize with these contacts outside of the usual business activities. This activity may be banqueting or a night out drinking with your Chinese government contacts. In some places in China today, it may even be a round of golf.
Meeting in the middle: Managing multiple levels of government
If you’re a medium- or large-scale company doing business in China in more than one geographic area, you’ll likely be managing multiple levels of relationships with government officials. You need to have the right government support in the geographic area where you plan to operate. You may need assistance at the national, provincial, city, or even township level.
The big picture for your company in China may look something like this: Your business is regulated by a central ministry in Beijing that exerts considerable power over national policy in your industry. The ministry is influenced by the government’s leading think tank that reports to the State Council. The regulatory officials also have local representation in the province and city where you operate your local businesses. Your biggest Chinese competitor has good government contacts at the national level. Your nimblest local competitor is tight with the provincial governmental leadership. But another Chinese government institution — yet another government-supported think tank — also advises the regulatory commission for your industry in Beijing. It so happens that your biggest foreign competitors are trying to influence industry developments with this think tank by financially supporting an independent study of regulation of the industry. As you can see, your company and your competitors can be quite active within many different levels of the Chinese government.
Joining the top to the bottom
If you have to deal with multiple levels of government, a good approach is to make the top meet the bottom. This idea doesn’t mean that that senior officials from one level of government need to meet other officials. What it means is that you may need to connect your network of government officials in a way that maximizes your chances to push through an approval. Pull the right government levers by using upper-level connections to help you while respecting the position of more local government officials. After all, local government officials don’t necessarily like being told what to do — especially if it reduces their influence or power. Therefore, you need to strike a balance by managing the mandate coming from the top officials with the need to stay onsides and work with the local government officials. This idea is especially true when your company is seeking approvals from government officials that cross geographic boundaries in China.
Make as many contacts as possible so you can cover the wide base of relationships that you may need to call upon to get the job done. The more-senior government contacts your company knows may have some influence over provincial and other local officials, but even senior officials from the central government can’t get everything lined up for your company at the provincial or local level. And often the provincial and local government leaders can’t get things completely organized for you up the government chain of command.
Lining up the levels
One of the most important activities for foreign companies operating across China is to align the interests of both the local government and the provincial or central government. The trick is to serve all these masters well.
Your local team can extend your Chinese network to reach the right relationships with multiple levels of government officials — from local and provincial leaders and possibly national, too. That way, your company can make contacts and gain influence not only up and down but across the Chinese government structures that manage, regulate, or impact your industry. Without having the right relationships in place at various levels in the Chinese government, you’ll find that getting things done across provincial borders is much more difficult.
Getting a strong recommendation from one government official can help your company build relationships with other key influencers in China. Build trust with government officials so they have no hesitation in recommending you or your company to others. (For more about building trust, see the following section.) Connecting one government official who really knows and trusts your company to a new government contact can help smooth the way with new government officials, who may have some lingering doubts about your firm or its dealings.
