Some thoughts on Government Affairs in China (article 1)

In 2015, I left the Ministry in Central China government where I worked over 10 years and began my career in private sector from the angle of government affairs. My role changed from policymaker to a company employee, and my perspective changed from macro to micro. Government Affairs is a good angle I could use to enter the operation system and business logic of enterprises. It’s never easy during the transition, especially the companies I served are from different countries, in different developing stages and different sectors. I assume that, there is no other job type as typical as government affairs, which meets diversified  expectations, creates different values that cannot be standardized. It also requires versatile abilities to become an excellent “enterprise diplomat” in front of the government as well as provide guide & guard to the company, even engine of a company’s development. The people should be not only in deep understanding of the government system, thinking logic of officials, and industry developing tendency, but also a salesperson’s tactics and mind-reading skills. He or she should also has a wide range of knowledge such as legal, social governance, politics, geopolitics, and enterprise governance, awareness of technology and product development as well as strategy and courage to roll up the sleeves and make things happen. In most occasions, this person should has “a rod of steel through the back and loads of charm”.

A multitude of feelings surge up when I recall the past and write down my thoughts on this role in recent years. It might also tickle curiosities from laymen who regard government affairs mysterious and intricate. Each reader has an unique understanding of Hamlet. If you don’t agree with me upon some conclusions, just reserve the differences then find the common ground and enjoy interesting perspectives.

What does it mean by government affairs, and why we need it.

Before answering this question, firstly we might think about what’s the function of government and the role of enterprises in macro social governance and economic development.

Enterprise as the key party of social economy, belongs to so-called private sector except for State Owned Companies in China. With profiting purpose, enterprise provides products or services to the market, in the invisible hand of the market, to compete with others, develop and win by better competitiveness. While, the government, as “the tangible hand”, regulates activities of enterprises in the market by means of economy, legal and administration, considering more about public interest, fairness and social harmony, and things that private sectors would not do and couldn’t do. On one hand, government is the most important external stakeholder for enterprises. In China, because the governments have macro-control functions, such as legislation, administration and law enforcement, they sometimes could be vital to a company’s destiny or announce its business death. An order from government, a regulation or law could bring vitality to a sector, create a mega market or cause some companies to die immediately. Actually, it happens almost in every country despite in different degrees. On the other hand, companies are taxpayers and they’re the main drivers of science and technology transformation, providers of job opportunities, participants and promoters for globalization. The government formulates various laws and regulations to restrict and regulate behaviors of enterprises, while, reversely, enterprises influence government’s decision-making through different channels.

Government affairs in enterprise, in essence, nurtures the communication channel between the company and governments. Enterprises use this channel:

• to reach positive interactions with governments,
• via government this tangible hand, to connect with market, talents, capital and other factors,
• to lobby policies and laws, impact the formulation of policies which are related to the enterprises’ development,
• to obtain more development opportunities and space,
• and to create more friendly external doing-business environment.

Within different political system and the governance logic, role of governments diversifies. Therefore, MNC usually hire local people to deal with government affairs. It’s the most basic glocalization: localization in globalization. Unlike sales, finance, legal or R &D, the wide gaps between government operations, political ecologies, and the cultural and value imprints will make people who hasn’t accumulated many hands-on experiences with governments feel confused or lost. Many companies prefer people with previous working experiences in governments, which lay the common sense for them.

Cultural shock and social governance differences are the primary factors that a foreign company in China should get adapted. With thousands of years history, Confucianism laid the foundation of social value system in China, such as “Authority and Hierarchy” ,”individual rights and interests are secondary, collective unity priors”, “direct confrontation should be avoided in people’s interaction” “importance of self-image/Mianzi”. “Nation is higher than Society, Society is higher than individual”. On the contrary, in Western world, governments are with smaller and limited power, judicial independence, Separation of the Three Powers are the social governance foundations. People tend to let the invisible hand work, oppose authority, support checks and balances, encourage competition and defend human rights.

Thus, the Chinese government manages much more and more broadly than Western countries. The “Comprehensive Control” by the Chinese government is difficult to be adapted by Westerners and even is criticized frequently. However, in the eyes of the Chinese, this control is very natural. People get accustomed to looking to the government for everything including guidance, support, justice and financial subsidies, etc. The mission of the Communist Party of China, the ruling party is “to serve the People”, which also determines that it has to take on more roles than governments in Europe or America, get involved into economic activities more deeply, acting more like a “parent” sometimes.

Working on government affairs in China is more interesting because of the differences in role and position between central and local governments, which also require different capabilities and expertise of people for the job. Some people could talk with central officials very smoothly but couldn’t deal with the local officials, or even don’t understand their subtext.

Companies have a wide range of understanding on “creating more friendly external development environment for the company”, and usually have quite different expectations. In General, the government affairs function should include:

• Judgements on macro political, economic and industrial environment and policy tendency, including assessment on impact to the business and policy lobbying, which are vital to the company’s strategic decisions,
• Obtaining government support (tax reductions, government subsidies, land use, local employment preferential policies etc.) and maintain good reputation through interaction with the government at different levels,
• Supporting business development: product and market access, obtaining qualifications/licenses, governmental Business Development (B2G), government procurement projects,
• Advice to the company's strategic decision in fields of investment, joint venture setup, legal entity registration, whether to enter a certain business field or not, etc.,
• Daily communication to nurture a good and cooperative relationship with the government,
• Negotiation with the governments,
• And crisis management.

--Nancy Cheng