This is the last article in my Getting to China series. Today I’m focusing on the 5th P in the 5Ps of Global Marketing Framework, Politics, as explained in my book, The China Factor: Leveraging Emerging Business Strategies to Compete, Grow and Win in the New Global Economy.
The influence of geopolitics on trade is clearly demonstrated by the United States-China trade dispute, with its rippling implications on other countries. Incorporating politics into your business strategy is important, whether you’re selling internationally or trading domestically. You may be thinking, ‘Why do I have to get involved in politics? Can’t I just leave that to the government?’ A closer look at politics in the context of my Global Marketing Strategy Framework will help you understand why it’s an essential element of your business strategy, particularly in emerging markets like China.
Using politics to influence business decisions from the top down
Politics in this context refers to government relations and the geopolitical dimension of business. The Chinese are experts at combining politics and business to favourably influence trade or business outcomes. Understanding and embracing political influence has been a key success factor in China’s rapid global expansion. This takes place at the highest levels of business, including government-to-government. It sometimes involves using trade agreement negotiations to impact purchasing decisions and vendor choices.
China’s public and private sector work together
The Chinese government is very integrated with its private sector companies. The public – private relationship in China is strong. The government plays a significant role in supporting international growth of Chinese companies, directly funding businesses for their global expansion at times.
China’s government bureaucracy can be a maze
There are challenges when it comes to navigating the complexities of the Chinese government when you’re trying to establish business there.
The rules of market entry to China aren’t always clear. There’s no set way for you to register your business, provide credentials, follow a checklist of requirements and establish your business in China. The road can appear windy. Market entry can be a lengthy process, and it’s not uncommon to experience road blocks. It’s also not always clear who you should contact in the government, which is why having local connections is often the best way to get your business going in China. Finding trustworthy local partners on the ground in China is essential. The key word is trustworthy - and effective partners.
Conditions for market access
It’s often necessary to partner with a local Chinese company to gain market access. Such joint ventures or partnerships may suggest imposing majority interest for the local Chinese company. This can be tricky because it often entitles the Chinese partner to your intellectual property.
Think long and hard about the terms of these agreements. Access to the Chinese market can be attractive. You may be tempted to agree to unfavourable terms just to ‘get in’. But give the terms serious thought and be aware of what you are agreeing to, so you won’t have regrets later.
3 ways to navigate politics in China
Politics in business can be complex, difficult and awkward, but there are actions you can take to successfully incorporate political strategy into your business strategy.
1. Expect politics to be a factor when doing business in China
Take a long-term view of the business process in China. Know it can take time to get the agreement you want and that the road to success is not always clear. Become acquainted with the government engagement process. Moreover, engage someone on the ground who will be on your side, knows the system and to guide you accordingly. Consider partnering with private sector execution experts who know the local business culture and will act as your representatives in China.
2. Engage your own government to help you
The Canadian government has a multitude of programs and representatives available to help you navigate the intricacies of getting to China. Learn more about what government services are available to you and partner with them. Connect with your regional trade commissioners, who have relationships with your international customers and can get you an introduction, vet buyers and represent you locally. There are also trade missions that can facilitate expansion explorations.
3. Get your company’s government affairs group involved
When I led a competitive sales support program at Cisco Systems in the U.S., I realized that working with the U.S. Department of Commerce was important to ensure our sales teams worldwide could be competitive. I enlisted our senior vice-president of government affairs to leverage her relationships at the U.S. government in Washington DC. This helped us flag any unfair trade practices and enlist the assistance of the U.S. government to advocate on behalf of our sales people in market.
If you don’t have a government affairs group, consider appointing this responsibility to one of your employees. Solicit your government’s assistance and share your concerns and challenges in international business with your government representatives. They can be a valuable strategic partner.
The global economy requires new business practices for greater success abroad. This means embracing new dynamics, adapting, and adopting new approaches. For more guidance, check out the courses and workshops at Global Business and Innovation Academy or read The China Factor: Leveraging Emerging Business Strategies to Compete, Grow and Win in the New Global Economy.