Go Global. But Not Without Political Clout

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Lobbyists (or “public affairs” / “government communications”) consultants have long been a feature on the business map in China, and it seems that globalizing Chinese businesses have taken note. Caijing magazine reports that an increasing number of Chinese companies are hiring lobbyists when they go global. Examples include:

    • Lenovo have hired Jeffrey Carlisle as VP for US government relations, the “first-ever in-house lobbyist for a Chinese company in the United States”. He was formerly an official at the U.S. Federal Communications Commission (FCC).

    • Bank of China hired Public Strategies inc. ahead of its pre-IPO US road-show (at a reported cost of US$85,000 a month).

    • The City of Beijing hired PR firm Hill & Knowlton in May, on a three-year contract, to promote the 2008 Olympics.

It is not surprising that Chinese companies are making these moves. They are seeking global market access, are learning “on the job”, and need to compete with locals, the local way – much as foreign companies have had to do in China.

The challenges they face are very real, and political opposition to CNOOC’s bid for Unocal’s, and Lenovo’s contested contract to supply computers to US government offices are just two examples. In the CNOOC case, Caijing reports that the company:

    “spent US$ 3 million to hire a 96-member team from Akin Gump Strauss Hauer & Feld LLP to pave the way for the acquisition…. Despite the firm’s considerable manpower, CNOOC ultimately lost its bid, not least because of the anti-China sentiments of several congressmen.”

Another problem was that CNOOC did not lay the groundwork, and build support, before making the bid. Instead they simply reacted to – but could not contain – the outcry. Don’t expect the same mistake to be made again:

    “Fu Changyu, the chairman of CNOOC…told The Wall Street Journal last month that the most valuable lesson he learned from the failed bid was that public relations and political lobbying should precede formal moves for acquisition.”

Making products cheaply in China is no longer enough to succeed and, in today’s politically-charged environment, market access cannot always be bought on economic arguments. If Chinese companies want to “go global”, they will find that value-added services, such as lobbying and PR, are among the few sectors where competitive advantage can still be found overseas.

China Lobby Curries Favor With U.S. Government

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