What are the top two issues facing GR units in China today?
China is now in a ‘new normal’ environment, with a slowing economic development rate and people-focused development direction. GR people are facing the challenge, under this kind of environment, of learning how to continuously support their businesses by showing the Chinese government their value to the local economy. MNCs and foreign companies have been in China for a long time. When China first opened its doors, government policy was a little bit preferential to foreign investment – FIEs (foreign invested enterprises) represented “high end, advanced technology, best practice.” But now Chinese companies are advancing. Therefore, foreign companies now face competition from both Chinese domestic companies as well as international companies. GR people will need to work hard to demonstrate that their company’s unique value aligns with the Chinese government’s goals and agenda.
The policy environment is another challenge. A part of GR’s function is to understand, interpret, and/or input on industry policies. However, sometimes industry policy in China is hard to predict. Furthermore, the recent global environment has become more complicated. The U.S. will have a new leader and the EU is facing its own domestic challenges as well. Under the changing environment, China’s industry policy will unavoidably adjust to the changing environment. Predicting policy trends, providing input on policy making and interpreting policy correctly will continue to be a big challenge for GR professionals.
Do you think that Chinese government industrial policy is influenced by both the external and internal environment?
I think Chinese government industrial policy is influenced by both. The recent global environment is unique – the new U.S. president will implement his new industry directions and policies. Since the U.S. and China are the top two economies in the world, the external environment will inevitably impact China’s industrial policy. Other countries will also adjust to fit into the new global economic environment. From the domestic side, China has its own agenda. China has its five-year plan, so they have their own goals to achieve, and a roadmap to follow. In order to achieve long term governmental goals, the government needs to enhance different industries to develop certain types of advanced technology so China no longer falls behind.
Can you share two or three trends that show how the practice of GR in China is changing?
It is very clear that traditional guanxi is no longer that effective. A long time ago, when foreigners first came to China, the first word they learned was guanxi. The word is changing very quickly. Guanxi is a kind of mutual understanding – you need to work with your Chinese partners to go in a certain direction that benefits both parties. Effective communication is very important.
The second trend is the exposure and promotion of the current administration’s anticorruption campaign and government discipline initiatives. For example, the government now emphasizes official processes and regulations for government approval (every approval has to follow certain regulations and is agreed upon by a certain group of decision makers). This kind of environment requires GR people to understand government internal processes and regulations to establish an effective and open working relationship with government officials. You need to add value to their work through you and your company’s resources to help the government resolve their problems. You also need to work with them towards a mutually beneficial direction.
Another trend is that the generation of young officials has new experiences compared with the older generation. Some of them graduated with a doctorate; some have experience in the EU and America. Additionally, government officials are increasingly working at foreign companies and the government is opening their door to foreigners. For example, Zhuhai’s government hired a foreigner to be their chief representative in North America to help the city attract investment from other countries. Examples like this shows that the government is trying to open up and attract more talent from different areas. This is good for GR people, as the government not only learns more about MNCs and foreign culture, but also how foreign companies operate.
What has surprised you the most working in GR?
How technology is changing GR work. I learned that the U.S. Ambassador, Max Baucus, uses WeChat and has a lot of Chinese fans. Additionally, Chinese government officials are using WeChat to service foreign investment companies. Shanghai’s government set up WeChat groups (called “Foreign Investment Service Group” and “Foreign Investment Companies’ Family”) to include all the MNCs’ government affairs and public affairs people together with government related people, as well as quite a few senior Shanghai municipal government officials. These high ranking officials joined these WeChat groups to directly hear the voice of foreign investment companies. This is amazing stuff – technology changing GR work.
How does the government implement policies that affect companies like yours?
The government has specific teams working on specific policies. This team will collect inputs from industry and academic experts. Of course big companies, especially SOEs, play critical roles in providing inputs to government policymakers. MNCs and foreign investment enterprises are also trying their best to provide inputs through different channels both directly and indirectly, such as via platforms like industry associations and business chambers. Once industry policy is made, companies need to understand and interpret it for their business strategy; GR people will need to support these efforts in order to ensure the right business decisions are made.
Does GR play a great role in business strategy in China?
GR plays a critical role in China. Many big companies tend to set up a GR function to ensure open channel communication with the government. This is important because most industries rely heavily on policy directions in order to make business decisions or to ensure smooth operation. Communicating with the government is critical, especially in China where government still plays a key role in managing the economy. For example, the central government creates key industry and finance policies, while the local government manages local development policies. From an operations perspective, if your company has issues with customs, import-export authority, or even FOREX, these all go through government systems. The government’s impact is everywhere.
In what ways does the GR department help Honeywell do business in China?
First of all, for the company’s reputation and promotion, we need to let the government know who we are and what we do in China. Honeywell is a B2B company, so normally people don’t know us very well, even some officials may not know about us. Honeywell’s corporate social responsibility (CSR) program allows people to know we are a responsible company operating in China. We also arrange for our senior leaders to meet with senior government officials to discuss key industry development topics.
The second level is business development. We need to support the business investment decisions to guide Honeywell’s investments by communicating with the government to give us enough support for us to make a decision to invest. If we want to participate in a certain government initiative, like the Smart City Initiative, etc., GR needs to support Honeywell by understanding government plans. Also we need to make sure the government acts as our key stakeholder; they need to know enough about us so that they can make informed decisions on whether or not to use Honeywell’s technology to support their government projects.
Last but not least, we need to ensure the smooth operation of Honeywell. We need to ensure that our business licenses can be granted, factories have enough power supply to operate, the goods that we need for R&D can be imported, our foreign talents can get their work permits, and our local talent can get their hukou, etc.
You trained as an engineer. Why and how did you transition from engineering to GR?
For me, it was a pretty natural transition. The reason was, when I joined Intel Shanghai, I was in charge of our technology cooperation with university professors (higher education programs). This function in Intel working together with the public affairs function, which included public affairs, government relations and CSR. I worked closely with my colleagues in GR and understood the overall job scope of GR. When I had worked there for about two years, there was a GR opening. GR seemed closer to both company strategy development and operational support, so I applied for the job and I got it. Since then, I’ve been doing GR.
What advice would you give to someone starting out in GR?
From my experience, by working you gain experience and confidence. When I first joined GR, I was not confident at all. I didn’t have the experience to deal with urgent cases or demanding people. But after a few cases, it became common sense that people to people communication skills are important – you may need to do some homework as you need to know your key stakeholder well; you need to know the project’s direction so you have a clearer idea on objectives; and you need to know what you hope to achieve so you have a strategy to talk with the government. The more cases you have, the greater your experience. And you use experience to forecast what kind of challenges you’re going to face. Second, you need to show respect to government officials. Some people may think that because MNCs are Fortune 500 companies, they might be arrogant – but this isn’t how you should talk to the government.