By Alistair Nicholas
President & CEO AC Capital Strategic Public Relations
China at a glance
Political structure: autocratic state ruled by the Communist Party of
China since 1949. Capital: Beijing Other key cities: Shanghai, Guangzhou, Shenzhen, Tianjin and Chongqing Population: 1.3 billion Official language: Mandarin Chinese (Putonghua) Other languages: Large number of other Chinese dialects spoken in various
regions. Religion: Officially atheist since 1949, but large numbers of Taoists and
Buddhists; smaller numbers of Christians and Muslims. Economic structure: nominally socialist, but considerable economic
reforms have meant a flourishing consumer market and environment for private
sector business. GDP: US$2.6 trillion, making China the world’s fourth largest
economy. Average per capita income: US$1,290 per annum. Middle class: estimated at 80 million, based on annual income of
US$8,000 per annum. Number of companies listed in global top 500: 22. Number of Chinese on Forbes world rich list: 20
Background China has come a long way in the 25 years since it opened the bamboo
curtain to the outside world and began transforming its moribund centrally
planned economy into a market-oriented one. Next year its capital, Beijing, will
host the XXIX Olympic Games. In 2010 Shanghai will host the World Expo. Chinese
automobiles are now being exported to the world’s largest automotive market, the
USA, and a Chinese car manufacturer last year bid to buy Britain’s Rover and IBM
was bought by a Chinese computer manufacturer, Lenovo.
It’s China’s time.
China has a population of 1.3 billion, the highest in the world, and it is
expected to rise to 1.5 billion by the year 2030 – an increase roughly equal to
the current population of Brazil. During the same period, 300 million - more
than double the population of Japan - will have left rural areas in order to
find a better livelihood in the cities. The purpose of these figures is to
demonstrate that China is currently in the midst of massive scale changes.
China’s has experienced phenomenal double digit economic growth for more
than a decade. China is today the world’s fourth largest economy, after Germany,
Japan and the United States. It is expected to become the second largest by
2018, and to finally displace the US by 2026. For many countries China is now an
important source of a range of manufactured products from toys to automobiles,
and it is increasingly a net exporter of capital. Outbound tourists from China
are now becoming a major source of tourist income for many Western nations.
No government and no company can afford to ignore China’s rise. It is a
political and economic superpower in the making.
Despite the Government favouring continuing flows of foreign direct
investment into the country, China, however, remains a difficult market in which
to do business. Regionalism, infrastructure bottlenecks, language and cultural
differences, and nationalistic and even xenophobic sentiments can hamper the
success of foreign companies operating in the market. In such an environment
public relations becomes all the more important for success.
China’s Political Structure
Although China is nominally a multi-party State, the reigns of power are firmly
held by the Communist Party of China (CPC), which has ruled the country
continuously since 1949. Eight registered minor parties, which hold seats in the
national and provincial-level legislatures, are controlled by the CPC.
Although it is not a requirement under the Chinese constitution, in recent times
the Chairman of the CPC has also held the post of President of China. The latter
position, which is head-of-state, is elected by the National People’s Congress
(NPC) to serve a five year term. The NPC is responsible for monitoring other
parts of government, delegating authority and writing laws and policy. The
executive branch of government is the State Council, which is composed of a
premier, a vice-premier, councilors and various ministers. It is responsible for
handling issues of internal politics, defence, economy, culture and education.
The members of the State Council are appointed and can be dismissed by the
President.
The country has 23 provinces, five autonomous regions and four municipalities –
Beijing, Shanghai, Tianjin and Chongqing, the mayors of which carry ministerial
rank. In the local people’s congresses, elected deputies are responsible for
governing within their specific region and report to the State Council.
Economic structure and consumer market
For decades, the Chinese State owned and controlled all business and property,
providing employment with ‘Danwei’ (work unit) style housing for nearly
everyone. Since 1979, following reforms by “paramount leader” Deng Xiaoping,
Mao’s model of Marxism has been turned on its head by what the Communist Party
today likes to call “socialism with Chinese characteristics”.
But don’t be fooled – there is very little about today’s China that is
socialist. Economic and political reforms allow private ownership of property
and capitalists have been admitted to the ranks of the all powerful Communist
Party. Chinese cities have been transformed into modern metropolises of six and
eight lane dual carriage highways, steel and glass skyscrapers, high-speed
broadband, and satellite TV. Almost everyone communicates by a personal mobile
phone. Consumerism permeates every level of society as individuals compete to
look hip and own the latest must have fashion item and electronic gadget. The
automobile has displaced the bicycle as the vehicle of choice as people grow in
affluence and more than 80 million people are classified as middle-class,
defined as earning more than US$8,000 per annum.
Against this backdrop, Chinese business is on the move. The Chinese computer
manufacturer Lenovo now owns IBM’s computer manufacturing division, while Haier,
a manufacturer of white goods and mobile phones has been actively seeking to
acquire American and European companies. Some 22 Chinese companies, such as the
State-owned oil giant SINOPEC, are now listed among the world’s top 500
companies and are major investors in countries around the world.
China’s Media Landscape
The last 25 years has seen a paradigmatic shift in the Chinese media landscape.
In the late 1970s state-controlled government mouthpieces, such as the People’s
Daily, dominated the media scene leaving little room for anything but one-way
communication. The open-door policy initiated in 1979 was to widen the playing
field; further reforms over the last 10 years have taken hold leading to a
competitive media industry with a stronger link to market forces.
Currently, China has more than 2,200 newspapers; more than 8,000 magazines; more
than 900 TV stations (covering 88% of the population); and more than 1,363 radio
stations covering 86% of the population). Additionally there are a plethora of
Online news and information websites catering to every taste and interest.
Although Government control and political censorship of the media remain as
corner stones, privately owned media outlets are allowed. Consequently
competition within the media has become intense. Editors are increasingly under
pressure to boost sales and advertising revenue through sensationalist stories.
In this competitive media environment a number of new media players have been
pushing the boundaries, including by exposing government corruption and other
systemic problems. For example news stories of poor safety standards at Chinese
coal mines and of child labour in some regions which have made headlines
worldwide were first exposed at home by some of the more brazen media of present
day China.
Too often in recent times business has been caught up in the media’s race for a
good story. As is the case elsewhere in the world, truth has been the major
casualty, especially where nationalism and xenophobia have played a role. These
factors make public relations an indispensable tool for companies seeking to
participate in the market. Corporate reputation management, issues and crisis
management, and consumer PR are proving to be indispensable to success in the
competitive China market of today.
Public Relations in China
The public relations industry in China is as sophisticated as that of North
America and Western Europe today. But with an estimated 2,000 PR firms
nationwide it is difficult to determine which can best assist a company with
implementation of a PR program.
The leading areas for public relations activity in China are: Beijing, Shanghai,
Shenzhen, and Guangzhou. Second tier cities, such as Chengdu and Kunming, will
become more important as China’s interior regions continue to develop, but they
are not there yet.
Beijing is the central area for public affairs, government relations (including
lobbying) and corporate reputation management, while Shanghai and Shenzhen are
more focused on financial relations as China’s two stock exchanges are located
in these cities. While Shanghai and Guangzhou have long been the two leading
centres for consumer marketing, many consumer PR programs today have a national
focus, even taking in some second tier cities.
Few PR agencies have truly national operations. The market leaders tend to be
based in Beijing and Shanghai. Some have operations in Guangzhou and Chengdu to
cover the south and central regions. But most second and third tier cities are
covered by affiliates that can only provide small localised operations, usually
managed by more capable agencies based in Beijing or Shanghai.
China remains largely regionalized. For example, Sichuan Province alone is as
large as France and has a population of more than 87 million. It has its own
dialect and a culture and cuisine that is different to other parts of China. It
is therefore vital to find PR expertise that understands the complexities of
China - from its opaque political system and rapid economic growth, to its
regional differences, and its increasingly aggressive media environment.
If China is important to your global business strategy it is imperative that you
make PR a part of your China business strategy.
