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Seeking the win win in government affairs

By Jonathan Stewart (chinadaily.com.cn)
Updated: 2008-04-16 14:48

China is unique, and if you want to do business here you need to understand it.

"People in the US and Europe are surprised: China has such a sophisticated government affairs industry," says Yuan Haiying, founder and president of Yuan Associates, one of the major players in China's growing government affairs industry.

Yuan says, "We seek a win-win-win between the three groups involved: China, clients and the firm.  We help the government and our clients create a mutual understanding, and we also promote friendship."

Over the last thirty years, the industries powering China's economic success are familiar: finance, manufacturing and services. But perhaps the more exciting ones are the less familiar niche industries. They suggest robust and diversified growth.

The government affairs industry is one such emerging niche. These firms are a third party connection between government bodies and firms from abroad. It is more than guanxi, or personal relationships.

As Yuan points out, "The situation here is more complex. China is changing from a country of rule by people, or relationships, to a rule by policy." In other words, rule of law is China's future, and the old way of doing things through personal connections is gradually being phased out.

But sustained economic growth of over ten percent also means a rapidly changing legal landscape in China as well. The newly created Ministry of Environmental Protection is an example of the quickness with which lawmaking bodies can change quickly.

The result, says Yuan, is there seems to be a calling for something. "Help China!" he says. In 2001, he points out that there were only 16 firms offering government affairs services. Now, there are over 100 and the number is growing. It seems the call has been answered. "This is the initial stage, not the peak, of government affairs."

Yuan's particular firm has three components. The first is the Western tradition of lobbying and communications, which Yuan learned himself during three years as Senior Vice President for Edelman Public Relations and three years as Vice President at APCO Worldwide.

Yuan Associates is also very Chinese. The second component stretches all the way back to China's Warring States period. They make use of one of the famous "nine disciplines" dealing with political strategy (zhong heng xue) in service of China's growing market economy.

The third component of the firm is their own experience, which Yuan says has been accumulated over the course of ten years. The firm's members represent a cross section of a wide range of backgrounds. Senior members include Michael Byrnes, former China President of Tyco China International and Huang Gang, previously the First Secretary of the Chinese Embassy to the United States.

Says Yuan: "We are a global service provider seeking harmony." The government affairs industry, in some ways, functions as a safety valve by reducing the likelihood of misunderstandings and putting a more human touch into relationships. In relationships between giant organizations like the Chinese government and multinational firms, a little human touch can go a long way.