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  1. 1. Contact us: cindy.tian@edelman.com / +86 10 5828 6505 www.edelman.com Edelman China Public Affairs Update March 2013 FACING THE ROAD AHEAD: TRANSITION AND CHANGE DURING THE FIRST PRELIMINARY SESSION OF THE 12TH NATIONAL PEOPLE’S CONGRESS On March 14th , CPC General Secretary Xi Jinping was elected President of China and on March 15th, CPC Standing Committee member Li Keqiang was appointed as Premier during the first preliminary session of the 12th National People’s Congress (NPC). These two events marked the end of a significant leadership transition in China which had started in November with the 18th CPC National Congress. This transition comes at a crucial time for China as it continues to experience significant growth and development, and responds to the pressures of delivering on economic, environmental and social priorities under deeper scrutiny from the public. With the whole world watching, it remains to be seen how China’s new government will respond to current needs and deliver on crucial issues. And, for Multi-National Companies (MNCs), the challenge exists in understanding exactly how they can continue to find opportunity and success in China’s changing world. A CONFIDENT AND COMPETENT LEADERSHIP In a keynote speech during the Congress closing, Xi repeatedly used the term “China Dream” to illustrate the opportunities on China’s horizon. More importantly, he also referred to taking a uniquely Chinese approach in achieving this goal by mentioning a “Chinese road.” While Xi talked about “what” China can aspire to achieve, Li provided more of the detail on “how” China will do it by outlining the government’s three key priority tasks and providing proactive answers to the problems of food safety and environmental pollution. These coordinated efforts helped the two new leaders present a unified partnership to their people and the rest of the world. But, in remaining consistent with the recommendations outlined in outgoing Premier Wen Jiabao’s 2012 work report and the goals outlined in NDRC’s draft Economic and Social Development Plan, they also communicated a larger message that China’s new government already has a larger plan in- hand for the country. Xi Jinping (R) shakes hands with Li Keqiang (L) during China’s 12th National People's Congress (NPC) held at the Great Hall of the People in Beijing. (Image via: Xinhua/Li Tao)
  2. 2. Contact us: cindy.tian@edelman.com / +86 10 5828 6505 www.edelman.com A PRAGMATIC APPROACH TO REFORM During his first press conference, Li said the government will continue making economic, social and political reforms, despite potential challenges and difficulties that will take the conviction of “chopping off one’s own arms.” To support this, Li pointed to specific measures that will be immediately implemented, including: a freeze on government spending and hiring, stricter accountability for public funds, and reducing the amount of administrative approvals by one-third. These points came just after China’s legislative body approved a cabinet restructuring plan designed to reduce the number of ministries under the state council from 27 to 25. With these specific examples, Li presented the image of a new administration that will push through major changes in a “plain and simple” approach already championed during the 18th Party Congress, and reinforced through the Party’s current focus on frugality and anti- corruption. MNCS: TIME TO MAKE AN EXTRA EFFORT MNCs entering into or hoping to expand in China must make extra efforts to participate in China’s changing world, specifically: UNDERSTAND THE BIGGER PICTURE: There is a reason Xi used “China Dream” in his closing speech. In the coming years, much of what the government says or does will focus on achieving this goal by driving economic growth, changing consumption patterns and addressing the issues that come with both. Before offering to work with China, MNCs must first understand what the country wants to achieve and the challenges it might face. KNOW HOW THE GOVERNMENT OPERATES: Many international companies take great pains to learn about the officials and ministers in charge of specific areas. However, while it’s important to understand ‘who’s who’ in China, success can only be achieved if an MNC understands how the overall government operates. Before getting involved, understand the government’s priorities and strategy, and how this drives its institutions. BE IN IT FOR THE LONG-TERM: China’s government has been very clear that it will focus on driving domestic growth and consumption. It will also take a tougher stance on addressing social and environmental issues, and will do all this in a uniquely “Chinese” way. The likely impact is that the government will be more selective with what kind of investment it will welcome in China, and will set even higher standards and expectations for MNCs. To succeed, develop a long-term strategy and align your business goals with helping China achieve its goals. Premier Li Keqiang waves to journalists as he and four vice- premiers arrive for the news conference following the conclusion of the annual national legislative session on Sunday. (Image via: China Daily/Xu jingxing
  3. 3. Contact us: cindy.tian@edelman.com / +86 10 5828 6505 www.edelman.com HOW IT WORKS: ELECTIONS & APPOINTMENTS OF THE NPC One of the most significant agenda items of this year’s session of the National People’s Congress (NPC) was the election of China’s President and Vice President, and the appointment of China’s Premier and his Cabinet. While all bodies are nominated for positions, the voting process for state leaders (e.g. President) and council members (e.g. Premier) is different. First, the President and five other leaders are nominated by a leadership group within the NPC, called the Presidium. Members of the NPC (called deputies) vote for or against a nominee, and can provide alternate nominations if they want. However, before the Presidium makes its nominations for state leaders, the CPC Central Committee first recommends who should be nominated. Once elected, the President nominates the Premier, and the Premier then nominates the rest of his Cabinet. Deputies vote for or against these nominations, with a nominee receiving more than 50% approval to assume the position. While candidates are never voted down, the voting process has not always remained unanimous – in the past, some nominees have received low approval votes (though high enough to pass). To avoid this, most nominations and work reports are vetted with NPC members before the voting process starts.
  4. 4. Contact us: cindy.tian@edelman.com / +86 10 5828 6505 www.edelman.com Click on the above snapshot to take a closer look at China’s history of government reform, via China Daily GOVERNMENT RESTRUCTURING IN CHINA This year marked the seventh major restructuring effort by the Chinese government in the past three decades, with the aim of consolidating the responsibilities and authority of certain ministries to improve regulation and enforcement. It is also intended to reduce the role of government in certain functions, allowing the market and private bodies to step in more. The current restructuring was not as broad as earlier speculated, indicating that there are already challenges and barriers to driving change at a faster speed. With the completion of this leadership transition, China’s government ministries have been cut from 27 to 25 and several departments and agencies have been restructured or merged. Additionally, nine new ministers have been appointed, while 16 current ministers remain. HOW IT WORKS:
  5. 5. Contact us: cindy.tian@edelman.com / +86 10 5828 6505 www.edelman.com GOVERNMENT RESTRUCTURING IN CHINA, cont’d
  6. 6. Contact us: cindy.tian@edelman.com / +86 10 5828 6505 www.edelman.com THE IMPACT OF SOCIAL MEDIA Signs from this year’s NPC indicate that China’s new leadership has started to embrace important changes that will make them more relevant both at home and abroad. The Government Work Report, NDRC’s Economic and Social Development Report and China’s budget report were all circulated in Chinese and English to media before the Opening of the NPC; a “plain and simple” style was embraced by most attendees; and social media was used by both the government and the public to communicate about the sessions. For example, nearly 14,000 “tweets” on Weibo were related to Premier Li Keqiang’s press conference, with almost half tweeted during the week leading up to the conference and another half posted within 24 hours following it. “Meet China’s New Premier” was a trending hot topic immediately after Li addressed the press, and the topic of China’s “Two Sessions” (the popular name for the two-week long meetings of the National People’s Congress and the Chinese People’s Political Consultative Conference) ranked 19th out of 100 for the week, with more than 5,296,000 comments tweeted or re-tweeted during the week leading up to the Congress. And it’s not just China’s netizens who are getting involved – China’s government has also recently taken to Weibo, with an estimated 60,000 government-related accounts on Sina Weibo currently dedicated to ministries or officials. China’s State Council, currently uses Weibo to publish legal updates and announcements to more than one million followers. And, although it doesn’t currently interact with fans, this could one day change with Weibo’s dedicated section for government communications. Perhaps in a sign of the times, one of Weibo’s most rapidly-growing accounts is dedicated to tracking Xi’s public appearances. The fan-created account, named 学习粉丝团 (“Learn from Xi Fans Club”), was created just days into Xi Jinping’s role as CPC General Secretary and has since racked up nearly 13 million fans. These small but significant changes indicate that China’s government is trying to maintain its relevance with a much more engaged Chinese population. It also shows that the country’s leaders are becoming more aware of the role of social media in public opinion, and the crucial need to actively participate in this space.