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Putting the PR in the PRC: Public Relations in China is broader than you think... July/August 2000 Establishing a business in China requires a clear understanding of the role of government, far more than is normally required in the West. In this article on the role of PR agencies in China, the PR expert who established Saatchi and Saatchi in China and lobbied to reduce the import duties for Mars chocolate to 55% reveals some of her secrets. Back to Awakening Dragon Index
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Introduction
It took the world's navigators thousands of years navigating the oceans before they found great new continents. Similarly, to sail the turbulent seas of China's government, economic, business, social and cultural worlds, the services of seasoned navigators including public relations professionals, is both beneficial and vital. Here, guest columnist Ms Yu relates some of her experiences in helping foreign firms achieve their goals in the new China. Her biography is at the end of the article. Piset Wattanavitukul
Public Relations as a field of professional service, established itself in China around 1984. It was the government's media, a daily newspaper called the "Economic Daily" that used the term "public relations" for the first time that year. In the same year, two of the world's leading public relations firms entered China and began to offer their services. The opening up of China and its economic reform policies have offered incentives to foreign investors, opened up opportunities for private enterprises stimulated modernization of state enterprises. In the process, several forms of business enterprises have emerged. At the same time, different management systems have also emerged. These are sino-foreign joint ventures, sino-foreign co-operating ventures, wholly foreign owned enterprises, state enterprises, private enterprises, and business enterprises that were formed to replace some former government agencies. They included enterprises previously managed under the old "Planned Economy Systems" which functioned and produced according to pre-set targets. Modern enterprises operated under "Market Economy Systems" which functioned according to their management's objectives in view of the interacting market forces. There were enterprises organized and managed like a government agency and those modern enterprises that were organized and managed under imported foreign systems and concepts. While some enterprises strived hard to reform themselves and to modernize their management under the new systems, many made only superficial or cosmetic changes. Some of them chose to employ public relations professionals to help them with the creation and/or publicizing of their new image. Some managed to gain important and vital access both domestically and internationally. Some have worked their way to listing on the stock exchanges overseas. Others failed even after huge sums of money were spent on publicity. Their efforts in this transitional period achieved only the equivalent of those walking around in modern western business suits a hundred years ago while keeping the long "pig tails" and the "melon caps" from the Qing era. During the past decade and a half of professional public relations in China, we have concluded that traditional methods of publicizing by saturating the media at huge costs yields very little within the new economic system. We have had to tailor-make plans and manage the execution for each client in order to help them achieve their desired objectives like name or brand recognition, public image as the industrial leader, reinforcement of public acceptances, or increasing market share. Based on the common needs of clients from various fields, we have carried out some training with reference to the China market for clients in the areas of public relations, corporate advertising, market surveys, and governmental relations and co-ordination.
In providing our clients with public relations services, we also provide market survey services. We are different from typical market survey companies in that we work closely with clients in the formulation of the marketing strategies, sales plans, and sales promotion activities. Furthermore, utilizing our professional channels, we also help the clients monitor the outcome of the execution and continue with follow ups, plan adjustments, or reinforcement plans. In accordance to the client's needs and objectives, we conduct market surveys in both the vertical and horizontal directions. Vertical market surveys are usually required by industrial clients while horizontal surveys are mostly required by clients dealing with consumer products.
Vertical Market Surveys analyze the governing structures relating to the client's business and/or products - the government's policies, organization, and influences relating to it. Here is an illustrative case example: In the process of China's opening up and reforms, a number of governmental agencies have established many administrative regulations, some of which to protect their own interests. Some of these regulations are not only inconsistent with generally internationally accepted practices, but many of them are either contradictory or counter productive to the national policies of opening up and reform. In 1995, a government agency issued an administrative regulation called "China's Environmental Regulations for Chemical Products Imports and Exports." This regulation made the normal business operations in China impossible for several international chemical firms. Being engaged to represent one of the major international chemical firm, we were commissioned to embark on a study on "The trends and attitudes of the regulation, the relevant agencies and officials." We contacted the National Ministry of Economics and Trade, customs, the Chemical Industry Ministry, the National Environmental Protection Agency, and the National Assembly's subcommittee on environmental protection legislation. We discussed the issue with scores of relevant officials at various levels and obtained their positions on the matter. Based on the result of that survey, we developed a strategy to convince the relevant officials and departments of adopting internationally accepted practices. One of the most important reasons that China was slow to become a member of the WTO is that it still has many regulations restricting foreigners in some key industries, including telecommunications and finance. While awaiting the eventual opening up of these areas, we have also administered surveys for some clients in the telecommunication industries. The survey analysed the telecommunication industry's structure, the relevant regulating agencies and legislation, the process of legislating involved, trends, and the impact on the prospective investors. Through years of information gathering, we established our own databases on a number of highly specialized business sectors including elevator maunfacturing, power generation, and fuel supply. Working with government departments we were able to develop the cross-sectional data required for succesful business strategy. Another example is the research we carried out for a foreign manufacturer of asphalt for road surfaces. To aid the client's ambition to build a very large production plant for asphalt in China, we examined the various deep sea ports for raw materials import and transportation facilities to tentative plant sites. We also researcherd road construction plans during the current "five year plan" and the next "five year plan." Due to the vastness of China we had to provide information for different climates and terrain in different parts of the country and their potential impact or road surface materials plus the attitudes of the relevant officials in various geographical areas and their impact on the sales.
This industry-wide horizontal survey is a parallel study of the market for consumer products such as beer, health food, chocolate, cleaners, personal care products, and cosmetics. The surveys can also help in the selection of the locations of fast food restaurant outlets. We often work with other market survey companies in conducting studies nationwide. Surveys could be aimed at the consumers of different income levels, different consumption preferences in different parts of the country the different market development prospects for various cities. Pre-market surveys for new products help to assess market opportunities and the competitive environment, assisting the client in arriving at optimal product design, pricing, distribution strategies and sales promotion plans. Examples of post-market studies, include established retail monitoring systems in order to obtain feed back for the client's follow up plans and actions. Horizontal marketing surveys are not as delicate and as complex as vertical surveys. There are many firms offering services and information in industrial surveys. However, horizontal surveys also have their problems. A classic case example involves a company which was a major sponsor of the Olympic Games and had sponsored several individual sport events attempting to gain the endorsement as the "overall" Chinese National Games' sponsor. However, there was insufficient understanding of the agencies involved to identify which government agency possessed the authority over the organization of national games, and which agency possessed the authority to grant the approval of the "overall" endorsement. It spent several years running around without achieving the intended result.
In examiming the conditions under which an enterprise can succeed in China, I have chosen to start with market surveys for good reason. Public relations have been an integral part of business success, and market surveys are the vital fundamental first steps to assure satisfactory outcomes. In discussing the vertical market surveys, the horizontal market surveys and the case samples, we hope to share with readers our experiences in this China market. The mere conventional market surveys have proven to be inadequate. The firm must gain insight and understanding of the framework, tradition, and procedures involved in this country where the "planned economic systems" and the new "market economy" are still inter playing their roles and impacts. Unless the business environment is clearly understood, charted, and piloted, time and expenses can be wasted.
We have often been called upon to conduct training programs for both businesses in general and specific programs for specific clients to develop on-the-ground PR Human Resources. These training programs can be categorized into 8 groups: 1) Government Affairs Training After working in China, many expatriates arrive at the consensus that mere understanding of the market economy system, the product knowledge and the management expertise from abroad are still not enough to assure successful operation and business development. Top executives must understand the Chinese government structure, the functions of the relevant government agencies, and the policies and regulations at all levels. With these aims, we have organized some training for key managerial, public relations, and business development executives involved in foreign ventures. The contents of the training included the following key elements:
Crisis management training is particularly valuable for consumer products, chemical industries and enterprises with high crisis-risk exposure. The contents of the training program include the types of crises and their management approaches, causes of the crisis and strategies for management in crisis situations, diagramatic analysis of the development and management of the crisis, pro-active approaches to crisis prevention, simulated training and the establishment of crisis management manuals. 3) Communication Training Most executives in Sino-foreign joint ventures have experienced difficulties in correctly and accurately perceiving the intentions and actions of their local counterparts. These difficulties are not limited to the communication difficulties caused by language differences. More important is the understanding of the Western cultural background and their methods of communication. This training is suitable for both Chinese and the foreign executives. 4) Media Management Training In the Information Age, businesses are constantly under the watchful eyes and scrutiny of the media. Some businesses opt to hold occasional press conferences or to invite media representatives to their important functions. Managing the media is vital and is in itself a whole book of knowledge. The approach by some businesses to rely on "paid publicity" may not meet their enterprises' objectives. Neither would such a practice be a desirable long-term media management. Key enterprise executives should be trained to possess good media handling techniques. This training program includes the theory and practice on the functions of the media and journalists, the journalist's character, news information collection methods, and the effective handling of journalists. Some of the training programs are geared for enterprises' top executives to enhance the benefits from their contacts with the media. Also included is preparation for interviews and press conferences and the preparation of press releases. 5) Capital Markets Communication Management Training As enterprises develop along the line of the Market Economy system, more seek entry into the capital markets both domestically and overseas. Enterprise leaders must learn the channels and methods to communicate with those markets, particularly the overseas capital markets. This training program offers participants detailed information on the structure and regulation of each capital market, such as, the Hong Kong Stock Exchange, the New York Stock Exchange, etc. An important part of the training is the understanding of the different regulations between "A" share listing in China and the listing of common shares overseas, plus how to reconcile accounting and financial practices to qualify for overseas listing. The preparation and execution of Road Shows and the design and production of the related documentation and materials are also essential parts of the training. 6) Marketing and Distribution Strategy Training When a training course in marketing and distribution strategy is designed and conducted by a public relations firm, it necessarily includes experiences from a professional PR angle. Normally this training course includes strategies for product design, product positioning, market segmentation, corporate, brand and product images, sales and promotion campaigns, and market monitoring methods. 7) Management of PR Personnel Many enterprises have their own Public Relations Department and personnel which carries out functions varying from reception, secretarial to government relations. For some, the PR Department concentrates more on the enterprise's internal affairs. When the enterprise's PR department aims to carry out work similar to an external public relations operation, we also offer training programs for them. This training program usually includes the planning and objectives of public relations activities, planning for large scale or formal public relation functions, and the coordination and the uses of external servicing professionals. 8) Public Relations Company Management Training Since the beginning of the public relations profession in China, enterprises calling themselves "public relations firms", have offered a variety of differing services. We design training programs in order to help these firms become truly effective and responsible professional service providers.
Ms Margaret Ya-Fei Yu has specialized in government relations in her 15 years career in professional public relations in China. She is best known for her familiarity with Chinese government organization and her skills in communicating with the "right" person at the "right" time. Two of her proud accomplishments were winning the 55% import duty reduction for "Mars" chocolate and obtaining the approval for the British advertising company Saatchi and Saatchi to set up in China. She was also the first to obtain the permission to establish a joint venture public relations firm in China. She is known for her experience in Capital Market Communication training. In this area, she provided vital services to facilitate the overseas listing of several major Chinese companies, among them, Qingdao Brewery, ING Fund,. and the Harbin Electrical Power Group. She provided governmental agency communication training for P&G group and other foreign investment enterprises. She has also provided professional public relations services to well known companies such as San Minguel Beer, Eastman Kodak, Dunlop, Hong Kong Telecom, and General Motors. She was the Director of the Government Relations affairs with one of America's largest public relations firm in China. During her years there, she carried out effective work for clients in the areas of Crisis Management, Corporate Image Campaign, Marketing, Media Management and, of course, Government Relations. She is a member of the China Public Relations Association, and the China International Public Relations Association. She is the Director of the China Public Relation Journal and the China Public Relations Year Book Deputy Editorial Director. She has written numerous articles and gave many lectures and training on subjects of public relations in China. She was educated and trained as a lawyer in Commercial Law prior to becoming the Marketing and Sales Manager of "E-Li" one of the largest food company in China, before entering the field of Public Relations. She established Ya-Ning Public Relations Company in 1996, and is currently the company's president. She can be contacted through Awakening Dragon's regular columnist, Mr. Piset Wattanavitukul at granddragon@sina.com or pisett@hotmail.com
| Piset Wattanavitukul is Managing Director of P. W. Consultants specializing in Investment, Management and Trade in and with China and Human Resource Development in Shanghai and Ningbo.
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