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2011 China Public Affairs Dialogue Trade, Investment and China’s 12 th Five-Year Plan

2011 China Public Affairs Dialogue

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The third annual Edelman/PublicAffairsAsia Dialogue examines issues and opportunities around Trade, Investment, and China's 12th Five-Year Plan.

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Page 1: 2011 China Public Affairs Dialogue

2011 China Public Affairs Dialogue

Trade, Investment and China’s 12th Five-Year Plan

Page 2: 2011 China Public Affairs Dialogue

State of Trade

Page 3: 2011 China Public Affairs Dialogue

The 12th Five-Year Plan

It will guide Government actions through 2015, so it requires our attention

Four notable commitments in the plan – Increase domestic consumption and social welfare

– Create a more balanced economy, less dependent on exports, more geographically balanced

– Encourage domestic innovation, both in technology and services sector

– Develop strategic emerging industries

• Especially new energy, new materials and alternative fuel vehicles

Our focus is on the implications of this plan on investment, both inbound by MNCs and outbound by Chinese companies

Page 4: 2011 China Public Affairs Dialogue

About the Survey

Aims and Objectives of the 3rd Dialogue – How current and emerging trends impact the practice of corporate

public affairs in Mainland China

Trade, Investment and China’s 12th Five Year Plan – The impact of China’s 12th FYP on the prospects for enhanced

Sino-global trade relations

Methodology – 155 Respondents

– Online between November 3 – 24

– Senior corporate and government representatives

– China, Asia, US, Europe

– Country Director, Managing Director, Chief Investment Officer, Vice President of Government Relations

Page 5: 2011 China Public Affairs Dialogue

The Future Looks Bright

Despite global economic

uncertainty and fears

over the sustainability of

China’s economic

performance, senior

management in global

industry and commerce

remain optimistic about

future economic and

trade developments

between Europe, US and

China.

0 10 20 30 40 50 60 70

Hold no view

Pessimistic

Very Pessimistic

Optimistic

Very Optimistic

Sense of future economic and trade development between China, Europe and US

Q7. Given recent developments in economic, political and commercial relations between China, Europe and the United States, how do you feel about future economic and trade developments between the countries?

66%

11%

0%

3%

20%

Page 6: 2011 China Public Affairs Dialogue

Investment & The Five-Year Plan

Q12. The focus on investment and economic development set out in the 12th Fiver Year Plan will: 1-10 (1=strongly disagree 10=strongly agree. D: Enhance the opportunities for China business in the West; E: Enhance the opportunities for international business in China.

Strong agreement that

current reforms will both

enhance business

opportunities for China in

the West, and enhance

business opportunities

for international business

in China

0

10

20

30

40

50

60

70

80

Enhance opportunitiesfor China business in

the West

Enhance opportunitiesfor international

business in China

Agree

Disagree

Opportunities abound for inbound and outbound investment

77%

68%

23% 28%

Page 7: 2011 China Public Affairs Dialogue

Everyone Wants in on China

China “most important” in

strategic economic and trade

terms.

Asked to rank from 1-5 (1 being

most important) China rates

significantly ahead of US and

Asia.

China

1.84

US

2.18

Asia (other than China)

2.63

EU

2.72

LatAm

3.67

Africa

4.41

1st in Average Rating

of Importance

3rd

4th

5th

6th

2nd

Q8. Please rank the following nations/region in terms of their strategic economic and trade importance to your country at the current time. Rank 1st (most important) to 5th (least important), marketing a tick in the not applicable box for the country/region where your company is headquartered.

45% Ranked as

“Most Important”

20%

9%

4%

3%

30%

Page 8: 2011 China Public Affairs Dialogue

Inbound Investment

Page 9: 2011 China Public Affairs Dialogue

Inbound Investment & The Five-Year Plan

Over three quarters

agree that objectives set

out in the 12th Five-Year

Plan will lead to greater

engagement by the

government.

This could be construed

as more state control of

enterprise, necessitating

the need for greater PA

and GR capabilities.

Greater engagement by Chinese government in the development of industry and economy is

beckoning

Agree

Disagree

Q9. Do you believe that the inbound and outbound investment and economic development objectives set out in the 12th Five Year Plan will: 1-10 (1=strongly disagree 10=strongly agree. D Lead to greater engagement by China’s government in the development of industry and the economy in that country.

23%

77%

Page 10: 2011 China Public Affairs Dialogue

Inbound Investment & The Five-Year Plan

Q10. The obstacles to achieving the stated objectives in respect of foreign direct investment in China are: 1-10 scale, 1=Strongly Disagree, 10=Strongly Agree

0 10 20 30 40 50 60 70 80 90

Agree

Disagree

78%

35%

The regulatory and legislative

environment in mainland China

A pro-China approach to business and

investment selection

The emergence of indigenous innovation,

domestic consumption and the expansion of

China's manufacturing economy

A lack of awareness among international

business about navigating China’s regulatory

and political environment

A lack of awareness among international

business about navigating China's stakeholder

and communications landscape

Obstacles to achieving objectives for foreign direct investment

81%

19%

22%

64%

73%

25%

85%

15%

Page 11: 2011 China Public Affairs Dialogue

Outbound Investment

Page 12: 2011 China Public Affairs Dialogue

Outbound Investment & The Five-Year Plan

Q9. Do you believe that the inbound and outbound investment and economic development objectives set out in the 12th Five Year Plan will: 1-10 (1=strongly disagree 10=strongly agree. B: Assist the development of Chinese business seeking to “go global”.

Assisting Chinese corporations as they go global

Agree

Disagree90%

10%

9 in 10 believe the

outbound investment

objectives set in the Plan

will help Chinese

companies expand

globally

Page 13: 2011 China Public Affairs Dialogue

Outbound Investment & The Five-Year Plan

Q11. The obstacles to achieving the stated objectives in respect of overseas direct investment by China are: 1-10 scale, 1=Strongly Disagree, 10=Strongly Agree

0 10 20 30 40 50 60 70 80 90

Agree

Disagree

17%

The unequal application of regulation

and legislation in respect of

international versus local companies

A lack of awareness among Chinese

business about navigating the West’s

stakeholder and communications landscape

A lack of awareness among Chinese

business about navigating the West’s

regulatory and political environment

Nationalism and currency

valuation/protectionist issues

A negative perception about China’s investment

motives and strategies

Obstacles to achieving objectives for overseas direct investment by

China

83%

23%

76%

59%

39%

83%

17%

80%

20%

Page 14: 2011 China Public Affairs Dialogue

GR Takeaways

Page 15: 2011 China Public Affairs Dialogue

The Business, PA and GA Dimension

0 20 40 60 80 100

Agree

Disagree

Make it more difficult to develop and

implement a China-wide GR and PA strategy

Increase corporate government relations and

public affairs activity

Make it more important for foreign companies

in China to have structured government

relations strategies operating as core aspects

of business planning

Focus on investment and economic development will:

Q12. The focus on investment and economic development set out in the 12th Fiver Year Plan will: 1-10 (1=strongly disagree 10=strongly agree. A: Make it more important for foreign companies in China to have structured government relations strategies operating as core aspects of business planning, B. Increase my company’s government relations and public affairs activity; C. Make it more difficult to develop and implement a China-wide government relations and public affairs strategy.

8%

91%

69%

20%

62%

35%

Page 16: 2011 China Public Affairs Dialogue

Advice for Inbound Investors

• Establish when a problem doesn’t exist

• Don’t just focus on the top

Relationships Matter

• Provincial gov’t bodies can count as much as central gov’t

Beyond Beijing

• Being well known in a home market does not equate to awareness in China

• Global approaches may not apply

Be Local

• Be respectful of decision-makers

• Avoid public criticisms

You are the Guest

• Ministries and agencies can overlap

• Cast a wide net

Repeat, Repeat, Repeat

Page 17: 2011 China Public Affairs Dialogue

Advice for Outbound Investors

• Remaining silent and not telling your story is not a strategy

• Overseas clients buy the country first, then the product

Define Yourself, or Others Will

• Meet with local management, employees, suppliers, community leaders

Engage the Stakeholders

• There can be frequently hostile constituencies

• Other cultures can have more open and critical discussions

Anticipate Criticism

• Prepare an on-going diet to keep the media well fed

The Media are Hungry

• Think locally, design personally, brand domestically

Put Feet in Target

Market’s Shoes

Page 18: 2011 China Public Affairs Dialogue

For more information Craig Hoy: [email protected] Mark Hass: [email protected]