Relationship between government and business in china

Understanding Government-Business Relations in China | AmCham China on EventBank

relationship between government and business in china

Senior Chinese political advisers have called for building better relations between the government and businesses to boost the country's. This paper investigates China's government-business relations in an the political practices of the Chinese elites, and this isespecially the. The establishment of the Shanghai Pilot Free Trade Zone in is the most tangible piece of evidence for China's further economic reform in.

The key challenge is not about how big the government is, but how much it should interfere in free markets. Under an ideal "Free Enterprise" system, business-government relationships are horizontal, which means the government serves the needs of private businesses and creates the most competitive environments, mostly rules and regulations, for business practices.

  • Political advisers call for better government-business relations
  • Reforming the business-government relationship

However, we should not expect China to adopt the ideal model of a "Free Enterprise" system in the short run, although we do hope to see Chinese institutions that can be characterized as "Free Enterprises. Theory tells us that free enterprise systems are the best option for a market economy and a horizontal business-government relationship works better for economic development.

However, China is an exception to the theory.

China - The role of the government |

The Chinese government has to be ready for possible market failures, social frustrations, and business abuses in serving the long-term interests of both its economic growth rate and its people's wealth and wellbeing. The Chinese government must still engage with leadership and take actions to solve serious problems involving water and air pollution, food safety and financial stability.

relationship between government and business in china

We should not be surprised if it takes years to transform from a vertical business-government relationship based economy to one on a new pro-free market, pro-competitive business performance basis with horizontal business government relationships. As long as the reform can begin, China will find a way to make it happen, sooner or later.

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The author is a columnist with China. When it comes to assembling a government affairs team in China, the best is to hire former Chinese officials for their deep knowledge of how the system works.

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These individuals know whom to call, how to phrase requests, how best to couch suggestions in acceptable language and how to interact with Chinese government officials. Patience and modesty are the key virtues for a Government Affairs professional working in China, given that accomplishing anything through government channels is time-consuming.

Reforming the business-government relationship -

Meeting Chinese government officials prior to or in parallel with negotiations with Chinese business executives increases the chances of success. Indeed, government officials can become state-owned enterprise executives and vice versa. Thus, country managers of multinational corporations doing business in China should make government relations their personal responsibilities.

Furthermore, when foreign firms take the Chinese market seriously, when China is or will become a global revenue driver, their worldwide CEOs should focus on Chinese government relations. Sequencing relationships is vital: Top-down optimizes the system. The Chinese partner will always want to arrange these meetings, but the foreign firm should, at least on occasion, do this on its own.


Many senior Chinese officials enjoy visiting with foreign CEOs in order to gain international understanding, a new criterion by which they are assessed for promotion. Appreciating how to work effectively with the Chinese government and how to deal properly with Chinese officials are essential for success. Dealing with Local Government To be successful in China, foreign companies must build strong, lasting relationships with not only the central government but with local governments as well.

Given the extensive reach of government and quasi-government entities in China, many foreign companies seek best practices to manage the wide range of government relationships. Continued expansion of foreign companies into China has brought a heightened recognition of the importance of government relations at all levels. Many companies have a dedicated, centralized, corporate-level Government Affairs GA staff based in one location in China, frequently in Beijing.

With the increasing number and complexity of policies that affect foreign companies in China, GA staff often focus on maintaining relations with central government officials and linking broader corporate goals to national government priorities. This broader focus often leaves little time to manage local government relations that are essential to ensuring smooth daily business operations.

relationship between government and business in china

In addition to GA work at the national level, companies often manage government relations at the sub-national level, which includes Provincial, Municipal, District, and County levels, to support business operations in that specific jurisdiction. Companies that cultivate relations with local officials when business is going well increase the likelihood that they will have channels to use when specific problems arise.

A company may need to work with all local government administrative levels depending on the issue. In general, provincial-level government agencies set the goals and development strategies for the whole province. In addition, certain provincial regulators, such as provincial development and reform commissions and provincial bureaus of commerce, have approval authority for foreign investments above a certain threshold or in certain industries.

relationship between government and business in china

District and zone government agencies are generally micro-regulators responsible for implementing the policies that touch on daily business operations, such as business licenses, tax registrations, import and export clearance, work safety inspections, and utility supply.

Best Practices Building and maintaining successful government relationships in China is a challenge. In addition to the significant language and cultural barriers, the environment is rapidly changing. Develop a government relations strategy. The Chinese government is involved in every aspect of business in China and is a key constituency.