Caixin
Sep 05, 2018 11:50 AM
DOING BUSINESS IN CHINA

Bloomberg Learns Lesson of Beijing’s Shifting Priorities

This week’s column is dedicated to the poor folks at financial news giant Bloomberg, who have probably lost plenty of sleep over the last week after being politely asked to reschedule a major event they were planning just two months from now in Beijing. My sympathies similarly go out to the thousands of businesspeople here in Beijing who are being hugely inconvenienced this week as the city hosts a major China-Africa forum that has attracted many of the continent’s top leaders.

For anyone who hasn’t guessed by now, this week’s column takes a look at the topic of holding major events in China, and how to avoid clashes and other issues that could lead to something like the Bloomberg fiasco. Key to understanding the debacle is the role of government in China, which old-timers all know is one of the most important factors for doing successful business here.

Anyone with serious China ambitions should always have at least a single person dedicated to handling complex government relations, and often an entire team is needed. That’s not too surprising in a land where the government has a hand in everything due to China’s past as a planned economy where government and business operated on one large continuum with little or no differentiation.

That’s changed somewhat in the current era, but the bottom line is that China’s bureaucracy is still vastly larger than what you would see in most Western countries. In this case, that also means the government still exercises huge influence over companies in state-controlled sectors like banking and telecommunications. That can sometimes mean the difference between success and failure of major events centered on such industries, because government support often means an organizer can instantly count on attendance by thousands of executives from China’s vast complex of state-run firms.

Textbook case

All that said, let’s review the basics of the Bloomberg case that will probably end up as a textbook example for future generations of people doing business in China. I actually wrote about Bloomberg’s plan back in May when it first announced its ambition to stage a major new global conference in Beijing bringing together some of the world’s biggest corporate chiefs talking about the latest pressing issues.

Company founder and former New York Mayor Michael Bloomberg was never one to think small, and reports at the time said he hoped the event could become an equivalent of the World Economic Forum held each winter in Davos, Switzerland. His choice of Beijing was meant to spotlight China’s rising global role, since the country is now the world’s second largest economy and will likely overtake the U.S. for the top spot in the next few decades.

As one might expect, Bloomberg had signed up the requisite government-linked Chinese co-host for the event and dates were set for Nov. 6-8 in Beijing. But then the wheels came off the cart when U.S. President Donald Trump started a tit-for-tat trade war with China, and suddenly Beijing was under the gun to show it was serious about boosting its imports.

Government leaders found a nice event that could spotlight that priority in a major new import trade show that was set to launch in Shanghai. The only problem was that the trade show, the China International Import Expo, was set for the exact same time, with dates of Nov. 5-10. The event is now prominently featured on the Commerce Ministry’s website, showing just how important it has become for central government leaders.

That didn’t bode well for Bloomberg’s rival event in Beijing, which central leaders probably worried might steal some of the thunder — and VIPs — from the Shanghai extravaganza. So Bloomberg’s co-host of the Beijing event, undoubtedly at the request of high officials, politely asked the U.S. company if it would mind changing the dates, even though the event was just two months away.

Never mind that countless arrangements had already been made and dozens of CEOs and other busy executives had reserved the dates on their calendars. This new import expo was now the primary focus as far as China was concerned, and everything else was secondary. With few other options, Bloomberg probably decided it would move the entire event to a more hospitable environment in Singapore, which is used to hosting such gatherings on relatively short notice and is far less bureaucratic.

This kind of occurrence doesn’t happen daily in China, but is still a major risk factor for anyone planning big events here. For more ordinary businesspeople, it can also cause major headaches for things like business travel and larger issues like securing supplies when roads are closed for long periods and factories ordered to halt production to ease congestion and pollution during such events.

In the end, it’s all about understanding government priorities and trying to align your own schedule and events accordingly, according to several longtime foreign China business hands I asked about the matter. One was particularly helpful in suggesting strategies to avoid such a Bloomberg outcome as she had previously worked for an organization that now stages a major industry event each year in Shanghai.

Her biggest advice was to maintain constant contact with Chinese partner organizations, to build up the importance of the event in such organizations’ minds, and to get such organizations personally invested through their own participation. After all, she said, an organization is far more likely to take your side in the event of shifting priorities if it believes the event will add to its own prestige and credibility with the vast Beijing complex.

Another contact talked of similar experience, and added the process of regular and constant communication can often buy more advance time than the meager two months that Bloomberg got. At the end of the day, the first contact said, there’s never any guarantee that your event won’t get bumped if something more important comes along. But the regular contact means you can get the warning signs as early as possible, and either argue your case for staying the course or quickly turn to plan B to try and salvage the situation.

Doug Young has lived in Greater China for two decades, including a 10-year stint at Reuters, where he led China corporate news coverage. Send your questions or comments to DougYoung@caixin.com

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