Leadership

Guiding Your Firm Through a China Crisis

Published : November 2017

The weight of being the legal representative in China is a heavy one. Crises are the toughest test of leadership skills and values that many CEOs face. And, that added dollop of legal responsibility that CEOs in China carry, make it especially intense.

One way to avoid crises in the first place is to invest time and effort in strong government relationships.  But it is important to set expectations accordingly.  As one member of IMA’s China CEO Forum put it, ‘We cultivate a relationship not because they want to help us, but because we hope they won’t be our enemy and hurt us.’

While building relationships with government officials is mandatory, sustaining those relationships is not an easy task.  Different levels of government may not be aligned or personnel changes can bring things to a halt.  Consequently, it is essential to design and implement a multi-level plan that encompasses local, provincial, national levels of government and includes both junior and senior roles.  An experienced executive at an IMA Forum commented, ‘We build multi-level relationships before we have an issue.  We identify who is the most influential regarding our set of issues.’

A China CEO advised his peers during an IMA meeting that, ‘When you build government relationships, it’s just like inside your company: you do not focus on the senior level and forget the junior level.  Likewise, you should not focus on central government officials and forget the provincial officials.  The senior level makes the decision, but needs to find a reason to help.  The junior person makes recommendations.’

What is the return on your investment in government relationship building?  It can be judged by the frequency and severity of your brushes with the authorities.  One firm decided to reduce the headcount of its government affairs team.  By the end of the year, they were embroiled in a nasty spat with the government that they were unprepared to handle.  The cost savings of the reduced headcount were quickly forgotten.

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