How to Establish a Positive Reputation for a Chinese Firm Entering the United States Market
by Momo Bi, MBA '15 (6/3/14)
Things to consider when entering the China market, an interview with James Robinson, Senior Director in APCO Worldwide's New York office
“Public sentiment is everything. With public sentiment, nothing can fail; without it, nothing can succeed. Consequently, he who molds public sentiments goes deeper than he who enacts statutes or pronounces decisions.” – Abraham Lincoln
James Robinson is a senior director at APCO Worldwide, a strategy consulting, communication and stakeholder engagement firm. He is based in New York where he leads APCO’s Sustainable Growth and Corporate Responsibility Practice. Prior to joining the New York office, Mr. Robinson was an associate director within the investment and government relations practice of APCO’s Beijing office. In that role, he advised multinationals looking to enter the China market and helped clients expand their China presence through government and public affairs programs. He also managed marketing and business development functions for APCO's China presence.
1. What are some of the trends of Chinese firms trying to enter the United States?
Since the recession of 2008 – 2009, there has been an increased amount of incentives to bring foreign investment to the US. In a survey conducted by APCO Worldwide in partnership with China Daily USA, 92% of the fifty one senior Chinese business executives representing forty six Chinese enterprises operating in the US expressed positive outlook for the future of their companies in the US.
2. What are some of the key benefits for the US to have Chinese firms enter the market?
Although the reviews of the Chinese companies entering the US conducted by CFIUS (The Committee on Foreign Investment in the United States) could generate a perception of concern, Chinese companies are actually making very positive contributions to the US economy. Chinese investment in the U.S. increased from $280 million in 2004 to $6.7 billion in 2012, an average growth of 128% per year. Companies from China have established operations and created an estimate of over 33,000 US jobs in more than thirty five US states.
3. Would you please elaborate a little bit on CFIUS? What is CFIUS and what role does it play?
The Committee on Foreign Investment in the United States (CFIUS) is an inter-agency committee of the US Government that reviews the implications of foreign investments. It is chaired by the US Treasury and involves sixteen US departments and agencies including the US State Department. It is one of the most important stakeholders for any foreign companies trying to invest in the United States.
4. Who are some of the other stakeholders in this process?
Managing a multi-stakeholder environment is one of the most important challenges of Chinese companies entering the US market. Some of the key stakeholders are policy makers, governments, media commentators, NGOs, customers, employees, think tanks, academics, business partners and suppliers. In recent years, social media has also become a key stakeholder in this process as well. The ability to engage with stakeholders and effectively communicate is one of the keys to successfully establish a positive reputation for Chinese companies trying to enter the US market. APCO Worldwide helps our clients engage with stakeholders, identify collaborative opportunities, and communicate effectively for successful outcomes.
5. What is a typical process to build a positive reputation for Chinese companies trying to enter the US market?
APCO Worldwide advises our clients with a listen, engage, announce and grow four step process for engagements. First, in order to help our clients listen, we help them conduct stakeholder mapping, competitor analysis, and opinion and regulatory research. We also identify supporters, and monitor media and digital feedback. Second, to engage, we help our clients build awareness and credibility, join associations, find areas of shared interest, engage thought leaders and be present online. Third, to announce the news of entering the US, we guide our clients to proactively define themselves, choose the right timing, prepare materials and spokespeople, prepare friends to engage, and break the news with a friendly reporter. Finally, as the last step, we help our clients grow in the aftermath by winning, retaining and leveraging happy customers and employees, proactively engaging stakeholders, delivering thought leadership and being recognized as responsive and accountable.
6. What do you think is the biggest challenge Chinese companies usually run into during this process of entering the US market?
The first challenge actually happens before this process even starts. Although Chinese companies have grown significantly more sophisticated in the international business arena, many companies still don’t realize the importance of hiring professional services to help them enter the US market. Professional services companies are experts in their practiced fields that have handled similar situations with an extensive amount of clients. Especially when it comes to public relationships, one small mistake could cost the company the entire market entry plan because media attention and public perception are such critical elements of international transactions now.
7. Can you give me a specific example of a case that you have worked on and what you did for your client?
One of the largest Chinese shipping and logistics companies asked APCO to help navigate the threatening situation based on discriminatory treatment under US law. In order to demonstrate to US officials that the company was operating and running in accordance with market principles, APCO launched a program to emphasize the client’s market-based business model and its positive contribution to the US economy and US China trade. APCO worked with the client to employ strategies regarding government relations, policy research and analysis, media relations, trade and investment policy and ally development. The client was able to successfully secure exemption from the discriminatory trade rules.
8. Any word of advice for current MBA students?
In order to launch a successful international market entry plan, public relations management is just as important as financial analysis, market research, and many other elements. It is particularly crucial to manage public relations well if the company is currently operating or entering a very transparent market. Overlooking the power of public sentiment could be a very costly mistake.