Every summer since 2000, General Electric Co. has worked with the world’s largest communist party to pick about 25 Chinese executives for the company’s leadership program in Crotonville on New York’s Hudson River.
The training creates potential Chinese allies for GE to help ensure its continued expansion in the world’s fastest- growing major economy, company officials say. It is part of an emphasis on government relations that has paid off with contracts to supply jet engines and build wind turbines.
Lobbying China is becoming a growth industry as the country promotes state-owned businesses and limits market-opening moves that followed its 2001 entry into the World Trade Organization. Programs like GE’s, along with efforts from firms headed by Washington veterans such as former U.S. National Security Adviser Sandy Berger, help companies convince officials that what’s good for business is good for China.
“We make sure our initiatives are aligned,” GE China Chief Executive Officer Mark Norbom told business leaders in Beijing on April 16. “What may have been alignment five years ago is not going to be alignment today; it’s not going to be enough.”
The obstacles to doing business coincide with increasing opportunities. China’s economy is poised to pass Japan’s this year as the world’s second biggest. General Motors Co. sold more cars in China in the first quarter of this year than in the U.S.
Companies that don’t toe the party line can find themselves at odds with the government. Mountain View, California-based Google Inc., operator of the world’s most popular search engine, rerouted its Chinese site to Hong Kong in March, saying it could no longer abide by China’s censorship rules.
The potential to influence such rules puts a premium on nurturing ties with Chinese officials. GE’s program has trained some 200 Chinese executives in conjunction with the Communist Party’s Central Organization Department, which names the heads of China’s biggest state-run companies. Alumni include Ning Gaoning, chairman of Beijing-based Cofco Ltd., China’s largest grain trader.
Helped by advice from program participants, Fairfield, Connecticut-based GE designs its Chinese businesses around the country’s goals. Building more efficient wind turbines is in line with the government’s push to slow carbon-emissions growth.
GE is providing the jet engines through a joint venture with Paris-based Safran SA for China’s new commercial passenger aircraft, which will compete with jets from Chicago-based Boeing Co. and Toulouse, France-based Airbus SAS. GE’s sales in China rose 16 percent last year to $6 billion compared with a global decline of 14 percent.
GE has a more traditional lobbying effort, with about 30 people in its Chinese government-relations department, almost as many as the 36 people who lobbied the U.S. federal government for GE or its subsidiaries in the first three months of this year, according to Senate records.
Washington-based consulting companies are expanding in China, hiring former Chinese officials to help clients navigate the country’s bureaucracy. The Albright Stonebridge Group, headed by former U.S. Secretary of State Madeleine Albright and Berger, plans to add at least two people to its staff of eight in Beijing this year, Berger said in an interview.
Led by former Chinese trade negotiator Jin Ligang, the China practice is the group’s largest outside the U.S. capital, Berger said. Last year it helped Tempe, Arizona-based First Solar Inc. negotiate with national and local governments to start work on the world’s biggest photovoltaic solar-power plant, in Inner Mongolia.
“It is very important for foreign companies to make their case, make their argument to the Chinese officials in ways in which there is a win-win, where the Chinese can achieve their objective and the company can achieve their objective,” Berger said.
Washington-based law firms have also been adding staff in China’s capital, hiring Mandarin-speaking officials. Timothy Stratford, until February the assistant U.S. trade representative for China, is now a partner for Covington & Burling LLP in Beijing, which opened its office there in 2008.
Stratford was involved in a recent effort to change a Chinese policy that encouraged domestic innovation and could have shut foreign companies -- including Redmond, Washington- based Microsoft Corp. and Intel Corp. in Santa Clara, California -- out of a sizeable portion of China’s $88 billion annual government-procurement market, he said.
While still a U.S. official, Stratford met with representatives of the Science and Technology, Finance and Commerce ministries to explain the concerns of the U.S. government and foreign-trade groups. Thirty-four of the groups, including the Washington-based U.S. Chamber of Commerce and Beijing-based American Chamber of Commerce in China, wrote to the Chinese government in December complaining about the rules.
On April 10 China said it would revise the draft rules, taking out some potentially discriminatory provisions on trademarks. The move came after “industry representatives raised opinions,” Ma told reporters.
“They changed a number, though not all, of the provisions that were concerns to us,” Stratford said. “In many cases they are willing to be persuaded, if we can provide compelling reasons why specific policies should be modified.”
To contact Bloomberg News staff on this story: Michael Forsythe in Beijing at +86-10-6649-7580 or firstname.lastname@example.org