From contacts to contracts – the importance of stakeholders in China – University of Copenhagen

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13 December 2016

From contacts to contracts – the importance of stakeholders in China

Martin Bech, ThinkChina.dk Coordinator


 
On 4 December, the Danish Cultural Centre in Beijing was filled to the brim with Danish municipal and regional politicians and public sector officials as well as representatives from a range of Danish companies operating in China. They gathered to prepare for the following two-day’s China Denmark Regions and Cities Forum, which was held in Beijing during 5-6 December.
 
Some of the presentations had the character of normal celebration speeches. For instance, Copenhagen’s Lord Mayor Frank Jensen launched the news that Copenhagen will be an official guest city of Beijing Design Week 2018. Other presentations tried to address some of the difficult issues related to operating in China. One example is Professor Jørgen Delman, University of Copenhagen and ThinkChina.dk, who introduced the dynamics of China’s political system and argued among other things that the decentralization, that has taken place since the open door, has lead to a fragmentation and power struggle between various levels, offices and individuals in the Chinese bureaucracy. At the same time, Delman explained, the system is also depended on consensus decisions, which means that many stakeholders need to be involved in decision-making processes. Another example was Humphrey Lau from Grundfos who said that in order to become part of the public infrastructure projects in China, it is necessary to be on the ground in order to cope with the many different stakeholders that influence decision-making in China.
 
None of the presenters, however, connected the dots. That is to say, for any international organisation – be it public or private or public/private – to succeed in China, it needs to be present on the ground to engage the stakeholders as observed by Lau. However, the reason why they must do this relates to the fragmentation as described by Delman. Because of the decentralisation of many functions in the Chinese bureaucracy, it is actually the case that different stakeholders, organizations, offices, or even individuals can impede decision-processes and obstruct consensus among relevant stakeholders. And worst of all, sometimes they obstruct simply because they fear that their hard fought privileges (maybe even vested interests) are at stake or a new precedence, that they don’t fully understand the consequences of, is in the making.
 
While this may be theoretical, it has practical consequences. For instance, it implies that a Danish municipality and its private partners who want to secure a contract in China in connection with a sister-city agreement, must make the effort of not only map relevant stakeholders in China but also find ways to access and speak to these stakeholders in order to explain the project and possibly adjust it so that it does not impact negatively on the stakeholder’s interests. Only when going through such an exercise can the Danish municipality and its private partners enhance their chances of actually winning the project. Many overlook this necessity because they misunderstand their Chinese hosts’ welcoming words and polite acknowledgements as a sign that deals are done when MoUs are signed. They are not. And in most cases, the Chinese hosts won’t do the necessary stakeholder groundwork – unless the benefits are worth it. That is not often the case and the Danish partners risk loosing the project to other international actors who are on the ground and are willing to use the resources to engage in the stakeholder groundwork as described above.
 
To conclude, if Danish public-private partnerships are to succeed in turning contacts into contracts in China, they need to combine their efforts and establish a joint presence in China, which can handle the stakeholder groundwork on behalf of individual cities and regions.

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