Why Obama's China visit is crucial for every global business

Every PR pro and marketer can gain from President Obama's impending trip to China.

In the 1700s and 1800s China was the world’s largest economy, following a huge expansion of the area under its control, increased agricultural production, and burgeoning trade.

In 1820, China accounted for 30% of global GDP. However, the 19th century was not kind to China, due to a series of internal rebellions and subsequent failures of infrastructure, and the US took over as the global economic leader in the 1890s – a position it has held to this day.

But that is all about to change. Estimates vary - one survey suggests it is already number one again on a PPP basis (purchasing power parity) - but the argument is pretty irrelevant as China will definitely overtake the US at some point in the next decade.

So, as President Obama prepares to make his first visit to China in four years, for the Asia-Pacific Economic Cooperation meeting in Beijing, the US-China relationship is at a pivotal point - especially in terms of business.

That’s why PRWeek embarked on an in-depth analysis of the business environment and what it means for PR pros. We spoke to experts on US-China relations, US-China business, and PR pros who are veterans in the region.

President Xi Jinping has been in power for two years now, embarking on a process of reform that has made headlines throughout the world, mostly for negative reasons.

Media have focused on crackdowns on Western companies, detentions of tens of thousands of individuals, and instances of torture and intimidation not commensurate with a modern global superpower.

But Xi’s reforms could ultimately have more of an upside for the US and businesses operating in China, specifically for the PR community in terms of hastening the end of pay-for-play media placements and the need to remunerate journalists for attending press conferences and events.

In Anthony Bourdain’s recent show about Shanghai in his Parts Unknown series, the TV presenter noted that the more you find out about China the more you realize you’ll never know anything about China – and that translates to a business context.

The US-China Business Council notes that China remains a strong and growing market for American goods and services, while also being a frustrating and challenging place to do business, especially due to regulatory barriers.

This is reflected in the council’s 2014 member survey, where the outlook has shifted from "optimistic" to "somewhat optimistic " – but only 1% of members are "pessimistic" or "somewhat pessimistic," so the outlook is still good.

Earlier this month, the council’s members sent an open letter to President Obama ahead of his China trip urging him to prioritize a high-standard bilateral investment treaty between the two countries. A particular bugbear, and a likely tough negotiating point for officials, is the high amount of excluded sectors in the annex to the treaty on the Chinese side compared to the US.

The council’s letter said: "If China can significantly reduce its negative list and open markets to American manufacturers, agriculture producers, and service providers, you will find the business community fully engaged and supportive of your leadership to gain Senate approval of the treaty." 

They added that few other commercial outcomes would gain as much support from business leaders in both the US and China and that a workable treaty would have a "significant and lasting impact on the trajectory of the US-China commercial relationship."

The Chinese will point to measures such as the Shanghai Free-Trade Zone, which has had a slow start but now seems to be picking up momentum in encouraging companies such as Amazon, Microsoft, Sony, and Costco to enter Chinese markets in a more favorable way than previously.

And, this week, President Xi was reported as calling for the expansion of the free-trade scheme to other parts of the Chinese mainland, and a proposed second zone in Tianjin has been ratified by regulators.

The Chinese market is already worth more than $300 billion to US companies, and the rise of the middle class and opening up of trade barriers suggests there is much more to come.

Every global brand and business should be gearing up to take advantage of these possibilities, and our China report contains 10 tips for PR pros to help position themselves correctly in the market.

Now the baton passes to President Obama, and business leaders across the country will be watching his trip very closely to understand the underlying messages on both sides in this crucial, sensitive, and historic meeting of the two most powerful economies in the world.

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