1. November 2, Beijing
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& Edelman

2. Agenda
 Welcome, Decentralization  CSR & Corporate Ethics
Alan VanderMolen, Asia Pacific President, Edelman Steven Cao, Founder, Pegasus Communications
 Overview of Survey:  Digital Dialogue
Three Pillars of Modern Public Affairs in China Mark Hass, President, Edelman China
Mark O’Brien, Vice President, PAA
 Conclusion: Looking forward on
 Government Relations complexity & decentralization
Frank Lavin, Public Affairs Chairman, Edelman Alan VanderMolen
Yuan Haiying, President, Yuan & Associates
 Cocktail Reception
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3. DECENTRALIZATION
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4. Decentralization
 Economic growth
– Drives strengthening of Provincial and Municipal governments
– Ability/need for Central Government to delegate authority
 Web and mobile technologies
– Flood of sources and channels for consumers of news and
information
– Domestic voices and foreign sources
 Legal compliance complemented by social compliance
– Changing legal and regulatory environment
– Great social expectations
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5. Pyramid Model of Authority
Organization
Mass Audience
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6. Traditional Influencing Model
Your Name
Here

7. A New Era Of Public Engagement
A new model has
emerged: Public
Engagement Cloud
Your
Name
Here
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8. ABOUT THE SURVEY
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9. About the Survey
 Aims and Objectives of the 2nd Dialogue
- Research and benchmark
- Debate and challenge
- Distil into white paper * Chatham House rules – open debate
* White paper: answers and
 Three Pillars of Public Affairs in China questions…and more questions
- Government Relations: Tough and getting tougher
- CSR: Social license to operate
- Social Media: The digital citizen
 Methodology
- 104 respondents
- Online between October 1-28
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10. GOVERNMENT RELATIONS
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11. Government Relations: Tough and Getting Tougher
76% believe GR is more difficult in China 68% feel GR will be even more challenging in
than in the West the future
80%
80%
70% 70%
60% 60%
50% 50%
40% 40%
30% 30%
20% 20%
10% 10%
0% 0%
More difficult Less difficult More challenging Less challenging
Q15. The government relations landscape confronting Western MNCs
Q 14. Practicing government relations in China is: Net top & bottom 2 box in China is becoming: Net top & Bottom 2 box
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12. Decentralizing Government Relations Practices
Agree Disagree Neutral
Local government in China is
rapidly rising in importance as it
takes on a greater role in 78% 2% 20%
economic development and
commercial investment issues
The rise of second tier cities
means government relations and
public relations strategies must be 70% 8% 22%
devolved from national to local
levels
Q16. State your levels of agreement/disagreement with the statement (Net top & bottom 2 box)
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13. Government Relations:
Tough and Getting Tougher
 More potential for  Provincial and municipal
change in China’s business decision-makers
environment than any increasingly involved in
other major economy operating decisions
 Strong positive  Even at Central level,
commercial prospects for diffusion of decision-
most MNCs, balanced making authority requires
against more difficult MNCs to help shape a
regulatory environment. consensus across multiple
 Ongoing debate in China institutions
between economic – Bloomberg
rationalism and economic
nationalism
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14. Government Relations: Tough and Getting Tougher
 Sustained over-performance of China’s
economy contributes to nationalism,
protectionism and creates local champions
 Increasingly open architecture and
multiple decision-makers and regulators
heightens the complexity for MNCs
 Opportunities in China have never been
greater; risks have never been higher
– US exports to France vs China
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15. Implications for Government Relations
1. Are your PA-PR-CSR functions coordinated?
2. Do you just monitor/consult in GA or do you try
to influence government activity/policy?
3. How do you tackle challenges at the provincial
and local level?
4. How is your PA budget in China set?
5. How do you build-up PA operations, including
head office calling schedule?
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16. CSR & CORPORATE ETHICS
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17. Impact of Rapid GDP Growth
China’s GDP growth is set to place higher explicit and implicit
obligations as companies are expected to address societal needs
Lower 11%
Same 35%
Higher 54%
0% 10% 20% 30% 40% 50% 60%
Q12. The development of GDP-focused growth in China means that companies will face (Net top & bottom box)
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18. A View on Social Responsibility
Agree Disagree Neutral
Chinese government expects foreign MNCs to have a 72% 7% 21%
higher standard of CSR than domestic operations & SOEs
CSR in China is more central to our overall corporate 21% 47% 32%
strategy than it is in the West
CSR in China is more closely aligned with government 61% 18% 21%
strategy than in the West
The government in China is committed to ensuring that 48% 11% 41%
companies treat workers better
Q13. State your levels of agreement/disagreement with the following statement (Net top & bottom box)
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19. CSR and Corporate Ethics: Social License to Operate
 Greater number of participants in the debate
about a corporation’s responsibility to society
 All corporations are exposed to pressures to be
“good”, with social media used when they fall  Implicit and explicit obligations for MNCs
short. – Audit to preserve and enhance license to operate in
- Trust Barometer: 75% in China more likely to trust a China’s increasingly crowded and complex markets
corporation that partners with an NGO to battle global  The ‘citizen consumer’ is rising leading to
issues Governments responding to increased call for
 Citizens and competitors will fact-check and action
expose corporate wrong-doing in a continuous
cycle of finger-pointing
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20. CSR and Corporate Ethics: The New Government Decree
Three Key Reflections of Central Leadership’s Attitude:
 Harmonious Society
 Scientific Development
 Sustainable Development
Sustainable Development has become a high-priority state policy,
expected to guide the current transition in industrial restructure and
upgrade – while China is gaining its economic strength and quickly
converging with the world in all aspects.
To answer government’s new call, the
upcoming 2010 Summer Davos in Tianjing
takes the theme of
Promoting Sustainable Growth
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21. CSR and Corporate Ethics: Social License to Operate
 Environment continues to be a key issue,  Labor laws: CSR and stakeholder
leading to the creation of relationships engagement are being fused
between government, NGOs and - Employees are rapidly becoming one of the
corporations most significant stakeholder groups
 Edelman’s 2010 goodpurpose study:
- 84% in China expect corporations to take action to
preserve and sustain the environment
- 82% in China agree government and business need
to work together more closely to ensure the
environment is protected
- 80% in China would support legislation that
requires government to fund partnerships between
public and private organizations to help protect the
environment
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22. Government Expectations
Looking to Business Leaders to Participate in Public and Social Management as Pioneers and Thinkers
 Investment, advanced products & technologies
and contribution to the GDP are still important.
More important is your role in helping China
solve social and environmental issues that
impede its sustainable development.
 Chinese mainstream media are seeking out
those who set good examples which promote
China’s sustainability in social, economic and
environmental arenas.
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23. Implications for CSR & Corporate Ethics
1. How do you comprehensively integrate CSR into
corporate strategy for business in China?
2. How do you align CSR strategy with government
concerns and policies?
3. How can you achieve the step change from CSR to
sustainability?
4. Government expects more of MNCs than local
companies, but strategy doesn’t match up. Why?
5. To what extent do Chinese country managers have the
ability to determine CSR priorities?
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24. SOCIAL MEDIA
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25. Digital is More Important, but Companies Are Engaging Less
Social media is important to public affairs 79%
strategy in China 74%
Opinions expressed in online and social media 54%
are more influential than other channels 67% 2010
2009
We fully utilize social media platforms as part of 10%
public affairs strategy 17%
0% 20% 40% 60% 80% 100%
Q7. Top 3 Box Important; Q9. Top 2 Box Influential; Q8 Top Box Utilize
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26. The Role of Social Media
Agree Disagree Neutral
Social media is beyond my company’s control 39% 38% 23%
Social media is beyond the government’s control 27% 40% 33%
Social media is a form of digital democratization 66% 25% 9%
The Chinese government is responding to 58% 35% 7%
representations made via digital platforms
Social media is presenting increased challenges to the 87% 6% 7%
traditional mode of corporate communications and
government relations
Q10. State agreement/disagreement with the statement (Net top 2 box)
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27. The Digital Citizen: A Populist Force
Rapid user growth to continue: 380 million
(2010); 840 million (2013)
Urban, young, educated: Half the nation’s
population is urban; 75% of its internet users
live in cities
Internet landscape is fragmented, but
increasingly oriented toward social
networks, mobile access Internet is a broad public forum in China, both
a source of public opinion information for
companies and the government, and a force
for shaping policy and news
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28. The Digital Citizen: Government vs. Community
The Government The Social Media Community
 The internet, once a force to control, must  The community exerts pressure on
now be viewed as a release valve for social government because of its sheer size
pressure and a portal into grassroots emotions • Social media are part of the news cycle
 Substantial, but declining control of content • Mainstream media quote social media and vice
Wumao Dang: The 50 Cent Party versa in an “internet amplification cycle”
The Golden Shield: Blocked searches, • Eruptions of nationalism online are disruptive
vanishing social media posts and troubling to Chinese policy
• Growth of online community makes long-term, real-  Growing importance of online
time control technically unfeasible influencers creates new, populist sources
of information
• 60% of Sina Weibo’s 20m users follow top 10
bloggers
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29. The Digital Citizen: Protesters, Vigilantes, Nationalists
 Large Scale Internet Protests against corruption, unfair actions and
“enemies” of China are a unique and powerful phenomenon of the
Chinese digital community
 2 large-scale protests targeted government in 2003; 12 in 2009
 Typically aimed at local government officials, rather than national
leaders or policies (with exceptions)
- July 2010: Internet community on behalf of Qiu Ziming vs. Zhejiang
province paper company and police
- July 2009: Internet community vs. Ministry of Industry and Information
Technology Green Dam software initiative
- July 2009: Online community vs. Hubei party and police officials over
Shishou incident
 Protests aimed at companies can be “scandals for hire”
 Protests often reflect strong nationalist themes
- Japan, Nobel Prize
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30. Implications of Digital for Public Affairs
1. Why have companies been unable to engage fully
in social media for PA programs?
2. How do companies monitor and analyze the
voice of the Digital Citizen?
3. How can companies prevent competitors from
exploiting Digital Citizens for negative attacks?
4. Can corporate GA and CSR programs be positively
aligned with the power of Digital Citizens?
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31. Where from here?
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