Successful lobbying in China

Back to Yenching

On 24 October I had an evening lecture at The Yenching Academy, Peking University (“Beida”). The theme was lobbying in China. Duration: well over two hours including the Q&A.
This was the second one, see earlier post with the details of the Academy:
“Biking and Chinese cultural conflict”
http://blog.strategy4china.com/2016/09/biking-and-chinese-cultural-conflict/
In the first lecture all students were Chinese; this time all were basically foreigners

Can lobbying in China be successful?

Well, the first questions should be: is it legal? What do we understand with lobbying?
After clarifying that and giving a quick overview on the tremendous changes China saw over the past 35 years, I moved to the core of the lecture. I give two real lobbying examples: the “Athletes Alley”, the huge sculpture of the artist Olivier Strebelle; the re-launching of metro projects in China through the contract for Shanghai Metro Line 3.
Both are two projects I handled personally. Both are of the type what I call “Mission Impossible”.
A lively debate followed where I explained also how one can overcome a new cultural obstacle, how to face challenging environments and the need to think out of the box.
Another issue I discussed is the other side of the medal: the difficulties working with the head office in Europe and the often murky situations one faces there.

Belgian Consular Info Session

Consular Info Session: great initiative

On 23 September the Belgian Embassy in Beijing held an information session in the Ambassador’s residence.
In every country one can face problems with visas, insurance, security and other. China is not an exception with its own issues.
The Consular Info Session was well attended by the Belgian community and many asked questions.
The Consul gave a clear and informative presentation of the main issues that can affect us all. The ambassador also intervened and also introduced the delegates from the “Belgians in Beijing” (“BiB”).
It is the first time (in 35 years!) I had the chance to join a similar meeting.

TIN and credit cards

I raised the issue of TIN: “Tax Identification Number”. Due to new laws in OECD, banks are becoming pretty strict on the tax situation of its clients. ING bank (Belgium) recently upset many of the Beijing clients as they were requesting our TIN, threatening to lodge complaints if we did not comply.
As a matter of fact, ING handled without understanding the situation of foreigners in China. While the Chinese government claims “everybody in China has a TIN”, in reality it does not apply to foreigners.

Chinese regulations mention:

The structure of TIN varies depending on the types of taxpayer. For entities, it consists of 15 characters (old TIN regime) or 18 characters (new TIN regime). For individuals, it consists of 18 characters. Taxpayer who registered with tax authority was issued a certificate of tax registration that contains its TIN. Under the new TIN regime, taxpayer who registers with industry & commerce authority will be issued a business licence that contains its “Credibility Code”, which is also its TIN. The TIN number of individual is shown on its identification card.

As we investigated, as for now the Beijing Tax Bureau uses simply the passport number as a TIN (not being in line with normal Chinese TIN for Chinese citizens).
The Beijing Tax authorities confirmed this in an official e-mail. One explanation is that foreigners do not have some kind of ID card in China. Long time ago we did have some kind of “ID booklet” that was later discontinued.
There are plans to reform the tax system and the work permits for foreigners, and to issue ID cards to foreign residents. At a later stage the foreigners could then also be issued a TIN according to Chinese tax standards.
As for me: we solved our problem as we got a brand-new TIN under our company.
Also to note: the Chinese Green Card number is can NOT be used for TIN and other purposes, it does not have 18 characters as the Chinese ID …

Belgian banks are now becoming difficult when sending out our credit cards. Some agencies only allow the cards to be picked up in person. The cards needs to be activated by SMS, usually too late when we get them in hand. The ATMs in Beijing do not have an “activation” service but the simple way is to withdraw a small amount, thus activating the card.

The Belgian EANDIS story revisited

Disclaimer: our consulting company works very closely with China State Grid since many years.

Belgian EANDIS stops the discussions with China State Grid

After a protracted battle, Belgian EANDIS officially announced earlier this month the discussions with China State Grid were definitively stopped.
A letter of the Belgian State Security had made waves earlier on, as it wanted to point out the possible security issues by granting shares to the Chinese state company. Others dismissed the warnings as China State Grid would not have access to “sensitive customer data”.
The negotiation had to be shelved as the 236 Flemish cities concerned could not agree on a fusion of the different city utility services, a main condition for the deal. Antwerp was one of the most opposed to the fusion.
Others, including EANDIS, said to be disappointed.
Again a sad example of political bickering in Belgium.

Opposition against a Chinese share

In the media, a lot of criticism against the deal.
Some were against a Chinese company as it was an “arm of the Chinese Communist Party”.
Others wanted the electric utility to remain Flemish and Belgian investors to join an investment that would give 4% interest returns while normal bank interests are less than 1%: “Why give all the money and benefit to the Chinese, they will take all the profits to China”.
Commented a member of the Flemish parliament (Green Party): “Do we want a Chinese or a Flemish Energy Network? Do we want to see every year 40 million euro to flow to China?”

My view

See my earlier post, in Dutch:
“Hoopla rond Eandis in Vlaanderen”
http://blog.strategy4china.com/2016/09/hoopla-rond-eandis-vlaanderen/

First of all, people should respect international investment deals. The Chinese company would invest 830 million euro in the Flemish network for a 14% share. Obviously a company wants to have a return on investment and repatriate it. If a foreign company invests in China, they expect the same.
So, a lame argument.

As for not inviting Belgian investors I must agree. As I mentioned earlier, since time we see good Belgian companies disappear and being bought by foreign groups, French, American, Japanese, Swiss, name it.
Belgium has shown incompetence to retain its valuable companies, through mismanagement, lack of financial support and creativity, among others. Why can’t they make the companies profitable? Look at “Belgian” beer and chocolate: how much is still in Belgian hands? Not even to mention companies in the mechanical and electronic industries. What a shame – I worked for some of those and saw how things went the wrong way.
So, why does Belgian EANDIS need to ask China for money? Why can’t Belgium solve the need for capital and new management? For sure many Belgian people would be willing to put their savings in an investment that returns annually more than 0.5% or something.

Chinese companies on a buying spree

See here an interesting article from KNACK (Belgium), 6 September 2016:
http://www.knack.be/nieuws/belgie/chinezen-kopen-onze-bedrijven-wat-zijn-ze-van-plan/article-longread-749205.html

“Chinezen kopen onze bedrijven: wat zijn ze van plan?” (The Chinese are buying our companies, what is their plan?). Companies mentioned are Delta Lloyd Belgium, Volvo, Punch Power Train, APM container terminal in Zeebrugge, Deurganckdock in Antwerp, rubber producer SIAT, Wijnegem and  Waasland Shopping Center. (If you want the article, contact me)

We do see in Europe (and other countries…) a growing opposition to Chinese buying up companies and other assets, partly due to their sometimes poor approach and execution.

160425-chinastategrid2160425-chinastategrid1161001chinastategrid

Actually China State Grid has been involved in transmission and distribution in electric networks in many countries, such as Brazil, The Philippines, Portugal, Australia and Italy. As far as I know no any country has had complaints of “security issues”.
It is the largest utility company in the world. It also has several factories that are state of the art, leaving most EU companies behind.

Is China State Grid to blame?

Some argue that the Chinese company did a poor PR job and did not communicate well to defend its proposal. Up to a certain extent I agree, the company is indeed weak in communication – I am also requested NOT to talk about the work we do with them… But all in all, in view of the internal bickering in Flanders, what could the Chinese do?
At first I dismissed the accusation that the company, as many others, is “managed by the Chinese Communist Party”.
Unfortunately, this objection related to SOEs (State-Owned Enterprises) is now supported by President Xi Jinping himself:
See:
“What mixed signals on TV say about China’s on-again, off-again state firm reforms. Question of whether the party or boards should dictate business decisions is still a running issue.
Xi’s speech on the SOEs clearly stated the party would strengthen control over SOEs and exercise more oversight instead of allowing market forces to play a “decisive” role as earlier promised. At the high-level meeting Xi made it abundantly clear that the party leadership is “the root and soul” for SOEs.”

Read the full article dated 16 Oct 2016:
http://www.scmp.com/week-asia/politics/article/2028203/what-mixed-signals-tv-say-about-chinas-again-again-state-firm

My interviews on SINO-US.com websites

SINO-US.com

Recently I was interviewed by Rebecca Lin from www.SINO-US.com.
The interview lasted over two hours and I guess Rebecca has a lot to digest and has material for more publications…
Some of my friends were surprised to read my story. Indeed, I mostly keep a low profile so some of the more “new” friends know little about my crazy stories, Olympics and much more.
Thanks Rebecca for being very professional.

See here the link: http://sino-us.com/21/17590493560.html
The PDF: 161011-mychineseolympicdream

USCHINAPRESS.COM

Then, confusion as my friend Mark Levine alerted me about another article that was published in Los Angeles, about him and me. After asking around Rebecca kindly sent me the PDF as that publication is related to SINO-US …
I honestly forgot about that interview and how those pictures landed there. I need to check about the journalist Zhang Han.
The online translation was kind of hilarious. Seems I am now :Van Gogh”. I am honored!
See part:

“Honor status. By the end of 2012, when Van Gogh was granted a Chinese green card, only about 7,300 foreigners were awarded the honor. Including two years earlier than his American-Chinese physicist Yang Zhenning.
Van Gogh was born in 1948, after graduating from university in Brazil and Nigeria, multinational companies work.”

See here the links:
http://special.uschinapress.com/161007/
and
http://news.uschinapress.com/2016/1007/1081634.shtml
The PDF: 161009-articleuschinab

Hoopla rond Eandis in Vlaanderen

Een vloed van artikels over Eandis

Tegenstand groeit in Vlaanderen tegen de mogelijke participatie van China State Grid in Eandis. Er is al heel wat inkt gevloeid over die mogelijke inbreng vanuit China.

Zie: Eandis: ‘Meerderheid moet nu verantwoordelijk nemen nu minister deal niet meer steunt’
24/09/16 – Vlaams minister van Energie Bart Tommelein (Open Vld) is er niet langer voorstander van dat het Chinese staatsbedrijf SGEL zichzelf inkoopt in het distributienetbedrijf Eandis. Groen is tevreden met die beslissing.

http://www.knack.be/nieuws/belgie/eandis-meerderheid-moet-nu-verantwoordelijk-nemen-nu-minister-deal-niet-meer-steunt/article-normal-756361.html

Eandis en China State Grid

Ziehier mijn kommentaar op het artikel (en op de reacties erop):

State Grid is een van mijn voornaamste klanten, we werken al lang samen, dus ken ik die. Zij hebben wereldwijd al veel opgekocht en ik heb nooit gelezen dat daar een “probleem” was. Ik begrijp de achterdocht bij velen in Vlaanderen. Maar laat ons hier duidelijk zijn: ik zie sinds tientallen jaren de incompetentie van ons land en onze bedrijven om sterke firmas in leven te houden. Ik leef in Beijing en vraag me af: wat is er nog echt “Belgisch”? De hele wereld koopt ons uit. De fout ligt dus bij ons in Vlaanderen, dat we niet in staat zijn onze industrie en diensten rendabel te maken, dat we om geld smeken in het buitenland. Waarom kan België dat zelf niet oplossen? Waarom is er zelfs een kans dat chinezen ons moeten “helpen”? Vele bedrijven in Europa worden door China opgekocht omdat ze niet kunnen overleven. Ergens loopt er iets fout bij ons. Indien we goed genoeg waren hadden we niet het geld nodig van Amerika, Frankrijk, China enz. Voor State Grid is dat gewoonweg business.

China onder de kijker in België

Ziehier een ander artkel dat spreekt voor zichzelf:
23/09/16 – De Chinezen komen: kom naar het grote China-debat van Knack met Jonathan Holslag en Piet Buyse (Eandis)
Zie: http://www.knack.be/nieuws/belgie/de-chinezen-komen-kom-naar-het-grote-china-debat-van-knack-met-jonathan-holslag-en-piet-buyse-eandis/article-normal-756263.html

De lijst van Chinese investeringen in Belgische ondernemingen groeit traag maar zeker aan. Op donderdag 29 september debatteert Knack in de Antwerpse Singel over de vraag: moeten we bang zijn van China?
Volvo, Wijnegem Shopping Center, de containerterminals in Zeebrugge en Delta Lloyd België: ze zijn allemaal geheel of gedeeltelijk in Chinese handen. De directe aanleiding voor dit actua-debat is de hoogoplaaiende discussie over de Chinese participatie in energiedistributeur Eandis. Hebben de tegenstanders van deze deal een punt? Of doen ze aan paniekzaaierij? Zijn de Chinese investeringen in onze economie een bedreiging of juist een redding?

Eandis: de saga gaat verder

Ondertussen gaat het debat verder, met de nodige kleurrijke wendingen:
Louis Tobback steekt draak met anonieme brief Eandis: ‘Ik hoop dat men geen levens geriskeerd heeft voor die informatie’
http://www.knack.be/nieuws/belgie/louis-tobback-steekt-draak-met-anonieme-brief-eandis-ik-hoop-dat-men-geen-levens-geriskeerd-heeft-voor-die-informatie/article-normal-757189.html

En nog veel meer nieuws elke dag, o.a. wordt gemeld dat de “security risks” van een deal met State Grid miniem zijn…
Maar tenslotte, zoals ik al schreef: het mist allemaal de echte problematiek.