Weitere ähnliche Inhalte Mehr von Brunswick Group (20) Kürzlich hochgeladen (20) U.S. Presidential election China implications 1. 1 | 2016 | BRUNSWICK ©
2016 U.S.
Presidential
Election Brief:
Implications for China
May 2016
2. 2 | 2016 | BRUNSWICK ©
Implications
for China
The field for the U.S. presidential election
appears to be set. Donald Trump’s May 3rd
victory
in Indiana pushed Ted Cruz and John Kasich
out of the race for the Republican nomination,
and Hillary Clinton stands on the verge of
securing enough delegates to win the Democratic
nomination. The rise of political outsiders, such
as Donald Trump and Bernie Sanders, and overall
unpredictability of this election cycle has caught
the attention of many — both in the U.S. and
around the world.
The unprecedented nature of this election has
communication implications for companies
across the globe, and especially for China.
The country is a frequent topic in presidential
candidates’ speeches on the campaign trail.
Companies operating in China, and particularly
those with strong ties to both China and the
U.S., should consider the white-hot campaign
spotlight on China during the election. Clear
communication, careful planning, and deliberate
timing are more essential now than ever.
2 | 2016 | BRUNSWICK ©
3. 3 | 2016 | BRUNSWICK ©
Campaign
Tone
B
oth presumptive party nominees*,
Donald Trump and Hillary Clinton, have
used a critical tone when referencing
China throughout their campaigns. They have
frequently mentioned China as the cause of
economic challenges for American workers
including job losses and struggling businesses.
Consider these recent comments:
China is upset because of the way
Donald Trump is talking about trade
with China. They’re ripping us off,
folks. It is time. I’m so happy they’re
upset. They haven’t been upset with
us in 30 years. . . . I’m not talking
about war. But they have waged
economic war against us.
- Donald Trump at a rally in Staten Island,
April 17, 2016
When you know how [China] operates
and you know they’re always trying to
game the system and you know that
they really don’t care about the rules
of the road, you have to get tough and
you have to be ready to really draw the
line. And I think we are at that point.
- Hillary Clinton at the AFL-CIO Convention,
April 6, 2016
While both Trump and Clinton frequently attack
China in their speeches, the substance of their
remarks differ. Trump’s attacks, like many of
his policy positions, are sweeping and vague.
Clinton focuses on job losses, particularly when
campaigning in battleground states.
The rhetoric of both candidates is, at best,
an oversimplification of the issues facing
the American economy. But it is an effective
political tool. Robert Moran, Brunswick
partner and former Republican political
strategist, commented:
In an environment where the
American middle class is stressed,
the path of least resistance for
American politicians is rhetoric that
questions free trade and plays to
anxiety over immigration. In reality,
the real challenge is automation
displacing workers and requiring job
retraining. But America’s political
class is ill-equipped to address this
transition. America’s political elite is
now scrambling to appeal to frustrated
and fearful voters. We can expect
more skeptical rhetoric on trade and
investment throughout the
election season.
Sharp language toward China is not limited
to the presidential race. Every seat in the
House of Representatives and one-third of
Senate seats are up for grabs in 2016. Many
members of Congress are already criticizing
China as a way to appeal to disgruntled
American workers in their districts.
* Nominations for both parties will be formally
confirmed in July.
4. 4 | 2016 | BRUNSWICK ©
Political
Reality
D
oes the heated rhetoric about China
signal that either candidate’s presidential
administration would take a more hostile
stance toward China? It does not.
There is a big difference between politics
and policy in America. What is said during
the election tends to be political gamesmanship
designed to drum up support by appealing to
pressures felt by American voters. This is not
new. Over the past several election cycles,
China has often been used by politicians for
this purpose without there being
a subsequent substantial change in the U.S.-
China relationship.
Furthermore, both candidates have personal
histories of cooperating with China — Trump
in his business ventures, and Clinton during her
term as secretary of state. If Clinton is elected,
she is expected to continue Obama’s momentum
— and one of his legacies — and collaborate
closely with China. Clinton recognizes the
importance of the U.S.-China relationship and
would extend a hand to President Xi, likely
making it a priority to visit with him early on
in her potential administration. If Trump is
elected, his China policy is more uncertain.
He has advocated for a tough position on
trade and would likely continue this into his
administration. But he is expected to soften
his overall stance toward China once the
election is over.
One notable departure from the policy positions
of the Obama administration that might be
expected is a change in direction on the Trans-
Pacific Partnership (TPP). President Obama is
making a late push to pass TPP before his term in
office ends, as evidenced by his May 2nd
op-ed in
The Washington Post in support of the trade deal.
This has become a priority for the administration
because Clinton and Trump are each on the
record as opposing TPP. Unless the trade deal is
passed before the next president takes office,
then the next administration will be able to
either kill the deal or attempt to renegotiate the
terms with the member countries. While the
campaign rhetoric about China is mostly noise,
positions on specific policy issues, such as TPP,
provide signals regarding what can be expected
and what might prove challenging to maneuver
around during the new administration.
China’s leaders have learned to ignore much
of America’s pointed campaign rhetoric. While
critical statements from candidates have led
to Chinese saber-rattling in the past, this is no
longer the case. Rather, the expectation is for
overall stability in the bilateral relationship,
even if points of disagreement persist.
Premier Li Keqiang recently had this to say
about the U.S. election:
As for the ongoing general election
in the U.S., it has been lively and has
caught the eyes of many. I believe that
no matter, in the end, who gets into
the White House, the underlying trend
of China-U.S. ties will not change. It
has been several decades since the
two countries established diplomatic
relations, and the relationship has
seen more than a fair share of ups
and downs, but it has been always
moving forward, which I believe is the
underlying trend.
- Premier Li Keqiang at a press conference
in Beijing, March 16, 2016
After November, the president-elect will
become more measured in how he or she talks
about China. However, some members of
Congress are likely to continue blaming China
for economic hardships in America. Members
from districts with high unemployment rates or
stagnant wages can adopt a “tough on China”
position as a way to show they are attempting
to address local challenges.
5. 5 | 2016 | BRUNSWICK ©
Business
Implications
F
or companies considering making a
significant business announcement
between now and the election, Brunswick
advises both foreign and American companies to
carefully consider its implications, intended and
unintended. George Little, Brunswick partner
and former Obama administration Pentagon and
CIA spokesman, shared his views:
This stage of the election cycle is when
the political parties are most extreme
in their rhetoric. Making a significant
business announcement that could
be seen as resulting in significant
American job loss between now and the
general election comes with a host of
complexities and would be ill-advised.
The entire election cycle is a sensitive period
for any corporate announcements that could
conceivably be interpreted as a threat to the
middle class. This is particularly true for any
business that touches China. Candidates often
interpret foreign relations through an economic
lens and then link it to populist rhetoric.
This does not mean Chinese businesses
should stop doing business with American
companies or in the U.S. Rather, it means that
clear communication of intent and outcomes is
essential. Chinese businesses looking to enter or
expand their presence in the U.S. market should
do the following:
nn Understand the interests of all stakeholders
involved in a given U.S.-China business
proposition. This is all the more critical until
the November election has passed. Mapping
the goals and concerns of all who could have
potential interests related to a venture can help
avoid an issue becoming a lightning rod in a
national political debate.
nn Demystify your operations to global
audiences. A consistent issue for Chinese
companies looking to expand internationally
is a lack of understanding of their businesses
and leadership teams. Traveling to meet with
stakeholders regularly and in-person, as opposed
to holding remote meetings, will allow the public
to better understand a company’s operations and
intentions. This will help avoid misperceptions
and foster more personal relationships with key
decision makers. In addition, it is important to
develop collateral that speaks to a U.S. audience.
Websites, factsheets, and English speeches will
need to sound authentic and be of similar caliber
to those of U.S. businesses.
nn Develop a narrative and approach that
reflect the nuances and sensitivities of the
current political environment. This involves
tailoring statements and responses based
on the public dialogue and sentiment of key
stakeholders. Events move quickly and can
influence the course of conversation around a
U.S.-China related deal. It is critical to monitor
sentiment carefully to strike the right tone and
level of visibility. Full-throated responses may
be appropriate for some situations, while lying
low may be better for others.
nn Ensure that decision makers have a
more sophisticated understanding of your
business and issues at play. It is important
to retain high-quality lobbyists who can
communicate with the Executive and Legislative
branches of government. Developing an
understanding of how a business move will
help the U.S. economy can help to insulate the
company from hostile rhetoric.
It is a complex time for Chinese investment
in the U.S. For example, there are areas of
sensitivity where investments will receive
scrutiny from regulators and where deals
are more likely to be blocked, including:
proximity to U.S. government sites, critical
infrastructure, advanced technology (including
semiconductors), real estate, and companies
with significant intellectual property. How
these areas are defined by regulators is opaque.
Chinese acquirers involved in deals that even
loosely touch any of these should expect
additional review from the Committee on
Foreign Investment in the United States (CFIUS).
6. 6 | 2016 | BRUNSWICK ©
Conclusion
Nuance rules the day. America’s campaign rhetoric is the most
fraught it has been in recent memory. As the political landscape
shifts, foreign companies, particularly those from China, might be
inclined to think twice before doing business in the United States.
Though we recommend prudence, we do not think that Chinese
firms should shy away from engaging their American counterparts.
Understand the playing field, including sensitive areas, both geographic
and political, as well as who is playing. A venture’s success hinges
on the execution of a strategy informed by thorough review of the
landscape, issues, and stakeholders who care.
6 | 2016 | BRUNSWICK ©
7. 7 | 2016 | BRUNSWICK ©
Brunswick is the global leader in financial and
corporate communications, providing senior counsel
to clients around the globe on critical issues that
affect reputation, valuation, and business success.
Brunswick Group
For more information contact:
Brunswick Group
Address:
1099 New York Ave.,
NW #300
Washington, D.C. 20001
USA
Tel: +1 202 393 7337
Email: dsutphen@brunswickgroup.com
Office Email: washingtonoffice@brunswickgroup.com
David Sutphen
Partner,
Washington, D.C.
Address:
2605 Twin Towers (East)
B12 Jianguomenwai Avenue
Beijing, 100022
People’s Republic of China
Tel: +86 10 5960 8600
Email: smoore@brunswickgroup.com
Office Email: beijingoffice@brunswickgroup.com
St. John Moore
Partner,
Beijing, China
Address:
2605 Twin Towers (East)
B12 Jianguomenwai Avenue
Beijing, 100022
People’s Republic of China
Tel: +86 10 5960 8600
Email: ymei@brunswickgroup.com
Office Email: beijingoffice@brunswickgroup.com
Yan Mei
Partner,
Beijing, China
Address:
12/F Dina House
11 Duddell Street, Central
Hong Kong SAR
Tel: +852 3512 5000
Email: tzhao@brunswickgroup.com
Office Email: hongkongoffice@brunswickgroup.com
Tong Zhao
Partner,
Hong Kong, China
Address:
Room 2907, United Plaza
1468 Nan Jing Road West, Jing’an District
Shanghai 200040
People’s Republic of China
Tel: +86 21 6039 6301
Email: jzlu@brunswickgroup.com
Office Email: shanghaioffice@brunswickgroup.com
Dr. Jianzhong Lu
Partner,
Shanghai, China
Address:
245 Park Avenue,
14th Floor
New York, NY 10167
USA
Tel: +1 212 333 3810
Email: clf@brunswickgroup.com
Office Email: newyorkoffice@brunswickgroup.com
Cindy Leggett-Flynn
Partner,
New York, New York
www.BrunswickGroup.com