Letter from the President
by Robert A Kapp
President, The US-China Business Council
After 10 years at the helm of the US-China Business Council,
Robert A. Kapp will leave his position in fall 2004.
Dear Successor,
It's time to begin wrapping up 10 years of fascinating work at the US-China Business Council and to leave a few pointers behind for you.
You will lead a wonderful organization, with a strong base of several hundred US companies and firms ranging from 30-year veterans to companies new to China. They will expect thoroughness and extremely high competence levels from the Council and will provide you with invaluable support. You have in the Council the resources with which to serve your member companies well.
You will lead an organization whose reputation for commitment to the enhancement of US-China economic and commercial ties is unparalleled. You will find many warm welcomes in China from the Council's wide network of US and Chinese business friends and counterparts.
In Washington, you will enter a dense network of political figures, civil servants, policy researchers, nongovernmental representatives, journalists, and polemicists who know the Council well and respect its voice even when they do not share its views. You will also meet those who do not wish you well.
As you prepare to settle in, let me offer a few observations for you, and a few recommendations as well.
1 Observation: Commercial interaction with China is the core of the US-China engagement, but it cannot and should not always be isolated from other dimensions of US-China relations.
Recommendation: You must master the larger themes in US-China relations if you are to advance the ideas and the concerns of the American companies whose interests the Council exists to advance.
Business issues often need to be seen exactly as that, and not loaded down with the baggage and the sensitivities attending other aspects of the US-China encounter. This is business's traditional (and often valid) response to other voices demanding the linkage of trade and non-trade questions, for example in trade agreements.
But in the end US-China trade and business relations are inherently political, in both countries. Especially as China's economic and political footprint continues to grow, the nature of our politics ensures that trade and non-trade policy matters relating to China will often be entangled. Business needs to hone its skills in that complex environment, in both the United States and China.
2 Observation: In the United States, an active political constituency dedicated to stronger US-China relations does not exist. This is especially important in regard to the Congress, where members cluster together around shared interests in good ties with many countries and regions, but not with China. There is nothing, for example, comparable to the House Taiwan Caucus, with its more than 120 members.
Recommendation: Your job will be to assert and defend your community's interest in a calm and productive US-China relationship in an environment devoid of permanent political allies within the US political system.
The task will require constant engagement with literally hundreds of people in the policy arena, friendly and unfriendly, either directly or through Council staff. It may also, on occasion, require strenuous advocacy in the face of inflammatory criticism or an assault on the foundations of US-China relations from non-business quarters.
The stream of criticism and invective directed at China by politically active groups in the organized labor community, the "China Threat" community, and their friends in Congress, will continue far into the future. Judicious legislators willing to grapple soberly with the complexities of China's situation and of America's relations with China are few, and their ranks are not increasing.
On the other hand, a large and growing community of American companies requires a stable, civil, and productive relationship between the United States and China. In institutions of higher learning and research, similar bonds of cooperation are forming.
American businesses do not like to stand up on political issues outside of the most directly commercial ones, lest they be blasted for interfering in matters they should not enter, or be deemed unpatriotic or amoral. You will need to help business find its voice on questions that do not naturally evoke corporate expressions of opinion.
3 Observation: The perspectives and interests of US business, sometimes articulated directly to a China increasingly willing to listen and to hear what we have to say, and often directed to a US government committed to the defense of our economic interests with China, have helped to form the templates with which China's leaders are building their country's new economy.
Recommendation: Work to articulate to China and to our own government the best of what American companies can envision, and the most responsible portrait of what they legitimately expect as they work to succeed in China.
US business with China, conducted by our member companies, is part of a truly historic 25-year process of Chinese economic transformation and global integration whose full significance cannot yet be known by anyone. But there can be little doubt that US business, by its examples, its accessibility, its practices, and its demands for change in the Chinese commercial and legal environment, has contributed to China's vision of what the PRC can become.
Has American business "caused" China to develop as it has to the present? Of course not: for one thing, the United States accounts for less than 10 percent of total foreign direct investment in the country.
But the patient and vigorous articulation of American business perspectives, combined with US companies' efforts in corporate social responsibility, will continue to generate interest among Chinese policymakers and economic figures. The Council's role in this regard should grow.
4 Observation: When it comes to business with China, the American public perception is mixed. The announcement of China's arrival on the world economic stage has sounded; the American public has taken notice, but China remains an abstraction for most Americans.
Recommendation: As the new leader of the US-China Business Council, you will need to articulate in a thousand venues the value of your member companies' progress in China for audiences outside those companies. This is not an easy task. There are plenty of voices eager to show why your member companies' progress in China is bad for Americans. You will need to be honest but creative in affirming the positive meaning of this now-huge commercial engagement.
Americans like entrepreneurship, and they love success. But they often fear bigness--big government, big business--and its perceived dehumanizing power over ordinary people. Some fear that companies, pursuing profits, will ignore higher ethical or moral principles, particularly those that exist to protect the disadvantaged.
Thus, the normal desire for economically priced consumer goods does not translate into a public conviction about the benefits of Chinese imports. The fact that China's purchases of huge amounts of US Treasury paper help to keep interest rates low, at a time when US federal budget profligacy and low household savings rates might otherwise have more disruptive economic effects, does not register on the public consciousness. The up-sides of US-China economic engagement need responsible articulation in the United States, and the US-China Business Council must continue to provide it.
5 Observation: In the United States and China alike, the media have much to do with an organization's success, whether it be a company or a nongovernmental organization.
Recommendation: Work with the media. Encourage business engagement with them. Strive to maintain and enhance the Council's reputation for responsiveness and accuracy in serving media needs for information, often on short notice. But work with your interviewers to be sure that you understood what was asked and that your responses have been understood as they were intended. Fight for corrections when the media distort your points. Never put words or thoughts for the media into the mouths and minds of those whose real thinking you don't know.
Respected American reporters and producers should receive the fullest possible assistance from the US-China Business Council. But never allow yourself or the Council to be hostaged to media agendas, and never let serious media misrepresentations of the Council's views go unchallenged.
6 Observation: US-China matters are seldom as totally positive as we might hope, and seldom as dire as we might fear. They don't often end definitively. In fact, most of them don't end at all.
Recommendation: Expect to revisit old issues and repeated themes, but don't mistake the recurrence of old questions for the utter absence of change or of progress. Distinguish the major milestones from the momentary excitements.
Will the United States and China have problems over intellectual property rights (IPR) protection again and again? Very probably. Does this mean that there is never progress on IPR protection? No. Will China and the United States snarl at each other over antidumping or other market-closing actions by one side or the other? It's a safe bet. Does it mean that US-China trade is not also progressing nicely? No.
The Council lives partly in a world of crisis and press release, partly in a world of megatrends. Every press release, by definition, is "news." The question is, for how long? As president of the Council, you must know and interpret the day's events, good or bad, but also measure the megatrends, soothing or disconcerting. And so: Never sugarcoat, but never hit the panic button. This work is long term, challenging, and occasionally it can really make a contribution to something bigger. That's the best part.
Those are a few thoughts for the new incoming leader of the US-China Business Council this fall.
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