Soft power helps Chinese firms tackle tough problems

• Source: Global Times
• [21:35 August 29 2010]
• Comments

By Catherine Chan

China is indisputably at the top of most international agendas in both the political and business worlds.

However, whether China's business community is ready for a leadership role is another matter.

Soft power has been on the radar of China's political elite since being endorsed by President Hu Jintao in 2007.

Generally understood, soft power is not a new concept.

Winning hearts and minds has always been a mainstay of statecraft and warfare, and the power to inspire love rather than fear has been a goal for leaders since time immemorial.

Nor is the concept new to China. Soft power was first popularized in the ideas espoused by Lao Tzu and Confucius and is at the heart of Sun Tzu's famous stratagems.

Indeed, Confucius' name has been bestowed on the global network of Confucius Institutes promoting Chinese language and culture in major world cities as part of a deliberate strategy promoting Chinese soft power.

But corporate China seems to be lagging in cultivating soft power to its advantage.

As Chinese business people and organizations expand their dealings with the wider world, the ability to move smoothly and confidently in international business cultures becomes increasingly important.

Moreover, the inability of Chinese corporate leaders to project soft power will potentially damage any advances made in the political sphere.

Engaging and understanding international business culture as a sophisticated participant are major assets for Chinese business leaders.

Sany Heavy Industries President Xiang Wenbo found this out the hard way, when Chinese Vice Premier Wang Qishan responded to a request for internal expansion funding, "Do you have a handle on your own management capabilities? Have you analyzed the cultural differences of the two sides? if you don't know yourself and your opponent, then this kind of confidence scares me."

This kind of awareness is growing, and serves as a salient example of how Sun Tzu's maxim "To know your enemy, know yourself" remains pertinent in business dealings today.

The corporate scandals that have periodically plagued the food and manufacturing industry in China are every business leader's worst nightmare.

The domestic and global reactions to the 2007 lead paint toy scandal and the 2008 chemical-tainted Sanlu milk scandal were negative in the extreme, not only because of the truly appalling consequences of each disaster, but also due to mismanagement and poor communication on the part of the offending companies.

One source of soft power Chinese companies need to think seriously about is their corporate image.

For many foreign investors, credibility is key. This means that not only doing the right thing, but also being seen to do the right thing will be a major issue as Chinese companies increase their international dealings.

One of the key issues that arose out of the Sanlu milk scandal was the delay in response over the way the disaster was handled.