The Chinese parliament’s vote on Sunday to amend the constitution and remove limits on the length of presidential terms, meaning President Xi Jinping can effectively rule for life, will largely be positive for brands and agencies in China, according to two industry insiders.
Their views run contrary to those expressed by many Western media outlets, which see the vote to scrap the two-term limit as a power grab by Xi Jinping that could signify a return to the difficulties of the Mao era.
“[Xi Jinping] has another five-year term coming up anyway, so for that to be continued is actually very positive because it means that business can continue and the business trajectory is very predictable,” says Simeon Mellalieu, a partner in client development APAC at Ketchum who has worked in Hong Kong for some 15 years.
Mellalieu also makes the point that the vote will potentially lead to far lower levels of disruption than brands have experienced under Donald Trump’s administration in the USA. "In systems like the USA a new president can simply reverse any political decision that's been made by his predecessor, and we've see that being immensly disruptive for both sovereign nations and for individual brands that have been sucked into the political debate in that market."
Comparing this with China, it's completely the opposite, says Mellalieu. “Even when you have a transition from one president to another like we had five years ago with the shift from Hu Jintao to Xi Jinping, the entire political system is managed in a way for those kind of transitions to be as non-disruptive as possible. The Chinese government takes a very long term view about the development of the nation and doesn't like sudden disruptive change.”
Along with the five-year plans that get posted on a regular basis in China, the constitutional changes will allow businesses to plan forward for the medium to long term in lower-risk environments, he continues. “It's a good thing for business, it’s good for brands, it’s certainly a good thing for agencies as well too, that we can be sure of a longer period of security and consistent leadership from the Chinese government.”
Brands should learn not to talk to Chinese consumers as though they are almost kids at Christmas
His view is echoed by Jerry Clode, head of digital insight at the digital and social media agency Resonance China. Despite the many headlines, Clode says these changes have not come as a surprise to him as a close follower of China.
“I believe that the Western media generally looks at it as a regressive step,” says Clode, “but another way to look at it is actually as a quite progressive step in terms of China's ambition to be a great nation.
“In the context of China it would be hard to find someone who did not support this change because of the popularity of the leader himself.”
The wider takeaway from the scrapping of the two-term rule, in Clode’s view, is what is says about China’s hopes for its future on the world stage. “It’s actually about optimism," he says. "Optimism about how China will take its place as a global leader. What does being a global leader mean? It means having a strong leader who is able to unite the people.”
What brands should take from the changes is a renewed sense of how they talk to Chinese consumers, who for too long they have failed to address as bona fide global citizens, according to Clode. “I think that brands can connect with the wider idea of China's re-emergence as a global power. The way that I’ve been talking to clients about this is not to talk to Chinese consumers as though they are almost kids at Christmas, which quite often brands get into the habit of. It's ‘look at this wonderful exotic culture that you get to experience too’. That's not the way that modern millennials see themselves in China.”
International brands must remain digilent acting in China
Although the potential positive outcomes of the vote apply to international businesses as well as homegrown Chinese firms, says Mellalieu, recent crises prove that there is still a greater need for diligence in terms of how foreign brands adapt their businesses for operations in China.
“There's a lot of scrutiny going on. Most recently we've seen a lot of examples of international brands tripping up because of how they are operating their online businesses with the delineation of countries and territories,” he says. (The Marriott hotel chain website, for example, was blocked for a week in January after listing Tibet, Hong Kong, Macau and Taiwan as separate “countries” in its email and app).
The best practice for foreign brands is to apply “greater control of their management from inside China”, says Mellalieu.
“Politics should be a no-go for brands anyway,” states Clode. “That's simply the reality. We've seen that some of the PR crises recently, for even a simple misdefiniton, can be deeply damaging for brands so I don't think that equation has really changed at all.”
Neither Mellalieu nor Clode predicts that the vote will have a significant negative impact on Chinese brands working abroad, however, despite the negative reaction from foreign media.
“Many of these brands, using Huawei as an example, have invested an incredible amount of effort into making themselves international, in a sense to blur that direct political association with the brand,” says Clode. “So when people think of Huawei they do not necessarily think of a Chinese brand.”
Mellalieu thinks that Chinese brands’ performance overseas will be impacted more by China’s behaviour as a whole, as it becomes ever more global. “Single long-term leaders is something looked on rather quizzically from observers in the West. So a lot of this would hinge not just on the presidency's performance but how China behaves on the world stage. Obviously it’s taking a larger and more significant role on that.”