Government Relations and Geopolitics

The Remit of Government Relations

Jake Siewert is Head of Global Public Policy and Political Risk at Warburg Pincus. Siewert’s career has spanned the private and public sectors, including as Press Secretary at the White House. On the question of how government relations has changed over the years, he said, ‘In the old days, government relations was very much about building personal relationships around a shared interest. If a company had a plant in a town in Iowa, you had to know the congressman, the mayor, the senator, the governor, and there would be a shared interest in making sure that the plant was successful. If there was an issue that you wanted those people to advocate on your behalf, then you invited them to the plant, you might hold a fundraiser for them, it’s all about building those relationships. That’s still important and you can’t neglect it. What’s dramatically changed today is the lawmakers are as responsive to what’s going on in social media as any other stakeholder.’

This raises a theme that is consistent throughout this exploration of corporate reputations, which is that every move a company makes is interconnected in a world where the flow of information is not controllable. Jake provided an anecdote that illustrates the shift that’s taken place. ‘I remember back to a time when I worked for a company that wanted to build a new facility in a small town in the Amazon. It was a good project for the town. What was interesting is that when we went to these tiny, remote villages in the Amazon, where people had to come in by boat, they had laptops, and they were asking questions about our operations in Iceland, Texas, Australia, and places like that. People can punch the company name into Google, and if any negative stories pop up, there’s only so much the politicians can do for you. The world has become radically more transparent, and you need to have a strong narrative in place around the world to support your government relations.’ Politicians are highly sensitive to public commentary around a particular company and any controversies must be solved before the company can expect support.

What Constitutes an Effective Approach?

As the landscape around which government relations continues to shift, what makes for an effective approach to engagement? Donough Foley has had a long career in government relations, with a primary focus on the Asia-Pacific region. Among other roles, Foley was Managing Director Government & Public Affairs at Moody’s Asia-Pacific and Head of Government, Asia-Pacific, at Philips Electronics. In relation to what makes for effective engagement with the government, he suggested, ‘The common feedback I get from regulators in Asia is that people don’t listen. Companies don’t look behind the need for a policy change. They don’t look behind what’s happening, what the regulator needs. Nobody asks, what more can we do for you? You get more from the last 15 minutes of the meeting, when you ask the “what more can we do for you?” question because it’s open ended. Versus just saying that this policy is not going to work for us.’

In Asia, there is a close relationship between large local businesses, state-owned enterprises, and political stakeholders. An awareness of those stakeholders, their goals, and what it may mean to the company’s advocacy or commercial goals is vital. There are also a web of business associations and chambers of commerce in countries across the region. Foley said, ‘From a government relations perspective, if you want to be successful your focus isn’t just entirely on the government space. If you look at Asia as a whole, whether it be Japan, Singapore, Malaysia, or China, business is closely aligned with government. There are organizations across each of those multiple markets where if you don’t have a seat at the table, if you’re not building a network, then you don’t really get to know what’s going on before it’s too late.’

Steven Okun is CEO of APAC Advisors and Senior Advisor to McLarty Associates. An American citizen, Okun has lived in Singapore for many years, where he’s held a range of prominent public affairs roles. On how to think about a proactive framework for government relations, Okun said, ‘The five P’s of Public Affairs are global. They are: Policy, Public Interest, Process, Politics, and Partnership.’ Okun elaborated on each, which are summarised as follows:

1. Maintaining an informed understanding of policy is an obvious starting point. Before you can advocate for a change in a regulation or law, you need to know the policy arguments both for and against. Public affairs practitioners must know both sides of the argument and be able to articulate your company’s position clearly and in depth.
2. The company must be able to explain why implementing the policy it is advocating advances the public interest from the government official’s vantage point. Okun notes that every government—from multi-party democracies to one-party states—considers the public interest from their own point of view before making major policy decisions in some fashion. On a related note, Siewert said, ‘You need to design a narrative that feels local and makes sense in a local context. In the past, a lot of big American multinationals tended to centralize communications. They ran everything through headquarters and there was a process for approval around media interviews, around branding and marketing campaigns and the like. For a global company today, if you put a powerful person in the headquarters, that is fine, but their perspective becomes the perspective of headquarters. So devolving communications to local leaders is critical.’ This has led many companies to be a lot more proactive in rotating staff from Asia into headquarters.
3. The process upon which this policy is going to be decided varies from governments, is usually complex, and varies in transparency. A detailed understanding of the local decision-making process allows you to lobby the right audience at the right time. You need to know what you don’t know. Retaining experts who understand your objectives and can leverage their ‘local-ness’ on your behalf gives you a greater chance of success.
4. What are the politics behind a particular law or regulation? Politics can derail even the most coherently argued policy position that meets the local public interest test. To meet this challenge, you need to look far beyond newspapers and policy briefs. Talk to experts and understand the trends and events in local markets. Peel back the rhetoric and really look at what issues are driving the decision-making process. Only after you map the stakeholder landscape can you connect the dots, understand who supports whom, and develop a battle plan.
5. The importance of partnerships recognizes that effective government relations includes engagement with workers and customers, shareholders, banks, NGOs, and the media. Developing local partners who will willingly articulate your position across the entire stakeholder map often provides the greatest impact. Building these partnerships can be accomplished regardless of one’s nationality if it is based on shared interest. That said, there is a school of thought that while well accepted in the West, the role of grassroots campaigns and media-led initiatives to support government advocacy has been less of a priority in Asia.

Okun explained, ‘The 5P model works everywhere. What has changed more recently in its execution is that geopolitics impacts the “politics” and the “public interest” points more than it had previously. You need to be aware of the geopolitics far more today compared to 20 years ago. Back then, for example, when you came to the Singapore government, public interest would very much focus on how much FDI you were bringing, how many jobs you were creating, how many expats are we bringing in to pay taxes. Now, you talk about those things, but you also talk about what are you doing for the Singaporean workforce, how you will be training them, offering them opportunities and how your presence will benefit Singaporeans directly.’

The Critical Impact of Geopolitics

In past eras, government relations was a comparatively sedate corporate function, carrying out technical and mundane work in the backwaters of corporate activity. Companies could go about their business with little concern about what was going on in the public sector. How things have changed, under the influence of a volatile and interlinked geopolitical landscape. Corporate missteps, whether through action or inaction, can be punished quickly and forcefully.

Geopolitics is not new. The term ‘geopolitics’ is considered as having been used by Swedish political scientist Rudolf Kjellén around the turn of the twentieth century. Awareness of geopolitics has always been relevant to companies, even if only to know the legal basis for being allowed to operate in another country. What is new is the magnitude of the impact of geopolitics on corporations around the world. Okun put it this way: ‘Twenty years ago, trade and economics were in one bucket, and national security and diplomacy were in a second, and there wasn’t a lot of overlap. Then, in managing public affairs, you did not have to consider how what you did in China would be received in Washington. While there were certainly issues between the U.S. and China geopolitically and from a national security perspective at the turn of the century, these were often separate to business matters. Today, trade and economics have merged with national security, so you have to be thinking about both U.S. and China when you’re conducting business in China.’

When asked for an example, Okun said, ‘When I was at UPS, the first UPS aircraft to land in China happened in 2001. It coincided with the time when a U.S. military aircraft had been grounded on Hainan Island with its crew detained, resulting in an international crisis. The event commemorating that arrival went forward. Today, whether to go forward with such an event would be considered very differently.’

In the past, it was far easier to separate business dealings from international politics. It was also a simpler exercise for an MNC to do and say something in one market and feel reasonably secure that it would not impact the company to any notable degree in another market. Today, this is not possible. Okun made the point, ‘If you are an American company, it is no longer the case what you are doing in China is going to be treated completely differently from what you are doing in the States – they are now intertwined. You must be aware of both markets and try to balance them. China will also act against U.S. companies for what they say in the U.S. You saw that with the Houston Rockets General Manager a few years ago when he made comments about Hong Kong, which ended up costing the NBA a lot of business in China.’

While it is impossible to predict what will happen in future years, it seems things will get worse rather than better. Looking at the global environment in which governments are operating, Okun said, ‘I use the term “poly crisis”, which has been popularized by Adam Tooze, a professor at Columbia University, to describe the coming together of multiple crises. Governments can barely handle one crisis at time. But when you have not one, but four or more global crises as we have today, those crises bump into one another. Governments cannot effectively handle them. You have the U.S.-China crisis, the Russian crisis, the climate crisis, a supply chain crisis and a post-pandemic crisis. The climate crisis is leading to food shortages and the Russian invasion of Ukraine is also creating food shortages. Those two then bump into one another, making the food shortage crisis worse.’ Okun went on to note that the U.S. Inflation Reduction Act was introduced to help finance the climate transition, but this has also caused trade tensions internationally. He concluded, ‘So, you have to be aware of this poly crisis and what that means for governments.’

Excerpted from Stephen Thomas’ book, Reputations of Value, Winning with Corporate Reputations in an Unpredictable World (Penguin Random House SEA, 2024). Stephen is Principal of TAVO Advisory, where he works with clients on matters relating to reputation, trust and stakeholder engagement. Previously, Stephen was Head of Brand and Communications at AIA Group for nine years.