The 11th Five-Year Plan, the latest in China’s series of strategic plans for economic growth and stability, covers the period 2006–2010, which is likely to be a major historical period in the socioeconomic development of China. It is a time of many contradictions and risks, for it is regarded as both a “golden age of development” and an “age fraught with contradictions.” If associations make the proper strategic choices, they may be able to grasp opportunities may be grasped with great benefits. Otherwise, development will be delayed with a heavy cost. (3)

Corruption is certainly an issue in China, and international business people must quickly learn to deal with it. The New York Times recently reported that “in an economic boom gilded with excess and profiteering, official corruption is so widespread, and increasingly so brazen, that it is almost taken for granted. The latest World Bank governance survey found that China has seriously backslid in the category of ‘containing corruption’ when much of the rest of the world, if not improving, was basically unchanged. . . .” President Hu Jintao and Prime Minister Wen Jiabao warned that corruption threatens the credibility and legitimacy of the Communist Party rule and have vowed to stamp it out. (4)

But in spite of corruption, most Chinese business people have a strong personal ethic. Confucian philosophy, which has helped shape Chinese culture for more than 2,500 years, is an integral part of their personal and professional lives. Personal relationships are important to the Chinese people, and anyone desiring to do business in China must first spend time cultivating relationships built on mutual respect and credibility. Unlike their Western colleagues, the Chinese are experts at using patience to their business advantage.

There is no nation or business entity in the world today that is not directly or indirectly affected by China. China’s average annual growth rate in the manufacturing sector has been in excess of 14 percent, and its annual growth rate in the services sector has been in excess of 8 percent, growth rates that are second only to those of India. It has been widely reported that one-fifth of the construction cranes in use in the world were operating in Shanghai in recent years. China is a market that is so hungry for growth that it is virtually gobbling up the world’s financial and material resources.

This market is ideally suited to the roles typically played by trade associations and professional societies. Professional development, which is a key offering provided by associations, is badly needed in China. Membership-based associations have seen growing membership interest in the past few years from China, and U.S. leadership may be developing a strategy for better serving this market or is puzzling about how to do so.

In this case, it is prudent to puzzle because China is not an easy market to penetrate, in spite of the incredible opportunities China represents. Associations that do not have any sort of sanctioned legal status in China will find it especially difficult to gain a foothold there. Traditionally there are five ways of working with or in China:

Export products or services to China: This is the least expensive and least risky way to do business in China. In other words, it is possible to serve the market from a distance. The advantage of this arrangement is the relative lack of risk, while the disadvantage is that one is unable to grow and expand into all the opportunities that China offers.

Most American-based associations are introduced to the Chinese market from a distance. Either the U.S. association has been contacted by an entity of the Chinese government that is interested in becoming an active collaborator in the association’s activities, or individual members from China seek to join and participate as members. Most of the cases noted below describe associations that originally started in the Chinese market in this way.

But to characterize this option as without risk is not entirely accurate. After an association has seen success in building up a sizable membership presence in China, the risks begin to escalate. These risks involve theft of intellectual property and possible problems in getting membership dues out of the country and back to the association. What size presence an association should have before it considers moving to the next step depends on the size of the association. Perhaps the best trigger point might be the level of pain the association would feel should it suddenly lose all its members and presence in China. If it would hurt, then that is a sign to develop a stakeholder’s interest in this market and plan to expand administrative presence there.

Maintain a representative office in China to promote the association and its products and services: This is relatively easy to do, but there are also limitations. For example a representative office cannot solicit membership or collect membership dues. Its role is promotional in nature, and to act as your eyes and ears to ensure rights to the association’s logo, name and intellectual property are protected.

Develop an in-country presence by licensing or franchising arrangements: This will be primarily of interest to association industry partners who are in a position to take advantage of China’s relatively new franchising laws. The Chinese government officially encourages this mode of entry, and any visitor to China cannot help but notice the enormous success of virtually every franchise found in the Western world.

Franchising laws are in place in China, and franchises are warmly welcomed. But while associations are actively using the franchise concept to expand globally, its use in China is largely unexplored territory. The principal problem lies with the government’s role in exercising tight control over all membership organizations as well as any organization that sets itself up to educate. Any organization that helps China to compete globally is welcome, but there is a great deal of circumspection about differentiating between business and political activity. The Communist government can be cautious and is still grappling with the idea of free enterprise. So this way of proceeding might work, but it might also be slow and tedious going.

Participate in a joint venture with a Chinese firm:Joint ventures are risky arrangements that used to be the only method of foreign investment sanctioned by the government. It is risky because if the joint venture fails there is little the foreign owner can do to prevent its assets, including its intellectual property, from later being used by its former Chinese partners.

One less risky way to approach a joint venture is to do so through collaboration with existing, established entities such as the AmCham-China, or an officially recognized Chinese association, or in partnership with one of the many western law, accounting, or publishing firms. Such partnerships can and do help associations market their services as well as help in repatriating funds from membership dues.

Establish a wholly owned foreign enterprise: In wholly owned foreign enterprises, or WOFEs (pronounced “woofies), the foreign investor attains government recognition of its presence in China. The advantage of this approach is that the association, the investor, has total control over its operations in China, but the disadvantage is that the association would have to invest considerable time and money on market research and staff recruitment beforehand. Launching a wholly owned foreign enterprise should be the final step in an association’s movement into China, and it should not take that step until after the association is well established in China and committed to staying there for the long run.

These five modes of market entry are not mutually exclusive. Many foreign investors can and do use a combination of approaches to crack this fascinating market. But associations have a special problem. Communist governments (and former Communist governments, such as Russia’s) are particularly interested in controlling membership organizations, especially those that offer education and training programs. For this reason, the only official associations in China are those that are quasi-governmental.
Literature, in both hard copy and digital versions, imported into China is closely examined and sometimes blocked. Membership fees in organizations that are not officially recognized are difficult to collect, particularly if funds have to be transmitted outside the country. And, technically, any unofficial gathering of more than a handful of people anywhere in China is against the law. This situation presents an interesting dilemma for Western membership-based associations.

Official recognition of association management could take many years. In the interim, Western associations need to be innovative, and they need to have recourse to the single most important factor for success in China: guanxi (pronounced gwan-shee), a kind of social capital accruing from one’s personal network of influence. China is a culture of relationships. In marketing terminology, China would be referred to as a high-context culture, one in which people do enter into business arrangements without acquainting themselves with a potential business partner’s family and social network. (In American culture, by contrast, people do business with strangers fairly easily.) Foreign entities need to choose a Chinese partner that has guanxi, the relationships needed to help launch an endeavor successfully.

Apart from cultural considerations, local contacts are crucial because of China’s sometimes overbearing bureaucracy and because of the many languages spoken throughout the country. China does not offer easy success, but it does represent tremendous opportunity to those with flexibility, intelligence, persistence and willingness to work hard, all qualities highly valued in China.

What Does It All Mean for the Association Community?

Despite its size and growing middle class (20 percent), China remains largely untapped by foreign retailers and professional associations.(5) As its middle class continues to grow, the newly rich will become supportive of charitable organizations. Professionals seeking to enhance their skills will pay membership dues to organizations that offer professional development and leadership training. And for government-encouraged industries such as science and technology research and education, and energy research and energy savings technologies, incentives are often generous and assistance available.

Leadership development opportunities abound. China is hungry for knowledge that associations could provide. Although the chief staff executive of a Chinese association may have received some type of training, it is usually project oriented. Staff is generally unfamiliar with sound practices and procedures and frequently unfamiliar with the basic tenets of the associations they represent. They have not developed fundraising and marketing skills, and they need training and guidance in these important areas.

A growing need for professional certification programs has resulted from the demand for a skilled workforce. China is “shifting the focus of its economic growth from quantitative expansion to the raising of quality and efficiency.”(6) With 1.3 billion people and few opportunities for university education, professional certification programs can help raise quality and efficiency, overcome poverty, and ensure that the growing demand for workers employed by foreign-owned companies will be met. China’s emerging economy depends on its ability to provide trained, reliable workers as China continues along the path of private investments and consumer goods production. And its culture places a premium on hard work, self-improvement, and learning, characteristics that ensure that many professional certification, training, and educational programs now being offered are oversubscribed.

The 2008 Beijing Olympics and 2010 Shanghai World Games will give many travelers an opportunity to briefly experience China; but association leaders must pave the way for true exploration into partnerships that will forge greater understanding, trust, and mutual respect among our global neighbors. Philip Kotler, a marketing expert, explains that “good companies will meet needs; great companies will create markets.” (7) The same is true for great associations. And along the way, association leaders should do their homework and make sure that the partnership is a good one.
Associations in China are not replicas of the U.S. association model. For the most part, they are organized and supported by the government, both the central government and regional governments. They may serve many of the same functions as U.S. associations, such as organizing fields of knowledge, providing credentials and standards, organizing learning, publishing, and advocating for certain positions, but they are direct government organizations or are linked to the government as quasi-governmental organizations or are approved by the government.

The Chinese government is complex. There is a strong national government but also strong provincial and municipal governments, all of which have a role in approving a foreign-based association’s entry into China. Government continues to be key in every decision, including which associations will provide value and which will not. Yet it is pragmatic, recognizing the need of a (socialist) market economy to reach out to global leaders in areas such as standardization, credentialing, and workplace skill development.
The following discussion includes examples of both Chinese and U.S. associations that are operating successfully in China today. All are related to or approved by the government, yet they have different purposes and are organized in different ways.

The American Society of Mechanical Engineers (ASME) and the American Society for Quality (ASQ) provide examples of the Chinese government reaching out to form relationships with those offering internationally recognized certifications, an important issue for China. The Chinese Association for Quality was formed by the Chinese government in the early 1980s to address issues of quality control and is now a quasi-government organization with a collaborative relationship with ASQ.

The American Planning Association is a U.S. association that has a representative office in China and a strong relationship with the government. The association provides technical expertise, training, and an exchange program for Chinese local officials and planners.
China is home to chapters of Toastmasters International, an organization that provides speaking and leadership training. And the Chinese Nursing Association is an example of an indigenous Chinese association that has flourished for nearly 100 years.

These are just a few associations that are operating in China. They have a variety of purposes and approaches, all of which meet a pragmatic goal in China, but as far as we could determine they have no relationship to each other. Association management is not a recognized field in China, but there is a need for training on how to successfully run these organizations. And although Chinese associations are government or quasi-government organizations, many need to begin raise money to support themselves.

Case 1: Reaching Out for International Standards: The American Society of Mechanical Engineers (ASME)

The American Society of Mechanical Engineers has had a presence in China since the late 1980s, when a Chinese pipe manufacturer sought certification under ASME’s boiler and pressure equipment standards. Since then, ASME has certified 180 Chinese companies.
Growing Chinese interest in ASME’s codes and standards led ASME to progressively increase its presence in China, first through the creation of about 15 partnerships with various Chinese organizations that were used for translating and disseminating ASME’s codes and standards. Then in 2004 ASME chose to take advantage of a U.S. Department of Commerce export promotion program that helped finance the Beijing office of the Consortium on Standards and Conformity Assessment (CSCA), a coalition of four American standards-making organizations that also included the American Petroleum Institute, ASTM International, and the American arm of the Canadian Standards Association (CSA).

Through this coalition ASME has developed and maintained contacts with its Chinese counterparts, including the Chinese Society of Mechanical Engineers. While the work of the CSCA is expected to continue through to 2008, ASME has decided to set up its own representative office in 2007 through which it intends to continue to market ASME products and services delivered from the United States.

In the area of codes and standards, the Chinese government recognizes the roles both of United States–based organizations such as ASME as well as the Geneva-based International Standards Organization (ISO). China actively participates in any and all standards-making organizations that will help them penetrate the world’s richest markets. But even as China works with both Europeans and Americans, ASME observers have noted that China also intends to develop its own Chinese standards. Over time China hopes that these will become the standards of choice used by all companies operating in China. Interestingly, rather than trying to fight or compete with the Chinese, it is ASME’s intent to work collaboratively with China in helping them to realize this strategic objective.

ASME’s expansion into China is part of the its overall globalization program, a result of its recognizing that the world’s largest and fastest-growing markets lie outside of North America, markets that for the most part do not offer the same caliber or scope of products and services that are typically available through the older and larger associations such as ASME. By entering China at this time, ASME is choosing to be part of this growth rather than to watch it from a distance.

Case 2: The Quest for Quality: The American Society for Quality (ASQ) and the Chinese Association for Quality (CAQ)

In1999 the Chinese National Certification Administration (CNCA) approached ASQ to find a way to help China close the quality gap. The American Society for Quality unites more than 100,000 individual and organizational members with the purpose of “advancing learning, quality improvement and knowledge exchange to improve business results and to create better workplaces and communities worldwide.”

ASQ has been working in China for the last eight years and has now established a WOFE with a staff of five. Establishing a presence in China was challenging. It involved a great deal of trial and error, investment, and legal work in a complex environment, but mostly patience. Many of ASQ’s multinational members do business in China and seek to train their indigenous staff in basic quality tools and techniques, leading to consistent standards. ASQ works collaboratively with several Chinese organizations dedicated to quality, including the Chinese Association for Quality and the Shanghai Association for Quality, to provide consistent training to Chinese companies and help further the worldwide standard of quality.

The Chinese government established the Chinese Association for Quality (CAQ) in 1979 to address the issue of quality control in Chinese industry. Its role was expanded during the 1990s to ensure that Chinese manufacturing was meeting international standards such as ISO 9000. CAQ is primarily focused in the Beijing area. It is now a quasi-governmental organization linked to the Commission for State Assets Supervision and Administration.

In addition to CAQ, there are other associations for quality in China. The emphasis on quality is key to ensuring that Chinese companies are effective in China and competitive on the international stage.
CAQ, an association of corporate members, disseminates quality-related knowledge to members and helps them get certified according to international standards. Recognizing that it needed advice and expertise, CAQ reached out to the American Society for Quality (ASQ) to find a collaborative way to offer technologies, concepts, tools, and training in quality.

CAQ runs several learning programs and advances the concepts of quality. It now offers training to prepare engineers, managers, and others for ASQ certifications. They are trained and permitted to use ASQ’s training materials, which have been translated into Mandarin. However, the certification test is based on exactly the same international requirements as in all other countries, so passing it carries a high level of prestige and competence.

Case 3: China’s Explosion in Planning: The American Planning Association (APA)

In the next 15 years, more than 300 million people are expected to move from China’s rural areas into its urban centers. The urban population growth will put a strain on global resources and present many urban planning challenges for the government. The American Planning Association (APA) is taking its experience and history of comprehensive planning lessons developed in the United States and offering them to Chinese leaders as they struggle with their urban and regional issues.

Since 1996 the APA has hosted delegations from China and provided them with policy and training services based on American planning experience. The delegations have included Chinese national government officials, mayors, and professional planners.
The Chinese delegations visit American cities comparable to their own in size, economic power, and problems and see firsthand the effects of planning, including both successes and failures. This exchange offers a mutual learning opportunity for the cities in the United States as well.

The APA works on follow-up hands-on projects with the Chinese Mayors Association and various planning organizations in order to develop the tools and techniques to implement the concepts discussed in the training program. Working directly with the local governments to bring expertise in areas that can be seen as models for other cities, the APA has assisted cities in historic preservation, regional strategic planning, and transportation-oriented development.

The APA has helped Chinese officials develop a plan to create a coastal area development strategy for Tianjin and a heritage conservation and tourism plan for Changxing in Zhejiang Province. APA experts work with their Chinese colleagues to create plans that build on the geographic and cultural features of the region, using the same method applied in many U.S. cities. The goal is not to copy American plans but to develop a Chinese approach that learns from America’s long experience with urbanization issues.

In addition to demonstration projects, the APA offers workshops, lectures, and tours in Chinese cities for American members and nonmembers who have an interest in Chinese planning.

Case 4: Developing Workplace Skill: Toastmasters International

Although many Chinese have studied English, few have had opportunities to become fluent in the spoken language. As the country has opened up to more interaction with the Western world and begun to take an active role in the world economy, Chinese businessmen and women are eager to improve their English and their public speaking skills in hopes of gaining a business advantage.
Toastmasters International is dedicated to helping individuals improve their communication and leadership skills. Toastmasters clubs have existed in China intermittently since the 1980s but have flourished since 1999. Clubs are typically formed by individuals who have experienced the program elsewhere and want to continue their participation and extend the program to others. In China, most of the early clubs were formed by expatriates whose employers to work there.

Currently 25 Toastmasters chapters are operating in China, with approximately 20 more in formation. Effective July 1, 2006, Toastmaster International designated clubs in China as a territorial council, a designation that allows the clubs to begin working together in new ways, such as holding conferences and providing training to the officers from the individual clubs. Club volunteers conduct all activities.

Participation in the organization is purely about self-improvement, which the Chinese people highly value. The opportunity to gain skills and confidence in communication and leadership is also supported by corporations and governmental agencies. And Toastmasters International has no political affiliations or alliances. There is no intent to establish standards or form industry based societies. The financial base is very minimal with no tangible product or basis for taxable income. In short, the organization poses no threat and offers positive returns for the individuals participating.

Case 5: Indigenous Development: The Chinese Nursing Association

Missionaries who had introduced Western-style nursing in China established the Chinese Nursing Association was established in China in 1909 by. Before the arrival of the missionaries, patients’ family members had traditionally provided nursing care in China. Local opposition to the idea of a stranger providing nursing care was one of the obstacles that the association had to overcome.

The organization has continued to be engaged in nurse preparation and treatment throughout its long history in the 20th century and survived through the world wars, internal wars, the Communist victory in 1949, the Cultural Revolution in 1966, and other major events. There are now more than 334,000 members in 31 branches with seven working committees and 13 academic committees. Since 1914 the members have elected a managing council. The association’s main objectives include the following:

• Protecting the rights of nurses
• Announcing jobs and job training for nurses
• Disseminating advanced nursing knowledge
• Fostering academic exchange
• Publishing academic journals
• Organizing and sponsoring national and international academic conferences on scientific and professional development

The association also sends nurses to Australia to study and work for one or two years.

The Chinese Nursing Association does not have a formal relationship with the American Nurses Association although the two groups have communicated with each other, shared practices, and participated in some of the same international conferences. Worldwide, nursing associations are organized through the International Council of Nursing, which includes representation from more than 130 countries. The Chinese Nursing Association is not a member of the International Council of Nursing but does attend some of the international meetings.

Continuing Questions and Exploration

As we have seen, successful associations, indigenous and foreign, operate in China, providing support for multinational organizations and serving useful purposes in China’s transition to a (socialist) market economy. They focus, for instance, on much-needed standards and certification.

Opportunities exist in China for U.S. associations, but they need to approach work in China with realistic expectations and enough resources to operate in China’s complex legal environment. Leadership development is important to associations in China, and although there is much to learn from U.S. association models, new forms of leadership with a Chinese adaptation will also develop in the coming period. Associations in China will develop differently and not necessarily be replicas of U.S. association model even though they may serve many of the same functions.

During the ASAE study mission, delegates began to form relationships with key players in China and determined how their associations could be involved in China. There were many examples of successful meetings and follow-up, particularly in the areas of credentialing, training, and sharing expertise and practices as well as delegate exchange programs and study missions in a variety of disciplines. This will be an exciting area to watch during the coming period.

As more U.S. associations become involved in China, how will they be organized and how will they relate to their Chinese and international counterparts? Will associations be seen as partners who can help organize knowledge and skills in professions, industries, and philanthropic organizations? How will associations communicate with each other and share best practices? Will the field of association management be recognized and developed in China? What adaptations will result in Chinese associations and how will they participate in international exchange?

Success in China will not be easy, but there is opportunity for those whose purpose is compatible with Chinese development and whose members are working in China currently or will be in the future and need the support of their association. In entering China, association leaders need to be flexible, persistent, patient, and able to live with ambiguity—all qualities highly valued in China.

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1. David Barboza and Michael Barbaro, “Wal-Mart Is Said to Be Acquiring a Chain in China,” New York Times, October 17, 2006.

2. Alex Taylor III, “A Tale of Two Factories,” Fortune (September 18, 2006): 120.

3. Academy of Macroeconomic Research, Research Team, “Strategic Options for the New Five-year Plan,” China Economist (March 2006): 24, www.chinaeconomist.com.cn/.

4. Jim Yardley, “The Chinese Go after Corruption, Corruptly,” New York Times, October 22, 2006

5. Barboza and Barbaro, “Wal-Mart Is Said to Be Acquiring a Chain in China.”

6. Academy of Macroeconomic Research, Research Team, “Strategic Options for the New Five-Year Plan,” China Economist (March 2006): 34.

7. European Foundation for Management Development and Sun Top Media, “Thought Leadership: Master Class in Marketing,” The Link: China Europe International Business School Alumni Magazine (Fall 2006): 23.