Global Meetings

China Exerts More Control Over Foreign-Based Associations

A new law approved by China’s National People’s Congress in late April is causing concern among foreign nongovernmental organizations (NGOs) that have a presence or hold events in China.

China flagA law, which goes into effect in China on Jan. 1, 2017, is estimated to have an impact on more than 7,000 NGOs that conduct activities in mainland China, requiring them to register with police agencies and operate under the supervision of an approved sponsoring organization. Activities of a temporary nature — such as meetings and events — are to be registered with Chinese partner entities that agree to serve as sponsors.

Widely seen as an effort to tamp down on Western influence in China, the law seems aimed at specific NGOs that deal with workers’ rights, ethnic equality, religious freedoms, and environmentalism, according to several media reports. But the law’s language is vague and open to interpretation, giving it the potential to constrain a larger group of foreign charities, trade associations, professional societies, and overseas higher-education institutions. ASAE has said that the registration and screening process for foreign nonprofit groups could prove so onerous that it fears many U.S.-based associations will rethink their activities in China.

But a source working in China for a U.S.-based events-industry company seems less apprehensive about the new law, telling Convene that he doesn’t think it will have a major impact on most associations. The source, who asked to remain anonymous, said that most groups hosting activities of a certain size have always had to register with China’s Public Security Bureau (PSB). If you want to succeed in China, he said, you need to work with the government, not against it.

He advises foreign-based organizations to develop strong partnerships with local institutions and associations, and stresses the importance of clearly and consistently communicating your organization’s objectives. He also reinforced that China is not a monolithic place. “You’ve got cities with their different micro economies and micro governments,” he said. “It’s a huge country, so there has to be some interpretation [of the law] left over to local authorities.”

Convene asked one U.S.-based association that does business in China — including holding conferences there — how it’s interpreting the new law. Jim Gurowka, CAE, senior vice president of global business development for the Montvale, New Jersey–based Institute of Management Accountants (IMA), responded to our questions via email.

Is it IMA’s understanding that the new law requires every foreign-based association meeting held in China to find an official Chinese sponsor and register with police agencies?

My current understanding is that foreign associations that have no presence in China will need to find a local partner. The list of approved local partners has not been released yet, so there is still some uncertainty around the final process. However, it looks like associations will need a local partner to help with the application to host an event in China. The approvals will need to be submitted to the Public Security Bureau.

This is similar to what we are seeing in more and more jurisdictions these days, including Abu Dhabi and Egypt. Foreign associations also have the option of setting up a legal presence in China. Once they are legally set up in China, they need to submit a yearly event plan, and once it is approved, no further approvals are required and no local partners are required.

Does IMA have insight into how the sponsorship process works?

As of today, the process has not been finalized. The exact approval process, documents to be filed, list of approved partners, and any costs involved have not been made public. The Chinese government has promised to have them published shortly, but we have not seen anything yet.

A New York Times article stated that many groups will probably curtail or eliminate programs deemed politically sensitive in China, such as training lawyers. Is this a concern for IMA?

This definitely seems to be the focus of the new legislation. It is not a concern for IMA at all. IMA is focused on training and certifying finance and accounting professionals. The focus of the Certified Management Accountant (CMA) certification and related training/conferences is on helping those in the profession become more skilled at their jobs. This fits nicely with the government’s thrust of upgrading the skills and abilities of those in key roles of Chinese companies — both state-owned and private. We work with different branches of the government to ensure that our certification meets the needs of the market.

How will you be moving forward based on the new law?

IMA is reviewing our next steps, and we continue to remain very positive about the China market and the opportunity to continue to contribute to the growth of the profession in China. IMA holds conferences in China — both on our own and in partnership with local organizations. The new law will most likely compel IMA to set up as a foreign nonprofit in China in order to host conferences, conduct training, advocate for the profession, and work with government entities. We know that our products and services are valued by Chinese members of our profession, and we need to ensure that we continue to provide them with access to education and conferences in the ways prescribed by the local authorities.

Is it IMA’s understanding that given activities that have been approved by the Ministry of Public Security — for example, conferences in fields that include the economy, education, science, culture, health, sports, and the environment — will be limited to specific geographic areas?

Our understanding is that the fields that organizations will be allowed to offer services and perform activities in will be limited, but as the new regulations are still being written, we are unsure exactly what those fields will be. It seems as though the economy, education, science, culture, health, sports, and the environment will be included, but we’re not sure what else will be. Our understanding is that it will not be limited to specific geographic areas.

Based on your experience, what insights can you share with other associations seeking to do business in China, if only to hold a conference there?

My advice is to find local partners to help with the events, including finding speakers, obtaining government support, and working with local academics. However, you need to be in complete control of the event, and do not assume that a local partner will do everything for you. You need “boots on the ground” to actively manage the lead-up to the event, the event itself, and the post-event work. Do not assume you can do it from the global head office, and do not assume that someone else can act for you as you would. To be successful in China, you need to be active there. IMA has a staff of close to 20 in China, but we also have senior executives go to China and work with the team there on a monthly basis.

The other advice I would give is to make sure that any association looking at entering the China market right now finds good legal advice from firms active in China. Also, make use of other resources available to you, like the American Chamber of Commerce in Beijing.

Michelle Russell

Michelle Russell is editor in chief of Convene.