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How a strategic public relations campaign can enhance the reputation of China's financial public relations industry

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How a strategic public relations campaign can enhance the reputation of China's financial public relations industry

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HOW A STRATEGIC PUBLIC RELATIONS CAMPAIGN CAN ENHANCE
THE REPUTATION OF CHINA’S FINANCIAL PUBLIC RELATIONS INDUSTRY

by
Yi-Ying Tiffany Lin

A Thesis Presented to the
FACULTY OF THE GRADUATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
MASTER OF ARTS
(STRATEGIC PUBLIC RELATIONS)

May 2007

Copyright 2007 Yi-Ying Tiffany Lin

ii
ACKNOWLEDGMENTS
I would like to thank my thesis chair, Jennifer Floto, for her unwavering support and
encouragement throughout the thesis editing process. I also would like to extend my appreciation to
my thesis committee members, Jonathan Kotler and Dr. Baizhu Chen, for their patience, professional
advice and support. The guidance I received from these individuals enabled me to complete what I
believe to be a cohesive overview of the financial public relations situation in China.
Additionally, I would like to express my thanks to my beloved family: my father, mother and
brother. I could not have done it without their unconditional love, support and understanding.
This project represents a path of self-discovery. Throughout the research and writing process, I
encountered every imaginable challenge. In pushing through my every emotional and physical
boundary, I have completed this thesis to the best of my ability. Though this process was grueling at
times, I walk away from it with renewed confidence in my potential to overcome future obstacles.

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TABLE OF CONTENTS

ACKNOWLEDGMENTS ................................................................................................................... ii

LIST OF TABLES............................................................................................................................... v

LIST OF FIGURES ............................................................................................................................. vi

ABSTRACT ........................................................................................................................................ vii

INTRODUCTION............................................................................................................................... 1

CHAPTER I: AN OVERVIEW OF FINANCIAL PUBLIC RELATIONS ........................................ 4
Financial Public Relations and Investor Relations.................................................................... 4
Clientele in the Modern Financial System................................................................................ 6
Buy Side Buyers of Financial Assets - Individuals and Families................................... 6
Sellers of Financial Assets - Businesses and Corporations ............................................ 7
Sellers of Financial Assets - Governmental Organizations ............................................ 7
Financial Institutions...................................................................................................... 8
The Value of Financial Public Relations .................................................................................. 9

CHAPTER II: AN OVERVIEW OF PUBLIC RELATIONS IN CHINA .......................................... 10
Geographic Effects ................................................................................................................... 11
Reforms to Improve China’s Public Relations Industry ........................................................... 12
China’s Entry into the World Trade Organization .................................................................... 13
Changes Following WTO Membership ......................................................................... 14
Changes to China’s Industry .......................................................................................... 16
Public Relations After China’s Entry into the WTO................................................................. 17
Future Expectations .................................................................................................................. 18

CHAPTER III: AN OVERVIEW OF FINANCIAL PUBLIC RELATIONS IN CHINA................... 24
The Beginning of Financial Public Relations in China............................................................. 24
The Turning Point for Financial Public Relations in China...................................................... 25
The Split Share Structure Reform .................................................................................. 25
Prior to the Split Share Structure Reform ...................................................................... 25
Reform of the IEC.......................................................................................................... 28
Implementation of the Split Share Structure Reform................................................................ 29

CHAPTER IV: CHINA’S FINANCIAL AND POLITICAL ENVIRONMENTS.............................. 32
The Relationship Between China’s Financial and Political Environments............................... 32
China Securities Regulatory Commission...................................................................... 33
State-Owned Assets Supervision and Administration Commission of State Council.... 36
Foreign Legal Events ..................................................................................................... 37

CHAPTER V: THE FUTURE OF FINANCIAL PUBLIC RELATIONS IN CHINA ....................... 39

CHAPTER VI: CAMPAIGN DESIGN............................................................................................... 42
Goal........................................................................................................................................... 42
Statement of the Problem.......................................................................................................... 42
Research Methodology ............................................................................................................. 42
Primary Research ........................................................................................................... 42
Secondary Research ....................................................................................................... 43

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Situation Analysis ..................................................................................................................... 44
Strengths......................................................................................................................... 45
Weaknesses .................................................................................................................... 46
Opportunities.................................................................................................................. 49
Threats............................................................................................................................ 52
Objectives ................................................................................................................................. 58
Key Audiences.......................................................................................................................... 58
Key Messages ........................................................................................................................... 58
Strategies and Tactics ............................................................................................................... 59
Establishing a Sound Financial PR Environment........................................................... 59
Incorruptible Plan........................................................................................................... 62
Low-Key Promotion....................................................................................................... 64
Evaluation ................................................................................................................................. 72

CONCLUSION ................................................................................................................................... 75

REFERENCES .................................................................................................................................... 77

APPENDICES..................................................................................................................................... 87
Appendix A: Securities Law of the People’s Republic of China (Revised in 2005)................. 87
Appendix B: Regular Member Code of Ethics ......................................................................... 88

v
LIST OF TABLES

Table 1: The List of Top10 Public Relations Companies in China ..................................................... 22

Table 2: The Top 10 International and Local Public Relations Companies in China.......................... 23

vi
LIST OF FIGURES

Figure 1: Foresight 2020: The World Economy at a Glance, Contribution to Global Growth............ 3

Figure 2: Annual Revenue of Public Relations Industry ..................................................................... 17

Figure 3: Distribution of Clients at Public Relations Agencies ........................................................... 19

Figure 4: Organizational Structure of the CSRC ................................................................................. 34

Figure 5: SEC Organization Chart....................................................................................................... 34

Figure 6: Events That Build Your Credibility ..................................................................................... 65

Figure 7: How Do You Find Prospects?.............................................................................................. 69

Figure 8: KDMR Model ...................................................................................................................... 71

Figure 9: Stages and Levels for Evaluating Public Relations Programs.............................................. 74

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ABSTRACT

With the rapidly growing capital market in China, the Chinese financial public relations
industry, which specializes in communicating with businesses, investors and the media, will increase
explosively in the next several years. With China still deeply rooted in “guanxi culture” and the
presence of ambiguously defined rules and regulations, development of the public relations industry
faces numerous obstacles.
This thesis examines the overall public relations situation in China, particularly in the financial
field, and explores the economic, political, and international relationships that influence it. After
analyzing current public relations, a financial public relations campaign that blends the pubic relations
practices of the West with Chinese cultural factors is proposed. This campaign aims to enhance the
overall reputation of the Chinese financial public relations industry by promoting a more positive
image and increasing its use within a guanxi culture that embraces public relations practices to
accommodate future economic activity in China.

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INTRODUCTION
With its huge population, vast territory and rich natural resources, China has become one of the
world’s most rapidly expanding economies. By 2020, China is expected to contribute about 27
percent of the world’s economic growth in terms of Gross Domestic Product. India and the United
States are expected to contribute approximately 12 percent and 16 percent respectively (The
Economist Intelligence Unit, 2006, p. 7). Additionally, leading financial firms Goldman Sachs, JP
Morgan and Deutsche Bank forecast that China will enjoy the highest GDP in the world by 2050 (Tan,
2006). Figure 1 illustrates the estimated GDP growth for some of the world’s most economically
powerful countries.
In light of these projections, the financial world will look increasingly to the East in the next
decade. As China’s economy continues to flourish, investors, especially those from the West, will
seek opportunities for both short and long-term profit. Investors seeking to capitalize on China’s 1.3
billion-person consumer market will be compelled to reorient themselves to Chinese customs. At the
same time, as a country steeped in ancient tradition and routine, China must create ways to engender
trust, transparency and confidence in global markets to allay the doubts and fears of a suspicious West.
At the same time, local Chinese businesses need to adopt new ways of thinking to maintain a
competitive edge and a find a medium through which they can demonstrate their value to the domestic,
and potentially international market.
The longevity of China’s economic prosperity depends largely on how successfully it can build
upon existing connections and cultivate future relationships. Given the professional and cultural
divides currently separating China and Western nations, the Chinese public relations industry has a
responsibility to improve communication and bridge existing gaps.
Modern public relations practices emerged in China in 1985 when a number of international
companies entered the Chinese market (Chi, et al., 2006). Since then, the public relations landscape in
China has evolved dramatically; the country’s traditional cultural and media environments
necessitated a change in public relations practices so that China could communicate more effectively
with an international audience. Although still in the early stages of development, the public relations

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industry has started branching out into diverse specializations (Chi, et al., 2006). Of these, the
financial public relations sector has become one of the fastest growing specializations established to
accommodate a growing demand by companies, investors and financial analysts.
China’s flourishing economy, coupled with its unique cultural and political features, has
brought about a differentiation of financial public relations operations. This thesis examines China’s
current investment environment and presents a long-term public relations model focusing on the
creation of a financial public relations campaign to promote a positive reputation and improve
audience reach.
This paper aims to do the following:
o Explore China’s current financial environment and the role of financial public relations
o Demonstrate the necessity for financial public relations, especially in China
o Illustrate how financial public relations engender trust in business organizations
o Provide a strategic plan that will accommodate future global economic powers in the Chinese
financial world
o Determine whether financial public relations in China should imitate the successful model of
financial public relations in the United States or create an entirely new approach
o Propose a unique model for financial public relations in China that fuses Chinese customs with
Western standards, while simultaneously building trust and improving the industry’s reputation
o Examine how China’s financial public relations industry can become more internationally
oriented to attract more foreign investors and help Chinese investors gain access to
opportunities abroad

3

Figure 1. Foresight 2020: The World Economy at a Glance, Contribution to Global Growth. Source:
The Economist Intelligence Unit (2006). Foresight 2020: Economic, industry and corporate trends.
The Economist, p.7. Retrieved February 22, 2007, from
http://futurists.files.wordpress.com/2006/06/eiuforesight2020wp.pdf.

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CHAPTER I
AN OVERVIEW OF FINANCIAL PUBLIC RELATIONS
Financial Public Relations and Investor Relations
“We are now entering what could be called the ‘Golden Era’ of Investor Relations and Public
Relations” (Silver, 2004, p. 61).
Public relations originated in the United States in the late 1800s when the extensive power of
the railroad industry prompted the development of practices such as customer communication and
press relations (Public Relations, n.d.). Public relations in America has evolved since those early years
and now is broken up into specialized fields to accommodate diverse industries. Different industries
require individualized methods to communicate with their respective audiences and stakeholders.
According to Effective Public Relations, by Scott M. Cutlip, Allen H. Center and Glen M. Broom,
modern public relations comprise the following specialties: internal relations, publicity, advertising,
press agentry, public affairs, lobbying, issue management, investor relations, and development (Cutlip,
Center & Broom, 2005).
Investor relations (IR), also referred to as financial public relations, is a public relations practice
that emerged from an increasing need for businesses to create trust and confidence among
stakeholders and stockholders. Financial public relations practices include creating and releasing
financial reports, planning road shows, hosting seminars and ensuring that stock prices match a
company’s value (Cutlip, et al., 2005). Specifically, investor relations entails:
A corporate activity, combining the disciplines of finance, marketing and communications,
which provides present and potential investors with an accurate portrayal of a company’s
performance and prospects so that they can make properly informed investment decisions.
Effective investor relations should have a positive effect on the market’s assessment of a
company’s value relative to that of the overall market, thereby minimizing the company’s cost
of capital, and should serve as a conduit for providing market intelligence to corporate
management (Caulfield, 2001).

Although investor relations now is considered synonymous with financial public relations, the
two originated at different times and developed as separate departments. Corporate public relations
arose first, and focused on marketing, lobbying and managing media relationships. Investor relations,

5
on the other hand, functioned as a conduit for communicating with financial analysts, investors and
accounting auditors (Silver, 2004). This changed, however, after a series of insider-trading scandals
on Wall Street during the 1980s prompted companies to reevaluate the importance of maintaining
positive repute in the public eye (Silver, 2004). Since then, the net income recorded on the books
hasn’t been a sufficient guarantee of a company’s prospects, nor enough to engender investors’
confidence; companies’ intangible assets such as “goodwill,” however, have become more important
factors for influencing stock price. “Some market studies indicate that as much as 40 percent of a
company’s market capitalization is determined by the intangibles” (Silver, 2004, p. 60).
Public relations, regarded primarily as an image creator and deliverer, recognized the
importance of communicating solid financial knowledge of an industry to analysts, investors and
stakeholders rather than simply circulating a superficially clever media spin. At the same time, the
investor relations industry began to grasp the importance of delivering accurate information to the
right audience and promoting a positive image of a company to financial analysts and the media. As a
result, financial public relations and investor relations merged into one specialization. “The
convergence of IR and PR has become so important that not combining those functions could have
negative consequences for a public company’s share price” (Silver, 2004, p. 60).
Today, financial public relations and investor relations share many functions within their
institutional practices. Practitioners in both financial public relations and investor relations, for
example, must be knowledgeable about finance, accounting, management and the trading market
(Silver, 2004). In addition, both need to disclose financial statements to investors, financial analysts
and the media. Both also assist publicly and privately held businesses to communicate within a
legally restrictive information environment by generating balanced media coverage (Silver, 2004).
Given the way in which the roles of financial public relations and investor relations converge on
so many levels, it is understandable they would target the same audience and share the same channels
of communication. “It is imperative that the IR and PR functions be at least coordinated, or even
combined, in public companies, so the same ‘story’ is consistently told to investor, shareholders, and
the media” (Silver, 2004, p. 72).

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Today, “investor relations” and “financial public relations” have become almost interchangeable
terms. Companies that practice investor relations refer to themselves as financial public relations, and
most books and articles categorize the two under the same profession. While some companies
establish separate departments for public relations and investor relations, the two work closely with
each other and often have integrated functions (Hu, Rebecca, personal communication, March 9,
2007). In light of this, the following analysis uses the term “investor relations” synonymously with
“financial public relations,” since combining the two is the most effective way to establish a
comprehensive practice in dealing with investor relations in the financial market.

Clientele in the Modern Financial System
Given that the key role of financial public relations is to manage and improve investor
relationships, practitioners constantly seek out investors who may require their services. Therefore,
financial public relations practitioners must tailor their strategies to attract prospective investors.
Based on levels of demand and the types of investments sought, investors can be classified into
three types: individuals and families, businesses and corporations, and governmental organizations
(Bodie, Kane & Marcus, 2001, p. 11). From a financial public relations perspective, these are the
three groups with which to be concerned.

Buy Side Buyers of Financial Assets - Individuals and Families
People who fall into this category tend to invest out of personal or family needs. These investors
aim to generate greater cash flow and yield stable returns through investments, which they seek for
myriad reasons, such as to pay their bills and mortgages, upgrade their standard of living, save for
their children’s education, and prepare for retirement. Individuals and families usually are willing to
invest in different types of assets, including bonds, stocks and mutual funds, especially since the
investment properties of these assets can vary significantly to correspond with an individual’s
economic situation.

7
Two of the most important considerations for individuals and families when deciding on
potential investments are tax and risk implications (Bodie, Kane & Marcus, 2001, p. 12). Investors
with higher income, for example, may seek stocks eligible for tax deductions. By the same token,
investors who choose the safe route may prefer mutual funds over other assets because of their better
track record in yielding stable returns. In such cases, financial public relations practitioners must
customize their strategies to address investors’ individualized expectations.

Sellers of Financial Assets - Businesses and Corporations
While individuals and families invest money for personal reasons, businesses and corporations
invest for professional purposes. Corporations invest to raise capital to finance their expenditures in
real assets, such as land, manufacturing plants, equipment and technology. Through such investments,
businesses and corporations maintain their competitive advantage and increase their market share.
Generally, businesses and corporations raise capital in two ways: by issuing bonds or issuing
securities. In issuing bonds, businesses essentially are borrowing money directly from individuals,
families, and banks, thus incurring long-term or short-term debts. Businesses are obligated by law to
repay the principal amount at a later date, along with the incurred interest, paid in the form of annual
or semi-annual coupons. By issuing securities or stocks, businesses are distributing ownership of the
companies to new shareholders. Instead of coupons, dividends are paid periodically to shareholders.
Since both approaches have pros and cons, it is up to each company to determine which method best
suits its financial structure.

Sellers of Financial Assets - Governmental Organizations
Apart from revenue generated from taxes, governments need money to finance expenditures for
public services and projects. The primary way to raise capital is to borrow by issuing securities, such
as through government bonds. Compared to the business sector, governments are less likely to default
on promised payments and thus can borrow money at lower interest rates.

8
Financial Institutions
The better the relationship between investors and financial institutions, the more investors are
willing to invest in the market. This in turn leads to greater revenue for financial public relations
companies, which work to establish and maintain these positive relationships. In general, financial
public relations companies deal primarily with two types of customers: financial intermediation and
investment banking (Bodie, Kane & Marcus, 2001, p. 14).
For the most part, financial intermediations were created for individuals, households and small
private businesses. Due to money and time constraints, these investors are unlikely to advertise their
willingness to borrow or lend money. Therefore, financial intermediaries formed to bring these
lenders, borrowers and investors together and provide them with a platform through which they could
communicate. Charging a service fee, these intermediaries include commercial banks such as Citibank
and Chase, investment management companies like Fidelity, Capital Group, and State Street,
insurance companies like New York Life, and credit unions like the University of Southern
California’s “Federal Credit Union.”Since investors in this sector consist of individuals, households
and small private businesses, financial public relations’ target audiences are numerous and diverse.
Another potential client sector for financial public relations companies is investment banking.
Unlike financial intermediations, investment banks primarily serve businesses, corporations and
governments. The principal role of investment banking is neither investing nor banking. Rather, by
issuing and selling securities in the primary market, investment banks raise money for companies that
need influxes of cash to grow and expand their businesses. Financial public relations firms also advise
companies on mergers, acquisitions and other types of financial transactions. The major players in
investment banking include Goldman Sachs, Merrill Lynch, Morgan Stanley and Credit Suisse First
Boston.

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The Value of Financial Public Relations
The overarching goal of investor relations -- also referred to as financial public relations -- lies
in helping companies compete in capital markets (Marcus, & Wallace, 1997). This is accomplished by
projecting an image of a company as profitable and trustworthy and communicating that message to
investors. “Investor relations specialists work to enhance the value of a company’s stock. This reduces
the cost of capital by increasing shareholder confidence and by making the stock attractive to
individual investors, financial analysts, and institutional investors” (Cutlip, et. al. 2005, p. 20).
According to Ted Pincus, chairman of The Financial Relations Board, “The upsurge in investor
faith and confidence is due in large measure to the far greater predictability of corporate performance”
(Pincus, 1996, as cited in Marcus, & Wallace, 1997). The principal functions of financial public
relations include monitoring market trends, announcing and providing financial information, editing
weekly, monthly and annual financial reports, and communicating information to financial
publications, reporters, analysts and investors (Cutlip, et al., 2005). More specifically, financial public
relations help businesses plan their Initial Public Offering (IPO), or the first sale of a corporation’s
common shares to public investors, assist in corporate takeovers, finance leverage buyouts, provide
strategic communications consulting, and conduct media outreach to stakeholders by refining and
packaging the most favorable information to analysts and investors. Financial public relations also
plays a vital role in crisis management and brand management.
The more information that is relayed to investors, shareholders, analysts, and the media in a
factual, truthful, timely manner, the more senior management will view the IR/PR function
within a public company as a crucial component, important to growth and higher market
capitalizations (Silver, 2004, p. 74).

In order to fulfill such a wide range of functions, financial public relations practitioners conduct
media training, monitor media coverage, issue press releases, arrange meetings between companies
and investors, manage a company’s public image, and create corporate identity through logos,
advertising promotions, and international and domestic road shows ("How Investor," 2005).

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CHAPTER II
AN OVERVIEW OF PUBLIC RELATIONS IN CHINA
In 1984, Guangzhou Baiyunshan Pharmaceutical Co., Ltd. established the first public relations
department in China with an aim toward promoting and increasing awareness of its business (Lee,
Chian, 2006). That same year, Hill & Knowlton set up a branch in Beijing, making it the first western-
owned public relations agency in China.
It didn’t take China long to embrace the burgeoning public relations business. In 1986, the
Shanghai Public Relations Association (SPRA) was formed, becoming the first Chinese-owned public
relations association. Soon after, Xinhua News Agency, one of the biggest government-owned press
agencies in China, invited Burson-Marsteller to open China Global Public Relations Company. This
collaboration marked the establishment of the first local public relations agency in the country ("Top
25," 2004). A few years later, the Chinese Public Relations Association (CPRA) and China
International Public Relation Association (CIPRA) were established.
Foreign public relations firms also began to sprout up in China. Responding to policies
instituted by Deng Xiaoping, former leader of the People’s Republic of China, a large number of
foreign investment firms entered China in 1998, bringing with them public relations departments
(Wang, Wei, 2006). Just one year later, public relations became one of the 1,800 listed professions in
China’s official PRC Grand Classification of Occupations (Harbor Education Group, 2005).
The influx of local and foreign public relations firms ushered in a growing awareness of the
field at Chinese universities. Sun Yat-sen University in Guangzhou established the first bachelor’s
degree program in public relations in 1998. The Communication University of China followed suit in
2004 with the country’s first public relations master’s degree program (Chi, et al., 2006).
After 20 years of development, public relations has become an integral component within many
segments of the Chinese marketplace, including travel, information technology, finance, and the
automobile industry. In 2005, China boasted more than 2,000 public relations agencies, with
companies generating 6 billion RMB, approximately 767 million USD (Chi, et al., 2006). Today the

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industry continues to expand, with an annual growth rate of 36 percent (Chi, et al., 2006). Still, the
public relations market in China has yet to reach maturity as its growth rate pales in comparison with
that of the United States.

Geographic Effects
Like other industries in China, public relations has not developed evenly in cities throughout the
country. The bulk of the public relations industry can be found in China’s five major cities: Beijing,
Shanghai, Guangzhou, Chengdu, and ChangSha. More than 40 percent of all public relations firms in
China are located in Beijing, many of which have more than 20 years of experience in the industry
(Chi, et al., 2006). Beijing’s popularity in the public relations market stems from two causes. First,
Beijing’s central location in relation to other major cities makes it an appealing setting for the
growing public relations industry. Second, as the country’s political and cultural hub and one of the
most industrialized cities in China, Beijing serves as an ideal headquarters for major banks and large
state-owned enterprises.
As one of the most populous business cities in China, Shanghai also provides an attractive
locale for public relations firms. Shanghai recently has seen a resurgence of public relations
companies, with more than 70 percent of public relations agencies establishing branches in the city
(Chi, et al., 2006). Furthermore, coastal cities, like those located on the Yangtze Delta and Chu
Chiang Delta, are witnessing an influx of new public relations endeavors (Chi, et al., 2006).
Geographic factors also have affected the development of public relations companies in China.
Generally speaking, public relations activities tend to be more developed and aggregated in the
eastern cities of China than in western areas (Chi, et al., 2006). Given that specialized services
function as indicators of a developed public relations industry, it is no surprise that agencies in Beijing
and Shanghai have started diversifying into different specializations such as financial and political
public relations (Chi, et al., 2006). Agencies in Chendu and Changsha, on the other hand, offer
predominantly general services, lacking the specialization to accommodate the varying needs of local
and international companies (Chi, et al., 2006). The absence of public relations specializations in

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these cities may be a result of a general unfamiliarity with communications practices, or simply a
reflection of the preference for basic services over specialized ones (Chi, et al., 2006).

Reforms to Improve China’s Public Relations Industry
The public relations industry in China is expected to continue developing to accommodate the
country’s rapidly expanding economy. With development programs established by the Chinese
government in place, combined with China’s increasing GDP, growth won’t be limited to the eastern
region; cities in central, western and southern China also will witness a proliferation of their public
relations industries.
The pace and direction of economic development in China are rooted in policies implemented
several decades ago. Mao Zedong -- former chairman of the Communist Party of China from 1945 to
1976 -- sought to stimulate China’s development through “revolutionary mass mobilization,” which
called for a physical mobilization of the population in the struggle for socialism (Maoism, 2007). In
1950, he introduced “On the Ten Major Relationships,” a preliminary socialist plan blending Marxist
ideology with Chinese principles that aimed to advance China’s economic, political, scientific and
cultural state ("Ten Major Relationships," 2007).
The key period of policymaking occurred during the 1980s when Deng Xiaoping introduced his
economic strategic plan, “Two Overall Situations,” to the country. As the name implies, the plan
contained two facets. The first priority was to develop the eastern and coastal cities of China (Lee, Lei,
2006). Those developed cities, in turn, would leverage their economy, capital and technology to
support the advancement of China’s western cities (Lee, Lei, 2006). The policy not only reinforced
Mao’s plan to expedite China’s overall development, but the coordinated effort between China’s
eastern and western cities helped balance regional growth and even out the distribution of wealth in
the country (Lee, Lei, 2006).
In 1999, Jiang Zemin, the general secretary of the Communist Party from 1989 to 2002,
propelled China’s economic strategy to its present level through his “China Western Development”
policy, also known as the “Great Development of West China” (Jiang Zemin, 2007). Through this

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policy, China added fuel to its already sizzling economic fire by expanding the growth of its markets
beyond the business centers in Shanghai and Beijing further west. Although Jiang simply pursued the
process of transitioning to a market economy mirroring that of the West, many critics charge him with
creating a “bubble economy” capable of falling apart at any time (He, Wei & Liu, 2005). Still, these
policies have helped bolster China’s economy to its current state of productivity.
The aggregation of the Chinese government’s aggressive measures to reform the economy has
led to an upsurge in the public relations industry. Studies indicate that public relations firms and the
roles they serve are “moving part and parcel toward these new marketplaces” ("China Western,"
2006). In light of the rate of economic growth thus far and the creation of international businesses in
the eastern cities, the western region appears to be the new frontier for business development in China.
Growth in this area will bring with it a wider audience and new demands.

China’s Entry into the World Trade Organization
Another important factor impacting the public relations industry in China was its December 11,
2001 entry into the World Trade Organization, or WTO. The WTO is guided by fundamental
principles that include trading without discrimination, trading with openness and predictability,
trading that endorses freedom, trading that encourages fair competition, and trading that
accommodates lesser developed countries (World Trade Organization [WTO], n.d.). These guidelines
have given China the momentum to reform its developing economy to better adapt to WTO standards.
China joined the WTO under the status of a “developing nation.” According to the WTO
agreement, China has the right to enjoy favorable treatment allotted to developing countries. The
Generalized System of Preferences, or GSP, constitutes one kind of favorable treatment that requires
developed countries to grant preferential tariff rates to developing countries’ products (Grimmett,
2006).
Due to the economy’s significant size, rapid growth and transitional nature, the WTO affixed
certain conditions on its agreement with China (Working Party on the Accession of China, 2001b, p.
2). For example, a Transitional Product-Specific Safeguard Mechanism (TPSSM) provision was

14
included in China’s WTO accession rules that serve as a safeguard against certain imports originating
in China (Working Party on the Accession of China, 2001a). The TPSSM gives all WTO members the
authority to take action if Chinese products are imported in such excessive quantities and under such
conditions as to cause market disruption (Working Party on the Accession of China, 2001b, p. 80).
The TPSSM remains controversial because it creates a potentially abusive situation against China’s
export industry akin to a form of discrimination that focuses on the nation and not its goods. The
ambiguous nature of the provision has been met with protest from the Chinese government but, so far,
the provision remains intact.
In order to better understand the complex relationship between China and the WTO and its
impact on the public relations industry, it is important to explore China’s relationship with WTO
members and subsequent changes and reforms in industry practices.

Changes Following WTO Membership
Significant changes were made to China’s legal and regulatory frameworks to comply with
WTO standards. More than 2,300 regulations have been made at the central government level, with
regulations at local government levels underway (Sung, 2005). These modifications include tariff
reductions and the elimination of non-tariff barriers, particularly in the agricultural sector, to name a
few. Many of these changes are still taking place (Rumbaugh & Blancher, 2004).
To ensure China’s compliance with the guidelines, the WTO implemented a Transitional
Review Mechanism (TRM) in China’s membership agreement. This condition gives the general
council of the WTO authority to review China’s compliance annually during its first eight years of
membership (Working Party on the Accession of China, 2001b, p. 82). Even with the TPSSM
provision in place to protect WTO members from “market disruptions” and “significant trade
diversions” against China, the United States, the European Union, Canada, Korea and India have
passed domestic legislation to prevent a massive flood of imports from China (Tzeng, 2005, p. 50).
Some of China’s trade partners have voiced concerns over implementation delays, lack of
transparency in the government’s legal framework, and enforcement issues at different levels of

15
government (Rumbaugh & Blancher, 2004, p. 9). Despite these concerns, however, the international
community has not yet experienced any broad patterns of non-compliance by China (Rumbaugh &
Blancher, 2004, p. 9). By and large, China has adhered to WTO principles, even completing some
implementations before scheduled deadlines ("China' s Commitment," 2006).
Additionally, the Chinese government has taken it upon itself to allow more foreign capital to
enter its borders. Previously, the government placed a 33 percent limitation on foreign capital inflow
into any company in China’s security market (Lu, James, personal communication, March 16, 2007).
However, a December 2004 joint venture between Goldman Sachs, one of the world’s largest global
investment banks, and Gao Hua, a domestic securities firm, violated the limitation set by the Chinese
government (Goldman Sachs, 2007). Although Goldman Sachs holds more than 50 percent of Gao
Hua shares, the Chinese government has more or less acquiesced to the venture, making no efforts to
penalize the company (Lu, James, Personal Communication, March 16, 2007). The partnership
between the two companies led to the creation of Goldman Sachs Gao Hua Securities Company
Limited, which has become one of the most successful investment banking and securities firms in
China (Goldman Sachs, 2007).
The Chinese government also opened up its retail industry to foreign investors, allowing more
foreign capital to enter its market, despite the fact that this move would create more competition for
local Chinese retailers and potentially threaten their survival (Lu, James, Personal Communication,
March 16, 2007). China’s efforts to meet WTO standards have elicited favorable responses from
many WTO members. For example, in 2005, the European Union canceled a quota placed on certain
goods from China. Similarly, Slovakia and Turkey canceled quotas that had previously limited the
number of shoes imported from China ("China' s Commitment," 2006).
Analytical studies indicate that China’s accession to the WTO will have long-term positive
effects (Lu, James, Personal Communication, March 16, 2007). China undoubtedly will benefit from
greater accessibility to international trading partners (Rumbaugh & Blancher, 2004, p. 12). At the
same time, China will be motivated to continue its economic reforms, which ultimately will lead to a
freer and more transparent market.

16
Changes to China’s Industry
China’s WTO accession seems to promise an increasingly open environment for the finance
industry. Some changes include trade liberalization -- specifically tariff reductions and the abolition of
non-tariff barriers -- and Trade-Related Investment Measures, which prohibit member countries from
making investments favoring domestic products (Trade Policy Directorate, 2001).
WTO membership is expected to help China directly by increasing exports and employment
(Bhalla & Qiu, 2003, p. 6). A potential demand for employees may result in an influx of foreign
professionals into the Chinese workforce, invoking a change in the quality of China’s human
resources pool. Membership also may drive domestic firms to improve efficiency through competition
which, ironically, could force weak domestic firms to close, thereby leading to unemployment (Bhalla
& Qiu, 2003, p. 6). Furthermore, plans to open up more service sectors to international players in
which foreign participation previously has been nonexistent or marginal promises to encourage
massive foreign investment in China’s domestic market. Similarly, new foreign companies and those
that previously had invested in China will seek more investment opportunities in the country (Tang,
2007).
Generally speaking, WTO membership is likely to create a domino effect in which a growing
number of foreign investors will be clamoring for a piece of China’s economic pie. At the same time,
China has developed a “walk out” mindset to encourage domestic firms to invest abroad and become
international enterprises ("The Form," 2006). This will lead to frequent mergers and acquisitions of
foreign and domestic companies, fundamentally altering the structure of China’s economy and
industry practices.

17
Public Relations After China’s Entry into the WTO
WTO is a great opportunity for China to improve its overall economy, establish a sound
business environment, and increase its visibility to the rest of the world. Chinese government
views all progress positively, even though some regulations like the TPSSM seem to promote a
discriminative attitude toward China. Still, we will take all of these challenges and seemingly
unfair treatment and utilize our best public relations skills to prove to the rest of the world our
reliability as a member of the WTO. China is prepared to undergo any preliminary tests or
trials necessary to demonstrate its commitment as a WTO member. We will continue to open
up our markets and strive to improve transparency in our economy (Lu, James, Personal
Communication, March 16, 2007).

From applying for WTO membership to securing the bid for the 2008 Olympic Games in
Beijing and the 2010 World Expo in Shanghai, public relations has played a significant role in
ensuring that the international community pays close attention to China (Chi, et al., 2006). Whether
conducted by domestic or international agencies, the public relations industry has helped China
improve its public image and modify its practices to meet international criteria.
Since the country’s entry into the WTO, China’s public relations industry has undergone a
facelift (see Figure 2). International and domestic public relations firms have found greater
opportunities to develop and mature, and the scale of the public relations industry in China has
expanded markedly (Chi, et al., 2006), increasing from RMB 150 million before China’s 2001 WTO
accession to RMB 600 million in 2005 (Chi, et al., 2006). Currently, more than 2,000 public relations
agencies operate in China (Chi, et al., 2006).
(Unit: 100 million)

Figure 2. Annual Revenue of Public Relations Industry. Source: Chen, Shiang Yang. (March 24,
2006). The Survey Report of 2005 Chinese Pulblic Relations Industry, [2005]. Nai, Feng (Ed.), In
China International Public Relation Association. Retrieved March 24, 2007, from
http://210.77.146.46/web/Disquisition/ViewDisquisition.asp?unhit=1&ID=10001647&page=1.

18
As China’s market becomes more globalized, a growing need for support from outside sources
that understand the country’s trade and media environments has arisen, leading to a greater demand
for public relations services. Competition between domestic and international enterprises to secure a
foothold in the country’s economy has intensified. In response to this increased competition within the
public relations industry, some agencies in China have started providing comprehensive services to
their clients while other firms have narrowed their focus, choosing to specialize in areas such as crisis
management, sports public relations or financial public relations (Liu & Lee, 2005).
The industry will continue to evolve in the foreseeable future. Public relations firms in China
must modify their practices to better adapt to an increasingly globalized world and tackle issues that
may influence their clients financially, legally and politically. In particular, with China’s growing
capital market, financial public relations firms will be needed to manage investor relationships,
establish trustworthy images for corporations and increase transparency in the overall market.

Future Expectations
Local and regional businesses operating in homogeneous marketplaces can set the terms of their
relations with customers, especially in a marketplace with limited competition. In today’s global
economy, however, the process by which a firm communicates with its customers, stakeholders and
stockholders has become exponentially more complex. Chinese corporations, even those with only
regional goals, need to be better prepared to do business in an increasingly transparent marketplace.
Specialized public relations in China will be one logical outgrowth of this trend (see Figure 3).

19

5.1
4.5
4.5
2.6
2.6
9.6
5.1
4.5
7.1
1.9
1.3
9.6
8.3
4.5
3.2
9.6
0.6
1.9
6.4
1.3
5.8
0 2 4 6 8 10 12
Medicine/ Drug
Health Food
Food & Beverage
Alcohol
Consumer Electronics
Communication Product & Service
PC/Internet
Medical Treatment Equipement
Medical Treatment Service
Cosmetic
Cleaner
Real Estate
Automobile
Traveling/Hotel/Restaurant
Tobacco
Finance
Fashion
Retail
Entertainment
Manufacturing
Other

Figure 3. Distribution of Clients at Public Relations Agencies. Source: Chi, Shiau Hua, Feng, Bing
Chi, Huang, Sheng Min, Bai, Ying, Ding, Shia Ping, Du, Jing, et al. (2006). Survey Report on Chinese
Public Relations Industry (2005), p. 68. Beijing: Social Science Academic Press (China).

20
As China continues to seek new centers of commerce, new industries emerge, altering the
dynamics of the business environment. Before 2000, 90 percent of public relations agencies in China
represented clients in the information technology (IT) industry (Chi, et al., 2006). After the dot.com
bubble burst in 2001, Chinese public relations firms started specializing in other practices, including
finance, medical and consumer services (Chi, et al., 2006).
In the coming years, information technology, mobile telecommunications, and consumer growth
will be the markets to watch in Asia (Chi, et al., 2006). Financial public relations will play a critical
role in maintaining the continuing growth of these industries in China. According to Survey Report on
Chinese Public Relations Industry (2005), financial public relations held first place as the
specialization with the most clients. Additionally, while only 13.6 percent of public relations agencies
provided specialized financial services at their inception, this number grew to 30.6 percent by 2005
(Chi, et al., 2006). The survey also projected that demand for financial public relations services will
continue to increase and attract more professionals to the field.
China’s public relations market is still young. More than half of China’s public relations
companies began their operations within the last five years, an indication that the industry remains
relatively inexperienced (Chi, et al., 2006). According to a 2005 survey of public relations firms in
China, most agencies do not possess the capabilities to provide comprehensive services (Chi, et al.,
2006). Nearly 40 percent of public relations companies indicated their communications functions
were limited to marketing, while 41 percent reported they deal only with media relations (Chi, et al.,
2006). Given this, it is no surprise that the services provided by these agencies rank relatively low in
professional development and quality (Chi, et al., 2006). A large part of these services involves event
management and press communications, which require relatively elementary planning efforts (Chi, et
al., 2006).

21
Nonetheless, the public relations industry in China has experienced steady growth since the
1980s. Local Chinese public relations agencies have been gaining record numbers of clients, while the
percentage of domestic agencies has exceeded that of foreign-owned firms since 2001 (Chi, et al.,
2006). Joint ventures between Chinese and foreign businesses and between foreign businesses
themselves have also yielded many clients for public relations agencies in China (see Table 1 & Table
2).
With an overall decline in advertising as a result of a saturated media environment, businesses
naturally have been seeking a more advantageous way to communicate with their customers. From
2002 to 2005, the number of Chinese businesses with public relations departments or with
departments that perform public relations functions increased by more than 20 percent from the
preceding three-year period (Chi, et al., 2006). Businesses have begun to recognize that customers
respond more favorably to professional communications released by well-trained representatives
(Bjorksten, Wang & Yin, 2006). They also recognize the crucial role public relations plays in
increasing competitiveness and maintaining a positive image with their audiences.
In the next decade, China can expect to witness a shift in its public relations landscape from a
fledgling industry into a world class production that will gain a powerful foothold in Asia. With major
upcoming international events like the 2008 Olympics and the 2010 Shanghai World Expo, China
grasps the implications of hosting a successful event to increase its visibility in the international
community. Because the 2008 Olympics is a seminal event for the nation, showcasing Beijing to the
world will likely herald a proliferation of international investments in China and Asia (Chi, et al.,
2006). Not only will this exposure drive many local and foreign public relations companies to
increase their investments, it also will encourage them to open more branch offices in the cities (Chi,
et al., 2006).

22
Table 1
The List of Top10 Public Relations Companies in China
The Top10 Public Relations Companies in China
Name Name in China
International Top 10 firms (Alphabetically)
APCO Worldwide
Burson-Marsteller China ! #"$&%’()
Edelman China *,+.-$/! #"$&%’.)
Fleishman Link Consulting 012345$/6789)
Hill & Knowlton China :;! #"$<%=()
Ketchum Newscan >(?@A,BC,()
Ogilvy Worldwide DE($/GFIH
Ruder Finn, Beijing J(+K L01M%N()
Text 100 OWeber Shandwick China TU:! #"$&%’()

Regional Chinese Top 10 firms (Alphabetically)
Blue Focus Consulting V(WXY,BC(Z[
D & S Consulting \]R.)
eVision Consulting ^(_‘a,IR()
Genedigi Consulting /b,cZ[
HighTeam Communications defgIR()
Linksus Group h],67Z[
Marketing Resource Group ijR.)
Pegasus Communications kGlmnopqr

Shunya Public Relations Us.$/G.)
Zenith Integrated Communications t,duv89,()

Note. The ranking is determined according to six criteria: Annual revenue, number of employees,
numbers of clients, reputation, service network, and service quality.
The basic requirements for being included in the top 10 public relations companies are:
o The company must have more than 18 million RMB (around 2.3 million USD) annual revenue
o Each of the top 10 international companies must have more than 60 employees
o Each of the top 10 local companies must have more than 75 employees
o The company must have a good reputation, good clients and provide outstanding services
o The company must have been in operation for at least three years and provide comprehensive
public relations services

Source. Chen, Shiang Yang. (March 24, 2006). The Survey Report of 2005 Chinese Public Relations
Industry [ "$Rs 2005 wxy,z{| ]. In Nai, Feng (Ed.), In China International Public
Relation Association. Retrieved March 24, 2007, from
http://210.77.146.46/web/Disquisition/ViewDisquisition.asp?unhit=1&ID=10001647&page=0.

23
Table 2
The Top 10 International and Local Public Relations Companies in China

Top10-
intl
2004
Top10-
local
2004
Industry
Average
2004
Top10-
intl
2005
Top10-
local
2005
Industry
Average
2005
Changes
Annual
Revenue
(Unit: 10
thousand)
3000 3100 3050 3550 3240 3395 11.31%
Number of
Employees
78 126 102 90 146 118 15.69%
Profit
15% 18% 17% 12% 16% 14% -3.00%
Clients
15.8 14.8 15.4 20 14 17 10.00%
Foreign
Clients
86% 58% 72% 95% 59% 77% 5.00%
Turnover
12.80% 13.80% 13% 17% 14% 16% 3.00%

Source. Chen, Shiang Yang. (March 24, 2006). The Survey Report of 2005 Chinese Public Relations
Industry [ "$Rs 2005 wxy,z{| ]. In Nai, Feng (Ed.), In China International Public
Relation Association. Retrieved March 24, 2007, from
http://210.77.146.46/web/Disquisition/ViewDisquisition.asp?unhit=1&ID=10001647&page=0.

24
CHAPTER III
AN OVERVIEW OF FINANCIAL PUBLIC RELATIONS IN CHINA
The Beginning of Financial Public Relations in China
In the 1980s, virtually no specialized public relations agencies existed in China. As more
foreign companies established joint ventures with Chinese companies, particularly in coastal cities
like Shenzhen, Zhuhai and Shantou, local branches of these businesses began importing a public
relations concept from the West and adopting international management systems. The trend toward
merging became especially evident in the hotel industry during that time. By adopting a foreign
management system, establishing public relations departments and importing public relations
functions, hotels such as White Swan Hotel, Marriott China Hotel in Guangzhou, and the Great Wall
Sheraton Hotel in Beijing, emerged as some of the first companies to introduce the idea of public
relations in China (He, 2002).
As more foreign investors have entered the country since 1986, China’s unique political and
economic environment has served to make foreign businesses a large part of the clientele for public
relations agencies in China (He, 2002). The competitive Chinese market also has stimulated local
businesses to seek more capital to expand and compete with international brands, which has hastened
growth in the Chinese financial public relations industry.
With its rapidly developing business market, demand for various and specialized public
relations’ services has soared in China. As new business opportunities attract investment, China’s
financial public relations industry is slated to expand considerably in the next few years. Chinese
initial public offerings, while still a relatively new phenomenon, show promise of being the next
significant stage in private economic development, creating greater demand for sophisticated financial
communications and public relations-related functions (He, 2002).

25
The Turning Point for Financial Public Relations in China
The Split Share Structure Reform
China’s financial public relations industry has been developing for nearly ten years. During this
time, the industry has undergone two noticeable periods of change, dichotomized by the introduction
of the “Split Share Structure Reform” by the China Securities Regulatory Commission (CSRC) in
2005. According to Article 2 of the Administrative Measures on the Split Share Structure Reform of
Listed Companies, CSRC defined the reform movement as follows:
The split share structure reform is herein defined as the process to eliminate the discrepancies
in the A-share
1
transfer system via a negotiation mechanism to balance the interests of non-
tradable shareholders and tradable shareholders (China Securities Regulatory Commission
[CSRC], 2003).

The reform signified a watershed event that improved the financial security of the Chinese
market while simultaneously giving rise to significant changes in financial relations practices. Before
the reform, the Chinese security market was beleaguered by bribery scandals and unscrupulous
activities, with many financial public relations services aiding in the “dirty work” (Wang, Yan Ni,
2006). After the reform, the security market was modified to a more reputable and honest operation
and financial public relations practitioners increasingly were held accountable to satisfy reform
requirements (Wang, Yan Ni, 2006).

Prior to the Split Share Structure Reform
Unlike Western business culture, which is transaction-based, Chinese business culture prior to
reform tended to be more relation-based, centering on “Guanxi networks” (Chen, 2001). “Guanxi,”
Chinese for “connections,” strongly influenced the way business was conducted in China. Guanxi
essentially means doing someone a favor and expecting something in return. Thus the old saying,
“You scratch my back, I’ll scratch yours” accurately embodies the spirit of the term (The Los Angeles

1
A-share, also known as RMB Common Share, is the common share registered and issued in China and traded as
RMB. Foreign companies were originally not allowed to invest in A-shares; however, in order to modernize its
capital market, the government enacted the 2002 QFII Act to allow foreign investors to invest in A-Shares under
certain criteria and with limited amounts of money (Chinaamc.com, 2006).

26
Chinese Learning Center, n.d.). Guanxi is deeply rooted in Chinese culture, and maintaining the
networks it involves consumes considerable time and resources. Although guanxi does not necessarily
depend on money, financial incentives frequently are used to maintain these relationships in China.
Not only foreign investors, but also domestic businesses, find it necessary to establish wide guanxi
networks with the government, financial organizations, suppliers, and retailers to smooth their
business operations and alleviate risks and failure when conducting business (The Los Angeles
Chinese Learning Center, n.d.). However, while the use of guanxi can be observed everywhere in
China, an overdependence on these networks has created inefficiencies in business operations,
particularly in the financial sector.
In addition to the influence of guanxi, inefficiency and corruption in China’s business culture
has been exacerbated by the presence of ambiguously defined rules and regulations. The vagueness of
some rules left the door open to varying interpretations. Consequently, some practitioners took
advantage of loopholes to make profits, using questionable methods that nonetheless remained within
the realm of legality (Lu, James, Personal Communication, March 16, 2007). This situation, coupled
with guanxi networks, exacerbated the bribery situation in China.
The CSRC’s Issuance Examination Committee (IEC) essentially functioned as the sole
authority responsible for reviewing and verifying a business’ initial public offering (IPO) in
China (Chen, 2003). Accordingly, every company in China that sought to launch an IPO needed
to get its documents verified by the committee. This process proved ineffective, however, as it
required committee members to review only that data provided by the companies (Chen, 2003).
Committee members regularly verified submitted documents without a thorough understanding
of a company’s true value, competitive power, technical creativity, marketing abilities and
reputation in the community (Chen, 2003).
After reviewing a business’ documents, IEC committee members possessed absolute authority
in deciding whether a company went public. Due to annual quota limits for business IPOs in China,
this situation exacerbated illegal bribery practices in the industry (Chen, 2003). In such a highly
competitive environment, companies would try anything to go public, including hiring shady financial

27
consultant companies or financial public relations agencies with the highest IPO success rates.
Although a number of legitimate financial public relations agencies operated during this time, many
were involved in bribing IEC members to guarantee successful IPOs for their clients (Ding, 2006).
Not surprisingly, China witnessed a proliferation of financial public relations companies in 2002
(Chiou, 2004).
While the names of committee members were kept classified, leaks proved common, especially
when big money was involved (Chiou, 2004). By leveraging the guanxi network, some financial
public relations companies purchased the list of committee members’ names, then bribed members
and supervisory bodies to improve their clients’ chances of going public (Chiou, 2004). One notorious
case was the 2002 Wang Xiao Shi scandal. While working as an assistant surveyor for the IEC, Wang
was approached by Lin Bi, the officer of the Fu Jian branch of Northeast Securities in China (Ding,
2006). Lin bribed Wang for a committee member list, in turn selling it to Fujian Fengzhu Textile
Science & Technology. Lin also persuaded Wang to arrange a private lunch for IEC committee
members and Fengzhu company executives to improve the company’s chances of going public (Ding,
2006). While the company never admitted to bribery, this maneuver was seen as pivotal in securing
Fengzhu a successful IPO.
After this incident, between March 2002 and September 2002, Wang continued to sell the list of
committee members’ names either directly to companies or indirectly through financial public
relations agencies (Ding, 2006). Although he eventually was caught and sentenced to prison, the
damage had already been done. The scandal was highly publicized in China, with news headlines such
as “The Dark Side of Financial Public Relations” and “The Corruption of Supervisory System”
appearing everywhere. Not only did the scandal damage public confidence in China’s security market,
it also impaired the reputation of the IEC and the financial public relations industry (Ding, 2006).
While the Wang scandal represents a concrete example of the kind of corruption that plagues the
Chinese financial market, it was neither the first nor last time somebody utilized inside networks and
accepted bribes to benefit themselves, businesses and governmental departments.

28
The underlying problem with the Chinese stock market lies in the fact that the government, and
more specifically the IEC, assumed ultimate control over which businesses could go public. By
holding exclusive power to authorize an IPO, the IEC violated the fundamental idea of a free market
economy. Additionally, unqualified and often questionable companies -- many of which had poor
organizational structures and ambiguous policies on financial information disclosure -- were allowed
to enter the stock market (Ding, 2006). Under this system, a seemingly successful company with high
stock prices one day could plummet in value the next. The unpredictable nature of these companies
endangered the rights of general investors and severely damaged the reputation and stability of the
Chinese stock market.

Reform of the IEC
Eventually, the consistently weak performance of the Chinese stock market forced the CSRC to
hold the Provisional Measure on Stock Issuance Review Committee in 2003. This review committee
sought to improve the regulatory practices of the IEC by passing provisional measures to increase the
transparency of the IPO operational process (O' Melveny & Myers LLP, 2003). To reform the
organizational structure of the process completely, CSRC ceased issuing IPOs from August 2004 to
January 2005 (Wang, Yan Ni, 2006).
To eliminate incidents of bribery, one key reform required the CSRC to publish the list of IEC
committee members (Fang, 2003). This change in effect curtailed the influence financial consultants
had with companies. Another provisional measure amended the way the committee voted on a
company’s IPO (Fang, 2003). Rather than utilizing an anonymous voting process, committee
members were mandated to disclose their vote, thereby placing more responsibility on each individual
member (O' Melveny & Myers LLP, 2003). Overall, the modification of the CSRC increased the
transparency of the IPO review process in China and forced what had previously been guanxi-oriented
public relations agencies to adopt more professional practices (Fang, 2003). Following the
restructuring of the CSRC, the government promulgated the Measures for the Issuance Examination
Committee of China Securities Regulatory Commission in 2006 and introduced the Split Share

29
Structure Reform in October 2005 to further open up the capital market and safeguard the interests of
investors (CSRC, 2003).

Implementation of the Split Share Structure Reform
A unique characteristic of China’s capital market divided shareholders into two groups:
tradable shareholders and non-tradable shareholders. While tradable shareholders could trade and
exchange their stock in the security market, non-tradable shareholders were not authorized to do so.
Until 2004, China’s capital market was comprised of approximately two-thirds non-tradable shares
and one-third tradable shares (Shiu, 2006).
Given that a large portion of Chinese companies’ stock was not tradable, tradable shareholders
oftentimes paid high subscription prices to purchase the company’s remaining tradable stocks (Shiu,
2006). Factors that potentially affected stock prices therefore were crucial to tradable shareholders.
Non-tradable shareholders, in contrast, tended to care little about a company’s management or stock
performance since changes in stock price did not affect their assets (Shiu, 2006). This situation
resulted in disparate mindsets between Chinese shareholders and led to a noncompetitive trade market.
Also, since the number of investors in the secondary market, or financial market, was small, any
minor change could potentially affect the stability of the entire trade market and result in volatile
stock prices (Shiu, 2006).
Originally, the Chinese government divided shareholders to maintain control over the bulk of
companies’ stocks and thereby protect state-owned assets (Ling, 2005). This also allowed the
government to supervise and manage the development of the overall economy. While this method
made sense at some level, especially when China’s financial market was in its early stages, it quickly
became obsolete as the economy expanded and large amounts of foreign capital began to enter the
country (Ling, 2005).
In order to remain competitive in the global market, the Chinese government realized it needed
to strengthen the capital market mechanism and make all shares fully tradable (Ling, 2005). In 2005,
the CSRC implemented the Split Share Structure Reform, which mandated businesses to translate

30
their non-tradable shares into tradable shares (CSRC, 2003). When non-tradable shares became
tradable, increased equities resulted in a dilution of stock prices. Therefore, non-tradable shareholders
needed to find ways to compensate tradable shareholders for their reduced individual share values.
Given the nature of this reform, negotiations between shareholders became crucial, dramatically
boosting the importance of financial public relations practitioners.
According to Article 10 of the Administrative Measures on the Split Share Structure Reform of
Listed Companies, CSRC defined the reform movement as follows:
The board of directors of a listed company shall, within 10 days after the announcement on
convening of the relevant shareholders’ meeting is publicly released, assist the non-tradable
shareholders in adequately communicating and negotiating with the tradable shareholders of
A-share market (hereinafter referred to as the “tradable shareholders”) by such approaches as
hosting an investor symposium, a press conference or an online road show, paying a visit to
institutional investors and issuing a consultation paper an so on. In addition, the board of
directors of the listed company shall publicly disclose its hotline, facsimile and e-mail address
in order to widely solicit opinions from tradable shareholders so as to lay a broad shareholder
foundation for the reform plan (CSRC, 2003).

Financial public relations practitioners’ newly acquired responsibilities included facilitating
communications between tradable stock shareholders and non-tradable stock shareholders, as well as
interacting with analysts and the media (Wang, Yan Ni, 2006). Practitioners organized seminars and
focus groups to help companies understand the changes and devise a satisfactory negotiating plan (Yu,
2005). At the same time, practitioners began to monitor media coverage to control damage from
negative reports, as well as to integrate newspapers, companies’ websites, and other security-related
industries seeking to conduct a comprehensive public relations communication strategy. In order to
maintain long-term relationships between shareholders, practitioners stepped up efforts to create more
positive images of their companies (Yu, 2005).
Though China’s financial relations industry has yet to reach the level of maturity enjoyed by
Western nations, it has changed significantly under the Split Share Structure Reform. The reform
highlighted the importance of investor relations, as well as increased the demand for well-trained and
educated financial public relations talents (Wang, Yan Ni, 2006). To meet companies’ expectations,
financial public relations practitioners in China must be familiar with all provisions of the reform and
knowledgeable about the country’s trading system and financial market. Current circumstances

31
present an excellent opportunity for the financial public relations industry to improve the quality of its
workforce, eliminate unqualified firms, and enhance its reputation in the public eye (Wang, Yan Ni,
2006).

32
CHAPTER IV
CHINA’S FINANCIAL AND POLITICAL ENVIRONMENTS
The Relationship Between China’s Financial and Political Environments
Grasping the complexity of China’s financially and politically-related environments poses a
difficult yet crucial task for businesspeople.
A traditional saying in China asserts: ‘No one man can approve a project, but any one man can
veto it.’ You have to interface with officials at various levels of government to make sure that
they understand what your project is and they buy into it (Norman Givant, as cited in
Fernandez & Underwood, 2006, p. 197).

As a socialist state, China operates a command economy that is planned and directed by the
government. But when such an economy tries to adopt a capitalistic market mentality,
misunderstandings and conflicts arise. Deng Xiaoping, compared the interplay of politics and the
market in China to the trial-and-error process of “groping for stones to cross the river” (Hutton, 2006).
In 2003, China’s Prime Minister, Wen Jiabao, announced a market-intervention policy, called
“Macro-control” (Wen Jiabao, 2007), for the second time to China’s business world. “Macro-control”
first was introduced in 1993 under then-Prime Minister Zhu Rongji. The policy sought to allay the
overheated economy through direct intervention by the central government, including “suppressing
real estate and stock markets, reducing domestic consumption, and lowering supplies of raw
materials” (Macro-Control, 2007).
The market-intervention plan played an important role in fulfilling the Chinese government’s
strategic macroeconomic goal of a “soft landing,” a condition in which the growth rate slows but still
remains positive (Soft Landing, 2007). For example, if the central government raised the export profit
margin by one percent, every local government and customs department would be obligated to find a
way to meet this demand, such as by forcing low-profit companies to stop the exportation of goods,
which would in turn pressure importers to buy goods at higher prices from other companies.
Consequently, the export profit margin of the country would rise. This example characterizes the type
of controlling environment, central to a socialist nation like China, which can lead to conflict and
miscommunication between financial and political entities.

33
Fortunately, China currently is transitioning from a command economy to a market economy.
Under pressure to expand its economy and maintain its economic growth rate, China is being forced
to create an environment that appeals to foreign investors (Saalman, 2004).
Economy development has been under way in China for 20 years, and that country has made
great strides creating international-standard rules and regulations since WTO accession, and
these changes create a new basis for foreign investors to be confident (Elmar Stachels, as cited
in Fernandez & Underwood, 2006, p. 209).

Three factors play a central role in regulating the relationship between China’s financial and
political environments:
China Securities Regulatory Commission
The China Securities Regulatory Commission, or CSRC, is the country’s oversight
organization responsible for the management of security firms. Founded in 1992, CSRC was
originally a sector under the State Council. After the 1998 State Council Organization Reform Project,
CSRC merged with the State Council’s existing commission on securities regulation to become a
single bureau of the Chinese government (Jou, Chiau & We, 2002). This union strengthened the
institutional authority and independence of the CSRC, which soon took over the responsibility of
managing security-issuing organizations from the People’s Bank of China (The People' s Bank of
China, n.d.).
The organizational structure of the CSRC shares similarities with the U.S. Securities and
Exchange Commission, or SEC, which aims to “protect investors, maintain fair, orderly, and efficient
markets, and facilitate capital formation” (U.S. Securities and Exchange Commission, 2006). Both
organizations operate facilities for legal affairs, international affairs, internal affairs and accounting
(See Figures 4 & Figure 5). But unlike the SEC, the CSRC publicly pledges its commitment to fulfill
the State Council’s “Macro-control” goal, a form of market-intervention policy that does not occur in
the West (China Securities Regulatory Commission, n.d.).

34

Figure 4. Organizational Structure of the CSRC. Source: China Securities Regulatory Commission,
2003, Retrieved March 25, 2007, from
http://211.154.210.238/en/department/dep_index_en.jsp?path=ROOT>EN>Departments.

Figure 5. SEC Organization Chart. Source: U.S. Securities and Exchange Commission. (n.d.)
Retrieved March 25, 2007, from http://www.sec.gov/images/secorg.pdf.

35
Other differences between CSRC and SEC can be attributed to the Chinese stock market’s lack
of operational efficiency and reliability evident in capital markets like the U.S. stock market. By
providing an adequate annual IPO quota, the U.S. stock market ensures that only companies with
sound organizational structures, stable finances, and transparent policies of financial disclosure be
reviewed by the SEC and have the opportunity to go public (Lu, James, personal communication,
March 16, 2007). If companies successfully launch their IPOs, they enter free competition market.
This process, at some level, reduces the risk of illegal bribery practices (Lu, James, Personal
Communication, March 16, 2007). Additionally, under this system, a company seeking a high stock
price must demonstrate its financial potential to the public and earn investor confidence to survive in
the market (Lu, James, Personal Communication, March 16, 2007). By emphasizing quality and
financial stability, capital markets are better able to maintain impartiality and build a more
competitive and reliable trading system.
Unlike those in China, investors in Western countries have access to comprehensive lists of
companies from which to compare and choose (Lu, James, Personal Communication, March 16,
2007). These investors can carefully review information provided by the companies, then determine in
which stocks they want to invest. Conversely, Chinese investors lack a comprehensive list of
companies from which to choose. Further, they are not provided with adequate financial information
about listed companies, which leads them blindly to “bet” or “gamble” their money on companies (Lu,
James, Personal Communication, March 16, 2007). This situation hinders the development of the
financial market in China and undermines foreign investors’ trust in the Chinese market.
As previously mentioned, notorious bribery scandals, particularly in connection with financial
public relations firms, forced the Issuance Examination Committee of CSRC to undergo reforms to
amend its policies and reputation. Still, the committee remains responsible for examining the
eligibility of initial public offerings (IPOs) in China, compared to brokerage firms that fulfill this
function in the West (Shi & Ju, 2003).

36
Unlike the business-oriented style of issuing IPOs in the West, the IPO procedure in China
remains politically-related, controlled by governmental organizations, CSRC, and officers and
political figures in the government. For this reason, financial public relations firms in China are more
concerned with political relationships than are firms in the West.

State-Owned Assets Supervision and Administration Commission of State Council
As in any communist country, the Chinese government controls all assets, having privatized
nearly half of the country’s economy in the past three decades ("People' s Republic," 2007). When
Deng Xiaoping rose to power in 1977, he placed China on a path toward a market-based economy,
declaring that China can develop a market economy under socialism ("We Can," n.d.). This special
economic model, known as “Socialist Market Economy,” shaped the roadmap for future development
in China (Fernandez & Underwood, 2006, p. 203).
The socialist market economic system of present-day China contributed to a special market that
created numerous state-owned enterprises (SOE), which today are “to a large extent used to reach
policy goals” (Dullien, 2006, p. 2). SOEs continue investing in various domains and inviting foreign
capital to form sino-foreign joint ventures. “When China first opened its market to the outside world
in the 1990s, most corporations assumed the best entry strategy into China would be to joint venture
with the Chinese government” ("Joint Ventures," n.d.). Today, many of these companies are listed in
stock markets.
In addition to providing critical capital and helping underwrite both healthy and faltering
SOE' s, the listings provide legitimacy for China' s largely centrally-controlled economy and
create global constituencies with vested financial interests in seeing that these companies not
only survive, but prosper ("Capital Markets," n.d.).

Regardless of direct or indirect investments, these companies remain partly or completely
controlled by the Chinese government. “From an economic point of view, the SOEs’ credit financed
investments which are to a large extent conducted under the influence of politicians and the loans for
which are often also handed out after political influence, have a similar effect as an credit financed
government investment” (Dullien, 2006, p. 2).

37
In 2003, the State Council established the State-owned Assets Supervision and Administration
Commission, or SASAC, to supervise the maintenance and enhancement of the value of the state-
owned enterprises. The commission also drafts regulations and directs government investment in
these enterprises. According to the SASAC, the central government currently invests in more than 150
major state-owned enterprises. In fact, central and local governments today have become such big-
name investment bankers in China that financial public relations firms must consider the importance
of political relationships in their decision-making and policy-making processes ("Major SOEs," 2004).

Foreign Legal Events
Foreign legal events have the potential to affect financial public relations in China. One
notorious example can be seen in the Merrill Lynch scandal in 2002. Merrill Lynch, one of the top
investment firms in the United States, became the center of controversy over allegations that Merrill
analysts misled investors with tainted stock advice “as provided to the public positive
recommendations on stocks that they privately disparaged as poor investments” (“Global Settlement,”
2003). “When a firm publishes favorable research about a company without revealing to its
customers that that research - far from being independent - was essentially bought and paid for by the
issuer, we had no choice but to conclude that the research system was broken” (Donaldson, 2003).
In May 2002, New York State Attorney General Eliot Spitzer reached an agreement with
Merrill Lynch. Spitzer ordered Merrill Lynch, the undisputed leader of the group, to pay $100 million
to the New York State Department of Law, law departments in the rest of the 49 states, and the
District of Columbia and Puerto Rico ("Agreement Between," 2002). In addition, Merrill Lynch was
required to change its entire research system, including separating analyst compensation from
investment banking revenue, as well as establish a Research Recommendation Committee to “monitor
performance of and supervise equity research recommendations for objectivity, integrity, and a
rigorous analytical framework in the development of all recommendations” ("Agreement Between,"
2002).

38
Following the Merrill Lynch case, Spitzer continued to investigate conflicts of interest between
investment banking services and securities research at brokerage firms ("Spitzer, Merrill," 2002). On
April 28, 2003, investigations came to a boil when the National Association of Securities Dealers, or
NASD, the SEC, the New York Stock Exchange, the National Association of State Securities
Administrators, and the New York State Attorney General announced settled enforcement actions
against 10 of the nation’s top investment firms ("Ten of Nation' s," 2003). This historic settlement
mandated sweeping structural reforms by requiring the firms to pay penalties totaling $487.5 million
and disgorgement fees of $387.5 million ("Ten of Nation' s," 2003). The firms also were ordered to
pay an additional $432.5 million to fund independent research and $80 million to fund investor
education and mandates for sweeping structural reforms ("Ten of Nation' s," 2003).
In addition to monetary payments, the firms were required to comply with several restrictions
that dramatically reformed future practices in the industry. This included separating research and
investment banking departments at firms, modifying how research was reviewed and supervised, and
making independent research available to investors ("Statement by Attorney," 2003). “To date, this
global settlement was one of the largest affected by securities regulators.” Spitzer indicated there
would be further actions against individuals linked to analyst conflicts of interest and other related
wrongdoings. His office, along with the SEC and NASD, continues to investigate other cases
("Statement by Attorney," 2003).
As a result of this crackdown, the international financial industry has gone through systematic
reforms that remain in place today. While China works aggressively to attract foreign investment and
sino-foreign joint ventures, many of these companies, including SEOs, are important listed companies
in various stock markets. Given that these top investment firms may provide information about
Chinese businesses to the rest of the world, as well as potentially serve Chinese investors, legal events
like the Global Settlement influence the way financial public relations firms in China operate and
underscore the importance of public relations firms keeping an eye on legal cases that pertain to the
financial world.

39
CHAPTER V
THE FUTURE OF FINANCIAL PUBLIC RELATIONS IN CHINA
With the country’s expanding economy and 2001 entrance into the WTO, the Chinese public
relations industry has realized the necessity to familiarize itself with the international financial arena
and cooperate with foreign public relations firms. In October 2005, China Business Press Release
Newswire, one of the country’s leading newswires that distributes news to the media and companies,
partnered with PrimeNewswire, a globally-operated newswire service specializing in the
dissemination of corporate financial news (CN PRnews, 2005).
Launched in 1998, PrimeNewswire is a U.S.-owned press release newswire and information
distributor in America, Canada, Europe and Asia (PrimeNewswire, n.d.). Its service reaches more than
1,700 daily newspapers and 3,500 internet Web sites, as well as trade magazines, weekly publications,
television, and radio outlets in those countries (PrimeNewswire, n.d.). PrimeNewswire also services
well-known media such as Dow Jones, Reuters, The Wall Street Journal and Bloomberg
(PrimeNewswire, n.d.). China Business Press Release Newswire is a business-oriented newswire
distributor limited to China’s business market and financial public relations companies. It provides a
platform for news distribution and monitoring, servicing nearly all of China’s financial media outlets
(PRnews.cn, n.d.).
The partnership between these two newswires was founded on the vision of establishing a large
bilingual financial relations newswire service for China (CN PRnews, 2005). Through their
collaboration, press releases published on PrimeNewswire are picked up by China Business Press
Release Newswire, translated into simplified Chinese characters, then distributed to China’s financial
media. Foreign businesses have the opportunity to increase their visibility in China by publishing their
news through the bilingual newswire service (PRnews.cn, n.d.).
At the same time, through the information exchange process, Chinese companies gain greater
access to resources and information about international financial public relations (PRnews.cn, n.d.).
These two newswire organizations hope their cooperation will set the stage for more Chinese

40
investors to expand their businesses internationally and more American investors to develop their
businesses in China (PRnews.cn, n.d.).
Just as China’s public relations industry has recognized the need to learn more about the
international financial arena, the foreign public relations industry has realized the importance of
networking with the Chinese government, media and businesses (Chi, et al., 2006). Foreign firms are
working to integrate Chinese cultural values and practices into their own public relations models to
adjust to China’s unique environment and attract a greater local audience (Chi, et al., 2006).
Foreign companies seeking to win a piece of this growing market must adapt to guo qing,
which means ‘national characteristics’ or ‘a country’s special circumstances.’ Understanding
guo qing is crucial for brand marketers who want to deliver a product with the value, quality,
and convenience that will appeal to Chinese consumers (Yan, 2004, p. 125).

In order to gain greater access to the Chinese network and better understand the cultural values
of the country, public relations agencies in the West have been seeking partnerships with local firms
(Chi, et al., 2006). International public relations agencies more often than not have a great deal of
overseas experience. But given the complexity of the country and its unique political and economic
environment, international public relations agencies oftentimes discover that the most productive
approach lies in forging a joint venture with a local Chinese public relations company (Chi, et al.,
2006). In this way, international agencies facilitate interaction within China by teaming up with
people familiar with the cultural environment who understand the limitations of a government-
controlled media (Chi, et al., 2006).
Compared to local Chinese agencies, foreign public relations firms provide more strategic
consulting services and are equipped with advanced technology, solid capital support, profuse
experience, and better public images (Chi, et al., 2006). In contrast, China’s public relations agencies
benefit from stronger social networks, more familiarity with local culture, and inexpensive services.
As such, they are able to establish better relationships with the local media and maintain excellent
event execution services (Chi, et al., 2006).
Given the benefits for both, local and foreign public relations agencies are increasingly
coordinating with one another to leverage each others’ strengths. For example, Waggener Edstrom

41
Worldwide, a global public relations firm, merged with Shout Communications, a Hong Kong-based
public relations agency that provides service in China, Korea, Singapore and other East Asian
countries (Waggener Edstrom Worldwide, n.d.). This union demonstrated Waggener’s ambition to
expand its business coverage to Chinese markets (Waggener Edstrom Worldwide, n.d.). Collaboration
between foreign and local agencies creates a win-win situation in which firms are able to maximize
the effect of their public relations services.
Some foreign agencies have set up their own branches in major cities in China, utilizing their
global connections and resources to gain a foothold in the Chinese public relations market (Chi, et al.,
2006). The internationally renowned public relations firm, Edelman, established local headquarters in
China in 1994 to take advantage of China’s burgeoning public relations industry (Edelman, n.d.).
Additionally, Chinese public relations associations, such as China International Public Relation
Association (CIPRA) and Shanghai Public Relations Association (SPRA), hold seminars, events and
presentations to give public relations practitioners a forum through which they can exchange
information (Chi, et al., 2006). Comprised of government officials and business and media leaders,
these public relations associations focus on promoting a positive image of China’s public relations
industry.
As China’s economy expands, the public relations industry will undergo continual development,
making it an increasingly important and competitive field. The public relations industry therefore
must be prepared to face off with the global financial public relations world and meet the expectations
of local and foreign investors. The second half of this thesis introduces a campaign model that, by
providing insight into the Chinese financial public relations world, aims to improve its reputation,
enable it to compete with foreign firms, and attract a more global audience.

42
CHAPTER VI
CAMPAIGN DESIGN
Goal
Improve the Reputation of Financial Public Relations in China
The campaign proposes a model that financial public relations practitioners in China can
implement to improve the reputation of the public relations industry. The model consists of a
synthesis of traditional Chinese customs and successful Western public relations practices and has
been developed according to the Public Relations Strategic Planning Model set forth by the Strategic
Public Relations Program at the University of Southern California.

Statement of the Problem
With a growing investment market and the introduction of measures to reform the country’s
stock market, financial public relations has become an industry to watch in China. However, past
scandals and the guanxi-oriented environment in China do not engender trust among investors and
financial practitioners. China needs a promotional campaign capable of repairing the industry’s image,
altering the public’s impression of the industry, and bolstering the reputation of the financial public
relations industry. Further, the public relations industry needs the find ways to attract a broader global
interest in China’s financial market, a challenge the campaign also addresses.

Research Methodology
Primary Research
I chose to interview three people whose background, knowledge and professional work
experience have relevance to the thesis topic.
o Hu, Rebecca
Hu has worked as an investor relations officer at Cathy Financial Holdings Co., Ltd for two
years. During the interview, I asked Hu questions about the investor relations situation in Asia,

43
particularly in China. We also spoke about how her company and other Asian investor relations
firms regard the role of investor relations and financial public relations in Asian economies. Hu
explained the kinds of services her company provides, described how clients regard investor
relations, and suggested different ways to evaluate the effectiveness of investor relations.
o Chen, Victor
Chen worked as an account director at GolinHarris International in Taiwan and has more than
four years experience practicing and managing public relations. During the interview, I asked
Chen about the extent of financial public relations services offered at a typical agency in China
relative to other public relations services. Chen also compared financial public relations in the
Asian market with that of the U.S. market. Additionally, Chen offered his opinion on the future
of financial public relations in China. We discussed the industry’s potential to develop,
expected opportunities, and any foreseeable obstacles.
o Lu, James
Lu was the section chief for investment in service industries at the World Trade Organization’s
department of ministry of commerce in China. He also represented China in the WTO global
negotiation on investment deregulation. During the interview, I asked Lu to describe China’s
economy before and after its WTO entry, particularly in the finance field. We discussed
whether public relations played a role in helping China apply for WTO membership, and if so,
how public relations practices facilitated the process. Lu also explained how public relations
served as strategic planners in helping China negotiate with WTO members when dealing with
seemingly discriminating provisions like the TPSSM. I ended the interview by asking Lu to
describe how public relations can advance the development of the Chinese market and improve
China’s overall image.
Secondary Research
I chose reference books, articles and online papers pertaining to public relations and investor
relations. In order to thoroughly understand the public relations situation in China, I used various
reference books written by Chinese public relations practitioners and professors. However, because

44
investor relations-specific books by Chinese authors are rare, I also reviewed investor relations texts
written by American authors. To better understand the varying perspectives foreign businesses have
of China, I referenced books by foreign investors and foreign-based public relations agencies that
offered personal experiences and lessons learned from doing business in China. I also browsed Web
sites of Chinese public relations associations, the U.S. public relations associations, and security
regulatory institutions like the China Securities Regulatory Commission (CSRC) and the U.S.
Securities and Exchange Commission. Finally, I referred to numerous online public relations-related
articles, periodicals, and research studies.

Situation Analysis
A SWOT Analysis has been conducted to present an overview of China’s public relations
industry, especially in the financial field, and evaluate the practicality of implementing the campaign.
Strengths

o China’s Growing Economy
o Awareness of Financial Public Relations
o Growing Financial Public Relations
industry
o Increasing Number of Foreign Investors
o Reforms of China’s Financial System
Weaknesses

o Bribery
o Government Intervention
o Deficient Financial Public Relations
Understanding
o Traditional Perception
o Rigid Organizational Structure
o Lack of Determination for Pitching Large-
Scale Events
o Inconsistent Public Relations Quality
o Lack of Creativity
Opportunities

o World Trade Organization
o The Popularization of the Financial
Public Relations Industry
o The Need for Trust
o State-Owned Enterprises
o The Chinese Government’s Growing
Recognition of the Public Relations
Industry
o 2008 Olympic Games and 2010
Shanghai World Expo
o The Need for Public Relations
Personnel
o The Power of Internet
Threats

o Short-Term Contracts
o Pump and Dump
o Rapid Turnover
o Low-Entry Barrier
o Dependence on Guanxi Culture
o Inappropriate Relationship with the Media
and Lack of Media Training
o The Influence of a Misused Term
o Shortage of Public Relations Management
Workforce
o A Tainted Reputation
o Long-Term Abuse
o Lack of Financial Public Relations
Understanding
o Launching IPOs in Hong Kong

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Strengths
o China’s Growing Economy
As China’s growing economy brings new ideas and global perspectives to the country, Chinese
companies will become more open-minded and receptive to changes, especially if they believe
these changes can improve their lives. This point represents a strength in the public relations
industry’s promotional campaign to demonstrate how its services can help people improve their
businesses and enhance their economic status.
o Awareness of Financial Public Relations
China’s public relations industry has been growing for the last twenty years, but only during
the past five years has the industry really taken off. With the country’s increasing capital
market, Chinese companies are striving to launch initial public offerings (IPO). Given the
integral role financial public relations plays in launching a company’s IPO, particularly in an
environment like China’s, the industry has become more prominent and commonplace in the
country’s business sector.
o Growing Financial Public Relations Industry
With the growing number of public relations books on the market and programs at universities
and colleges, the Chinese public is becoming keenly aware of public relations. Financial public
relations in particular is growing rapidly in China, with many people in the field seeking ways
to improve the practice of financial public relations, as well as people’s perception of the
industry. In light of this, financial public relations companies have more incentive to
incorporate a new and cohesive financial public relations campaign.
o Increasing Number of Foreign Investors
The rising number of foreign investors in China brings global views and a more liberal attitude
to the country. China has become increasingly aware of the need for flexibility in business and
the importance of understanding the multicultural world. The presence of foreign investors also
urges China to reform its traditional business model, which includes reducing government
intervention in the industry (McGregor, 2005).

46
An influx of foreign investors creates a rising need for financial public relations
companies. In the future, the industry promises to become integral to advising investors about
the ins and outs of the Chinese market and acquiring access to the local media, communities,
and government. “China has allowed foreigners in only on its own terms, and those terms are
often opaque, contradictory, and bewildering” (McGregor, 2005, preface p. 17). Under more
recent circumstances, the public relations industry has grown by leaps and bounds and will
continue to expand, particularly in the financial public relations sector.
o Reforms of China’s Financial System
Reforms related to the trading market, such as Split Share Structure Reform, elevated the value
of, and trust in, financial public relations in China. At the same time, these reforms curtailed
illegal and inappropriate public relations activities, thereby boosting the credibility of the
industry as a whole. The presence of these reform measures, in turn, stimulates growth in the
industry.

Weaknesses
o Bribery
China has been notorious for allowing bribery in the business sector. The infamous Wang Xiao
Shi scandal, discovered in 2003, lingers in the public consciousness, tarnishing the reputation
of financial public relations in China. This failing may prove to be the greatest obstacle in
promoting China’s financial public relations industry to the public and foreign investors.
o Government Intervention
Industries such as media, information technology, transportation, medical, and financial
markets all operate under government control in China. “Trust in brands is enhanced by the
media and by approaches used to promote products…the trusted media are those used for
official purposes. Television, radio, and newspapers are tightly controlled by regulatory
bodies” (Yan, 2004, p. 134). Although intervention by the Chinese government has enabled
several Chinese industries to grow faster, bureaucratic red tape represents a serious obstacle to

47
promoting reform and may undermine any public relations campaign in China. The situation
threatens to be worse in the financial industry, which the Chinese government strictly controls.
Therefore, finding ways to reach target audiences through media and accurately conveying
their message without censorship presents a considerable challenge to the financial public
relations industry.
o Deficient Financial Public Relations Understanding
An overall lack of understanding has hindered the development of PR in China, especially in
financial public relations, which is a comparatively new field in China. Some Chinese
companies mistakenly regard the function of financial public relations as similar to advertising,
while others perceive it simply as an event department and media communications connection.
As the result, public relations departments frequently have been placed under marketing
departments and assigned limited duties, such as disseminating press releases and holding
events. These misperceptions have thwarted the development of public relations, which often
remain stuck in the basic executive phase instead of entering the strategic planning phase (Chi,
et al., 2006, p. 90).
o Traditional Perception
Some complacent and conservative Chinese businesses, such as manufacturing companies,
regard it as unnecessary to place too much emphasis on communicating with investors,
believing that as long as a company’s performance gives investors a good stock price there is
no need to explain what the company is doing, the nature of their products, or what new
products they intend to launch in the future. Traditional perceptions of management in these
companies lead to the assumption that investors lack the background and professional
knowledge to understand business practices (Yuan, 2006). As investors in China become more
educated and sophisticated about the stock market, however, they inevitably will be interested
in what the company is doing so they can evaluate and decide whether to invest in the company.

48
o Rigid Organizational Structure
China’s comparatively inflexible business structure poses problems for promoting financial
public relations. Many traditional Chinese companies prefer to stay in the comfort zone and
retain old patterns of thinking, no matter how out-of-date. Because they resist change, it is
difficult to persuade them to adopt new concepts or ideas recommended by public relations to
improve their reputation. Those who believe public relations should only be involved in press
releases or press conferences have trouble understanding why they need to listen to public
relations experts for management-related advice. “It is now commonly understood that most
Chinese companies lack the experience to keep up with the speed and scope of change in the
Chinese marketplace…the whole concept and practice of free-market competition is alien to
many Chinese” (Vanhonacker, 2004, p.113).
Since public relation practitioners maintain direct contact with media and the public,
they are the first to sense market changes and detect opportunities. Companies that resist
suggestions from public relations miss opportunities and risk falling behind other competitors.
Traditional ways of thinking on the part of these companies also hinders the development of
Chinese public relations by thwarting its transition from event executive to strategic planning
consultant.
o Lack of Determination for Pitching Large-Scale Events
Domestic public relations firms generally have less confidence in pitching big public relations
projects, such as the 2008 Olympics Games (Chi, et al., 2006, p. 56). Further, since the
government retains the right to decide which public relations firms should handle high-profile
international events, comparatively smaller firms willing to take on such projects are keenly
aware that the final decision rests with the government (Chi, et al., 2006, p. 56).
o Inconsistent Public Relations Quality
The quality of PR practitioners in China lacks consistency (Chi Shiau Hua et al., p.241, 2006).
While some practitioners have an established background in the industry, others lack sufficient
training in the field. The financial PR industry, in particular, requires experienced practitioners

49
capable of providing professional advice to companies, both foreign and domestic, and
communicating skillfully with media.
o Lack of Creativity
According to the Survey of the Top 25 Chinese Public Relations Firms, public relations firms in
China generally lack creativity when planning and executing PR practices. The majority lack a
global view sufficient to develop the insights necessary to recognize trends and create
compelling brand image strategies (Successful Marketing, 2004).

Opportunities
o World Trade Organization
The World Trade Organization ushered in an era of reform for China’s business sector. Since
entering the WTO, China has witnessed an influx of foreign industries and accompanying
reform measures aimed at developing free trade in the country. Chinese industries now are
facing unfamiliar terrain, increasing the need to modify old practices and find a place in a more
competitive, transparent global business environment ("Internationalized Public," n.d.).
With foreign companies seeking local mediums through which to enter the Chinese
market, local companies face the challenge of adapting to and competing in the new global
environment. Local companies must raise capital, meet the public’s need for transparency in
operations and prepare themselves for the international market. They will not be able to do this
on their own, but will need the help of financial public relations to facilitate communication
with local media as well as with foreign entities (Yuan, 2001).
o The Popularization of the Financial Public Relations Industry
The growing capital market in China has precipitated the popularization of the financial public
relations industry. With prosperity in the industry, practitioners will be more willing to accept
new methods to improve the overall quality of the financial public relations field. A public
relations campaign aimed at improving the financial public relations industry, such as the
model outlined in this thesis, will have greater opportunities to be adopted. Moreover, if the

50
campaign were implemented and brought about significant changes in China’s financial public
relations landscape, it would more easily be noticed by the public which would, in turn, drive
more financial PR practitioners to follow suit.
o The Need for Trust
“It is all about trust, given the changing economy. People will gravitate to a name and brand
they can trust. They want to know they are getting quality service” (Debbra Smith, as cited in
Woodall, 2002). In the business world, whether on the sell-side or buy-side, establishing a
relationship of trust with the consumer constitutes the foremost objective. Scandals and bribery
cases that tarnished the reputation of China’s financial world underscored the need for greater
transparency in both the business and public sectors. While Chinese companies have made
strides in reforming their practices, they still have a long way to go before they can fully secure
the confidence of local and international consumers.
o State-Owned Enterprises
With the large number of state-owned businesses in China, the public relations industry has the
opportunity to demonstrate its value to the financial world by guiding those businesses to build
sound operating systems. This will help the financial public relations industry gain government
support, leading to further reform and promoting the importance of PR in China.
o The Chinese Government’s Growing Recognition of the Public Relations Industry
In 1997, the National Public Relations Verification Committee was established by CPRA and
CIPRA and in 1999 the National Vocational Qualification Public Relations Committee, which
formally recognized the specialized PR industry in the country, was established (Ju, 2002).
The public relations industry is regulated by the Chinese government and Chinese public
relations practitioners who wish to run their own companies must first be certified public
relations officers, a measure that ensures the quality of the Chinese public relations industry
(wwn, 2005). Today, public relations has become one of the ten most popular industries in
China (Harbor Education Group, 2005), making these regulations critical for ensuring high-
quality service in the Chinese public relations industry.

51
o 2008 Olympic Games and 2010 Shanghai World Expo
For China, the 2008 Olympics is a matter of prestige and pride. However, it has brought
about more international scrutiny, making China accountable for its actions in
preparation for the games. The Olympics will be a huge publicity campaign for China,
showing the world China’s new status in world affairs…The games may very well lead
to a more open and democratic China, reveal the severity and handicaps of the CPC, be a
hugely successful publicity stunt, or just be a spectacular show—the best that China has
to offer (Li, 2005).

The 2008 Olympic Games and 2010 Shanghai World Expo are important events for
China from both a political and economic standpoint. As the host of these two international
events, China must find ways to improve the reputation of its government in the global eye.
Also, it is imperative that the Chinese government and local businesses develop better
communication skills to demonstrate their potential to international media expected to visit
China during these two events. In pursuing these ends, the demand for PR undoubtedly will
increase.
o The Need for Public Relations Personnel
The public relations workforce now faces a shortage, particularly at the management level.
According to current figures, there will be an estimated shortage of at least 1,300 PR
practitioners at the time of the 2010 Shanghai World Expo (Jou, 2006). As China’s public
relations industry expands, the need for a larger workforce of public relations practitioners
arises. Currently this demand is not being met. The three areas in the Chinese public relations
industry facing the greatest shortages include press release editors, account managers and top
managers (Ju, 2002).
Ironically, this situation can be used to the public relations industry’s advantage. The
workforce shortage will likely prompt the Chinese public relations industry and the government
to invest greater resources in education and training programs, improving the quality of the
public relations industry as a whole and, in turn, encouraging more students and workers
entering the job market to consider careers in this field.

52
o The Power of Internet
The Internet, which public relations practitioners rely on to contact their clients directly and
efficiently, has become a critical tool for communicating in the 21st century. From traditional
e-mail and cost efficient e-commerce to the popular IM system, blogs, online video sharing,
and YouTube, the Internet already has emerged as the most efficient communicator globally.
Although it can become a serious threat when disseminating negative news, if used carefully
and with savvy, it has proven to be an invaluable communication tool for the public relations
industry to deliver its messages to target audiences.

Threats
o Short-Term Contracts
Chinese companies seek out financial public relations practitioners primarily when they are
pursuing initial public offerings, or IPOs (Chi, et al., 2006). These companies may not
understand the critical role financial public relations plays in maintaining relationships with
stakeholders after an IPO. Short-term service fails to give public relations practitioners enough
time to understand their clients’ companies thoroughly and absorb the industry’s knowledge, a
drawback that results in inefficiency when planning and executing public relations programs.
Furthermore, this kind of one-time service proves quite costly for financial public
relations companies. According to the customer relationship management field doctrine, “…the
cost of acquiring a new customer can be as much as five times the cost of holding onto an old
customer” (Butler, Steve, as cited in eMarketer, 2001). To curb the tendency of companies to
pursue only short-term contracts, PR professionals must provide more comprehensive services
that meet their clients’ needs so they can retain those companies for longer periods of time.
o Pump and Dump
A serious problem arises in the financial market when companies exploit financial public
relations to engage in “pump and dump” schemes. “In the pump and dump scheme,
unscrupulous companies artificially and temporarily boost their stock price so insiders can take

53
a profit” ("How Investor," 2005). The public relations industry requires strict regulations to
prevent any inappropriate leveraging of media outlets to disseminate financial statements
overstating the value of a company. A notorious example can be seen in the Enron scandal, in
which the energy company disintegrated as a result of top-level mismanagement and
misrepresentation of the company’s value. Because financial public relations relies heavily on
morality and transparency when serving its clientele, practitioners should be acutely aware of a
company’s situation and maintain honesty with the public since, once investors leave, they
don’t come back.
o Rapid Turnover
Rapid turnover represents a serious problem in the public relations industry, especially in China
(Ju, 2002). Because China’s public relations industry is facing a serious personnel shortage, the
most talented practitioners constantly are being recruited and fought over by corporations (Chi,
et al. 2006, p. 202). Also, when PR practitioners move to other companies, they frequently take
their clients with them, leading to a loss of clients for many less prestigious Chinese companies.
o Low-Entry Barrier
Compared to Western countries like the United States, China maintains a relatively low barrier
of entry for financial public relations companies (Chi, et al., 2006). Still in its early stages, the
financial PR industry in China is not up to par with Western standards. In the United States,
professional financial public relations practitioners must be knowledgeable about finance,
management, communications, capital markets, investment models, crisis management,
branding and promotion (Chi, et al., 2006, p. 241). However, the Chinese financial PR industry
does not yet impose these kinds of requirements essential to recruiting qualified practitioners.
As China’s economy develops, the demand for financial public relations personnel grows.
Unfortunately, financial public relations personnel are insufficient to meet increasing demand.
Consequently, the quality of PR practitioners remains low and employees frequently are hired
regardless of their knowledge or experience in the industry (Chi, et al., 2006, p. 241).

54
A certain percentage of businesses and media outlets in China have become dissatisfied
with services provided by local public relations companies (Chi, et al., 2006, p. 128). In many
instances, public relations practitioners lacked training and experience in public relations
operations and in dealing with media or did not know enough about their clients’ background
and needs (Bjorksten, et al., 2006, p. 8). These deficiencies have precipitated a general distrust
of the public relations industry, prompting businesses to seek out public relations practitioners
solely on a short-term basis rather than as a long-term investment (Chi, et al., 2006, p. 129).
Regrettably, growing public mistrust currently is eroding the Chinese PR industry’s authority.
o Dependence on Guanxi Culture
One of the most daunting obstacles the Chinese PR industry confronts is the heavy dependence
on traditional guanxi culture to maintain relationships with the media. Many public relations
companies regard interpersonal relations with the media as more important than their
professional responsibilities. Some public relations agencies in China, for example, give red
envelopes containing money for a so-called “transportation allowance” or “meal allowance” to
the media (Bjorksten, et al., 2006, p. 44). The PR industry’s reliance on guanxi operations
creates a superficial relationship between the media and public relations practitioners. Rather
than building a relationship on the interchange of information and knowledge, it rests on
material benefits. This system will falter over the long-term, particularly as the media modifies
its standards of what constitutes news to meet the public’s growing demand for higher quality
information (Bjorksten, et al., 2006, p. 47).
Guanxi-oriented public relations practitioners need to alter their method of reaching out
to an increasingly knowledge-oriented media to avoid being eliminated from the market. The
Chinese PR industry must not only establish a professional rapport with the media, but learn
how to communicate effectively with the public and the government.
o Inappropriate Relationship with the Media and Lack of Media Training
Since the effectiveness of public relations is difficult to assess, securing media coverage
constitutes the most direct way to satisfy clients. Public relations practitioners’ fixation with

55
acquiring media coverage, however, has led many to be described as a “press release machine”
(Bjorksten, et al., 2006). While this may seem like a harmless term, it does little to promote the
image of public relations practitioners in the world of finance.
Given the burgeoning media environment in China, public relations companies can no
longer rely on drafting and disseminating press releases as a means of reaching the media and
communicating with the public. Sending out dry press releases for publication increases the
media’s burden and erodes the relationship between public relations practitioners and the media
(Bjorksten, et al., 2006, p. 15). The most effective way for public relations companies to
maintain a solid relationship with the media is to provide material that follows the latest social
trends and that the media would be interested in publishing on its own accord. To meet
reporters’ needs and interests, public relations practitioners should offer accurate and timely
information about their clients, an approach that generally has been deficient in the Chinese
public relations industry recently.
o The Influence of a Misused Term
The Mandarin pronunciation of public relations is “Gong Guan,” a term that also refers to
people who work in bars and hotels and make their living by entertaining clients, in both sexual
and nonsexual ways. The dual meaning of this term gives the public relations industry a bad
reputation and deters future practitioners, who turn to other professions (Chi, et al., 2006, p.
271).
Even though the public now recognizes public relations as a professional field, the
negative connotation of the misused term still lingers in Chinese culture. For example, some
Chinese consider public relations as a vocation mainly for decent-looking people interested in
internal relations (Chen, Tung Kuei, 2006). Though a harmless characterization in its own
terms, the confusion surrounding the term “gong guan” can lead to misinterpretations, thereby
proving to be an obstacle for promoting the reputation of the public relations industry among
more traditional Chinese people.

56
o Shortage of Public Relations Management Workforce
Although the dearth of public relations practitioners conceivably could motivate the
government and businesses to take action and promote public relations training and education,
it will take time to address the personnel shortage. Since this shortage cannot be solved in a
short period of time, it represents a serious obstacle that limits the growth of the Chinese public
relations industry. In the long run, well-trained and experienced public relations veterans are
essential to furthering development of China’s public relations industry.
o A Tainted Reputation
The 2002 Wang Xiao Shi scandal severely discredited the financial public relations industry in
China. Businesses did not want to be associated with the financial public relations industry’s
corrupt image. Investors feared being cheated by financial public relations firms and even those
pursuing IPOs exercised caution in seeking public relations services (Ding, 2006). “Restoring
public confidence in the nation’s investment system will take years” (Cutlip, et al., 2005, p.
404). Thus, the financial public relations industry must impose strict self-regulatory
mechanisms to ensure a level of honesty and morality, as well as uphold its responsibility to
disclose accurately a company’s information to the public.
o Long-Term Abuse
Due to a lack of corporate governance, Chinese business culture is notorious for deceit and
fraud. In One Billion Customers, author James McGregor wrote, “China’s relationship-driven
system is often incompatible with honesty. The peasant tycoon’s journey into the dark heart of
China’s endemic corruption shows how it works and outlines your options” (McGregor, 2005,
p. 94). Indeed, the enterprise culture in China is rife with ethical problems, such as
embezzlement and the creation of false accounts.
o Lack of Financial Public Relations Understanding
In 1987, “Public Relations Ladies” became a highly popular Chinese television series that
portrayed the lives of public relations practitioners. The series familiarized the Chinese public
with the idea of public relations, especially public relations in hotel operations, and helped

57
businesses get a better sense of the benefits of employing public relations practitioners (Public
Relations, 2007). Despite the growing awareness of the public relations industry, however,
some businesses do not regard it as a specialized profession. Because it still is relatively new in
China, financial public relations in particular is not as well understood as other specialties in
the field.
Some Chinese companies consider financial public relations simply as a conduit to
disseminate press releases and secure advertising space in the media (Chi, et al., 2006, p. 71).
Many fail to understand how financial public relations is critical for establishing a
comprehensive network system and implementing a strategic plan. Some companies identify
PR as “marketing specialists” and assign practitioners to different departments like marketing
and advertisement (Chi, et al., 2006, p. 71). Since each department has its own goals and
philosophies, PR cannot be amalgamated with departments like advertising if companies want
to maintain a coherent operational system. Combining public relations functions with separate
departments precludes PR from bringing its skill into full play, further deterring advancement
of the industry.
o Launching IPOs in Hong Kong
After economic reform began in 1978, a large number of Chinese investors entered the Hong
Kong market, choosing to launch their IPOs there rather than in China (Tan, 2006). Investors
were attracted by Hong Kong’s sound financial and banking systems, comprehensive and
mature financial network, free trade market, transparent business environment, and favorable
IPO environment (Tan, 2006).
Another financial advantage for companies going public in Hong Kong is the high
corporate governance standards that make it easier to attract foreign capital (Tan, Wei Er,
2006). By the same token, China’s 11
th
Five-Year Plan, initiated by the Communist Party of
China to boost its industry, alleviated its previously strict regulations for IPOs in Hong Kong
("Ten Features," 2006).

58
In light of these advantages offered in Hong Kong, China must strive to increase its
appeal to local businesses and foreign investors. China’s financial PR industry needs to
demonstrate its capability and credibility in launching IPOs. This would encourage local
companies to launch IPOs and lead to a more stable financial environment.

Objectives
o To raise awareness and understanding of Financial PR in China by 15 percent in 5 years
o To improve the positive reputation of financial PR by 10 percent in 5 years

Key Audiences
o Companies of any size in China, including foreign capital or local capital companies
o People who work in the financial industry, including brokers, investment bankers, analysts,
traders, economists, investors and shareholders
o China Security Regulatory Commission, NASDQ, New York Stock Exchange
o Major media outlets and media specializing in finance, including newspapers, trade magazines,
radio, and Internet
o Overseas financial media and financial analysts
o Lawyers, auditing firms
o Chinese government officials

Key Messages
o Financial PR is credible and trustworthy
o Financial PR can help companies generate positive images, increase visibility in the financial
market, minimize crisis situations and legally increase their market value

59
Strategies and Tactics
Establishing a Sound Financial PR Environment
The following outlines key strategies and specific tactics for each:
o Reinforce the Authority of Chinese PR Associations
China International Public Relations Association (CIPRA), China Public Relations Association
(CPRA), and Shanghai Public Relations Association (SPRA) are three major public relations
associations in China. Given the specialized nature of financial PR and the need for its
regulation in China, establishing an independent financially oriented PR association is crucial.
China Financial Public Relations Association, or CFPRA, will be created to focus on
affairs that fall within the financial PR spectrum. In order to demonstrate its commitment to a
strong PR network, CFPRA will form alliances with the three major PR associations in China
and foreign PR organizations, including the International Public Relations Association (IPRA),
Public Relations Society of America (PRSA), International Professional Rodeo Association
(IPRA), International Association of Business Communicators (IABC) and the National
Investor Relations Institute (NIRI). With connections on both local and global levels, CFPRA
will form a comprehensive media relations department that has better access to major
international finance media such as The Wall Street Journal, the Financial Times, Reuters, and
Barron’s Economics.
By allying with credible international and local PR associations and media outlets,
CFPRA will take its first step toward establishing a solid reputation and authority in the field.
CFPRA will issue Chapter membership opportunities to PR professionals and stakeholders.
Every organization applying for membership will go through a preliminary interview -- a
thorough review and trial period to assess whether it has a solid organizational structure, a
sound record and outstanding PR performance. CFPRA membership also will be available to
individuals outside of the PR profession and students, so they can access news and information
concerning the organization and the financial PR field.

60
CFPRA will take advantage of expanding Internet usage in China by creating a website
that provides local and international PR news. The website will feature a vast online library of
PR material, discussion forums to share ideas, and job search tools for members to establish
connections with other practitioners in the field. Because CFPRA will have access to extensive
local and international resources, members can take advantage of the association’s connections
and array of lectures, seminars and public relations development meetings.
o Establish an Accreditation Mechanism
Occupational Skill Testing Authority (OSTA) is the accreditation for Chinese industries,
including public relations. Unlike the Accredited in Public Relations (APR) of PRSA, however,
which combines theory with a practical approach under a strict three-year certification period,
the accreditation in China focuses primarily on theory (Lin & Kuo, 2003). Therefore, a
financial PR accreditation that infuses theory and practical applications must be established to
increase the credibility of the Chinese financial PR industry.
In order to earn a financial PR accreditation in China, PR firms must be well-versed in
the overall situation and operational system of the Chinese stock market and the country’s
financial policies. China’s financial PR accreditation also must cooperate with the American
Institute of Certified Public Accountants (AICPA), which provides the Uniform Certified
Public Accountant Examination, to develop a comprehensive and credible accreditation
mechanism. The exam mainly would cover issues concerning China’s economic situation.
Every financial PR practitioner who seeks to be professionally recognized and trusted will be
required to take and pass the exam. Through this process, the financial PR industry in China
will be more widely recognized by the public and elevate its reputation.
o Financial PR Education
China now offers degrees specializing in public relations in junior colleges, colleges and
graduate schools. The most well-known schools offering these degrees include the
Communication University of China, Sun Yat-sen University, and Donghua University (Chi, et
al., 2006, p. 271). According to a survey of the Chinese PR industry, however, the majority of

61
Chinese PR managers found that the quality of education suffers from several weaknesses,
including curricula that is out of date with contemporary PR theory, information about the
foreign PR market that is inconsistent and does not apply to the culture, politics and economic
situation in China, a lack of practical case studies, and faculty with limited practical experience
in the field.
For these reasons, a well-formulated education program must be established to ensure
the long-term development of the financial PR industry. Instruction categorized by specialty --
such as finance, investment management, crisis management, PR management, capital market,
branding, media training, spokesperson training, media law, media writing, media and branding
strategies, and PR case studies -- promotes a more concentrated and thorough understanding of
public relations. Students will be required to complete an internship at a PR firm so they
possess skills that enable them to integrate PR theory and real-life experience. In addition,
CFPRA will establish a PR student association, like the Public Relations Student Society of
America in the United States, to help Chinese PR students broaden their networks and forge
connections with foreign PR student associations. CFPRA will offer fellowships to outstanding
PR students and encourage them to enter the PR industry.
o Crisis Leadership Training Program
As China’s media environment continues to mature, media outlets increasingly are trying to
present balanced coverage to the public. In the past, media felt compelled to generate
predominantly positive news about large and influential companies (Bjorksten, et al., 2006).
Today’s media, in contrast, seeks to establish credibility by finding and disseminating negative
news about businesses. This situation is especially common in China’s financial industry,
where numerous scandals by Chinese financial media already have been uncovered, such as the
discovery of the Yin Guang Shia scandal by Caijing magazine (Bjorksten, et al., 2006, p. 41).
With the booming Internet era in China, negative publicity has the potential to spread
and damage a company’s reputation almost instantaneously. To cope with these situations,
financial PR practitioners should be well trained in crisis leadership (Mitroff, 2003). With such

62
training, practitioners grasp the importance of establishing early warning mechanisms for
companies to safeguard against unexpected crises and recognize the need to design an early
identification system that will reduce the damage caused by crises (Mitroff, 2003).
CFPRA will provide members with case study workshops and seminars on crisis
leadership. By helping members familiarize themselves with strategies to handle crisis
situations, financial PR practitioners will be able to help businesses pinpoint their strengths and
weaknesses and prepare for emergency situations. Since crises can lead to a drop in stock
prices and other losses, financial PR practitioners’ ability to identify crises in a preemptive
manner will grant them greater credibility and recognition in the public eye.

Incorruptible Plan
Financial PR in China must maintain a high level of transparency to avoid scandals like the
Wang Xiao Shi fiasco. Although promoting high ethical standards is crucial to the industry, CFPRA
does not possess the authority to require financial PR firms to retain outside auditing companies that
ensure an impartial review of operations and clients’ financial information. Hence, in order to protect
investors and create a better financial environment in China, CFPRA must launch a plan that
standardizes rules and regulations which all financial PR firms are required to follow.
o Demonstrating the Rules and Regulations
On Oct. 27, 2005, China’s securities regulatory authorities drafted new rules and regulations to
supplement existing securities law aimed at standardizing the securities market ("China to
Further," 2001). The Standing Committee of the National People’s Congress modified the
Securities Law of the Peoples Republic of China to correct flaws in the stock market
supervision system and protect the interests of investors. The amendment comprised twelve
chapters and more than 200 articles intended to boost investors’ confidence and, consequently,
rejuvenate the slumping stock market ("Securities Law," 2006). Articles 169 to 173 outline
regulations for investment consulting firms, including financial PR firms. CFPRA will set up a
section on its website that lists these regulations (see Appendix A).

63
o Leveraging Outside Auditors
To minimize inappropriate and fraudulent practices in the trading market, CFPRA will
establish guidelines for the financial PR industry. One such requirement would be to
recommend that firms have their clients acquire outside auditors to review all financial and
accounting data. By requiring the use of external services, CFPRA can ensure the legality of a
firm’s operations and demonstrate its credibility to the public. If clients already have this kind
of auditing mechanism in place, financial PR firms can leverage existing auditors to review
their practice and operational system, which would demonstrate the firms’ integrity to the
public.
o Moral Constraint
Established in 1969, the National Investment Relations Institute, or NIRI, is an international
investor relations association which provides professional knowledge, education and suggested
regulations regarding the investor relations industry ("Mission and," n.d.). Investor relations, or
financial public relations, relies heavily on morality and transparency. Hence, NIRI established
the “Ethics Council” to advise and educate practitioners concerning ethical issue (see Appendix
B).
Following the example set by NIRI, CFPRA will create an online ethics center to
address ethics-related issues in the practice of financial PR. The ethics center will host online
forums for members to pose questions and answers and discuss ethical problems, as well as
online seminars and lectures to promote the importance of ethics in the trading market. The
center also will publish news articles and book excerpts pertaining to ethical issues in the
finance world. Similar to NIRI, CFPRA will require all members applying to the association to
sign a “Moral Agreement.” By signing this agreement members will pledge to refrain from
engaging in deceptive practices in the financial public relations industry that may damage the
rights of investors or compromise the stock market. Any member who violates this agreement
will have his membership revoked.

64
o Annual Awards
CFPRA will grant annual awards to individual financial public relations firms that demonstrate
outstanding performance. CFPRA will invite the China Security Regulatory Commission to
join the rating process to increase the credibility of the award in the public eye. The rating
standard will be determined by the number of successful IPOs a firm launches, as well as its
reputation within the industry based on surveys of companies and media in the trading market.
Additionally, the award committee will consider whether a firm’s disclosure of information had
veritable effects on a company’s stock price; this will encourage financial PR firms to take a
more active role in verifying a company’s information instead of simply relying on information
they receive from clients.

Low-Key Promotion
It is essential that the PR industry identify avenues to promote itself to the general public. As a
consulting group, however, financial PR must employ different promotional strategies than other
specialized PR groups. If the financial PR industry floods the public with advertisements for its
services or endorses investments and other endeavors with obvious PR spins, it risks undermining its
professional reputation and reducing its credibility. Therefore, the financial PR industry must use a
low-key promotional plan that inconspicuously introduces its name and reputation into people’s
personal and professional lives. According to Larry Chamber’s The Guide to Financial Public
Relations, one of the most powerful strategies to increase a company’s credibility is by making its
name visible to the public through newspapers and books (see Figure 6).

65

Figure 6. Events That Build Your Credibility. Source: Chamber, Larry. (1999). Chapter 6: Credibility
Marketing Strategies, Events That Build Your Credibility, The Guide to Financial Public Relations:
How to Stand Out in the Midst of Competitive Clutter (1st ed.), p. 64, St. Lucie Press, CRC.
Least effective
Most effective
Heard you speak in seminar
Met you via a cold call
Read article you authored
Read your book
Saw you on TV
Win
Nobel Prize
Read about you in newspapers

66
o Creating Financial PR Guidebooks
CFPRA will invite members who are economists, officers of the China Security Regulatory
Commission, and senior managers of financial PR agencies to coauthor a financial PR
guidebook that provides an overview of China’s economy, trade market, and rules and
regulations in the finance industry. The book also will contain sections dedicated to Chinese-
specific financial PR practices.
The guidebook will serve as a sort of financial PR bible for Chinese companies. Local
and foreign financial PR practitioners will be able to refer to this book as the ultimate set of
guidelines governing financial PR practices in China. CFPRA and its members who coauthor
the book will receive recognition for their contribution in drafting such a constructive and
credible reference.
o Publishing Financial PR Reference Books
One of the greatest obstacles to effective PR education in China is the scarcity of original PR
reference books. Most PR reference books used in Chinese classrooms are translated from texts
originating from the United States and Europe, with only a limited number truly focusing on
the Chinese market (Chi, et al., 2006, p. 271). It is even rarer to find original Chinese books
dealing specifically with the financial PR industry. Therefore, CFPRA will call for PR college
professors and PR industry practitioners to coauthor financial PR reference books, which will
be used to promote the financial PR industry to college seniors and working professionals.
Additionally, CFPRA will encourage individual PR practitioners to submit their financial PR
work for review. CFPRA will then choose a few outstanding works and publish them in
reference books.
o Publishing Financial PR Newsletters and Magazines
CFPRA will publish its own monthly newsletter and financial PR magazine, both of which will
be distributed free of charge to its members. Like IABC’s Communication World Magazine,
CFPRA’s newsletter and magazine will feature popular financial PR topics, question and
answer sections, and top news generated from its website and online forums. By offering these

67
resources, CFPRA will further demonstrate its authority in the financial PR world to working
practitioners and the public.
o Publishing Problem-Solving Articles
Another avenue for promoting financial PR is to publish articles in finance and trading markets.
“An article published in a magazine can be many times more effective than client referrals in
generating new business. A referral will introduce you to one or two people, a magazine can
reach thousands of pre-qualified prospects” (Chambers, 1999, p. 79). Articles pertaining to
current PR issues would serve to educate practitioners and the general public by delineating
different approaches and problem-solving tactics to address situations that typically arise in the
finance world (Chambers, 1999). CFPRA will encourage its PR members to submit articles to
financial media outlets, provide them with media contact information, and arrange for more
opportunities to publicize their work.
CFPRA will target well-known online, print and broadcast business media outlets
including www.forchina.com.tw, CCTV’s China Business News, Fortune China, Time, Finance
Point To Point II, Caijing Magazine, PR Magazine, China Economic Information, Capital,
Oriental Enterpriser, China Top Brands, Successful Marketing, Success Magazine, and
Xiandai Yingxiao.
o Publishing Periodical Articles
CFPRA will make an effort to build a relationship with the Economic Daily and contribute a
weekly column. Established in 1983 in Beijing, the Economic Daily is an influential economic
newspaper in China that reaches more than 20 countries and is published in Chinese, English
and German versions (Kuo, 2004). It also manages China Economic Net, an online version of
its paper.
In addition to its far-reaching status, the Economic Daily is an ideal publication because
of its relationship with the Chinese government. Managed by the Ministry of Communication
of the Party’s Central Committee, the Economic Daily is a government-owned newspaper (Kuo,
2004). Although publishing articles in a government-owned newspaper may lead to a loss of

68
freedom of press, CFPRA has an opportunity to boost its recognition with both the government
and the public.
CFPRA also will make an effort to contribute periodically to Caijing Magazine, a
monthly finance magazine in China. Since its inception in 1998, Caijing has become well
recognized for its formal and analytical reporting style (Bjorksten, et al., 2006, p. 41). The
magazine earned the reputation of being trustworthy by being the first Chinese financial media
to publish negative news and by providing coverage of the bribery scandals plaguing the
Chinese stock market (Bjorksten, et al., 2006). Consequently, over the years, Caijing has
become a publication of authority in China and strongly favored by the public. By teaming up
with a publication of such high standing, CFPRA will become more familiar to the public and
further advance a positive image.
Publishing articles in the Economic Daily and Caijing Magazine have different aims: the
first is to gain government recognition and support while the latter is to increase its exposure to
the public. Regardless of which publication is targeted, CFPRA will only submit articles that
are balanced and impartial in their reporting.
o Publishing Internationally
To promote China’s financial PR on an international level, CFPRA will submit articles
concerning Chinese financial PR to Harvard Business Review (HBR). HBR is an
internationally recognized publication with a specific PR section under its “Communication”
category. Its readers include students, businesspeople, and the academic world. By publishing
articles in the HBR, China will be able to promote financial PR on both a local and
international scale.
o Peer-to-Peer Communication
According to Edelman’s Trust Barometer of 2006, the influence of the concept of “people like
me” is among the most powerful and persuasive ways to affect behavior. “People like me”
refers to people like ones’ selves who have similar backgrounds and lifestyles or are facing
similar situations. Through Edelman’s research, the firm discovered that information provided

69
by “people like me” is considered the most trustworthy (Edelman, 2006, p. 19). Therefore, the
most effective way to promote Chinese financial public relations would be through this kind of
peer-to-peer communication, especially in the Chinese guanxi society, where people are more
inclined to trust recommendations from individuals they are already familiar with.
According to Larry Chambers’ Guide to Financial Public Relations, the “referral” and
the “personal contact” also constitute the most effective channels through which financial
public relations practitioners can increase their credibility (see Figure 7).

Figure 7. How Do You Find Prospects? Source: Chambers, Larry. (1999). Chapter 6: Credibility
Marketing Strategies, How Do You Find Prospects? The Guide to Financial Public Relations: How to
Stand Out in the Midst of Competitive Clutter (1st ed.), p. 68, St. Lucie Press, CRC.
Least effective
Most effective
Radio/ TV interviews
Traditional Public Speaking
Speaking
Personal
Contact
Referrals
Advertising

70
In pursuing this avenue of communication, CFPRA will schedule a series of speaking
tours at major Chinese universities. These circuit speeches, combined with the aforementioned
PR student associations and fellowships, will help CFPRA engender positive awareness of the
organization and its reputation in the academic world. The move may also encourage students
to seriously consider entering the financial public relations industry after graduating. CFPRA
will offer free programs in areas such as crisis management and spokesperson training that are
open to the public. In China’s growing economy, people are expressing greater interest in
professional training in areas such as management, leadership, and interview skills. CFPRA
can garner appreciation and positive feedback by offering these practical programs to the
public. Speakers at universities and in management programs will be carefully selected
volunteers from CFPRA’s membership. CFPRA members will benefit from increased personal
awareness and reputation by volunteering and participating in these activities, which will give
them opportunities to gain more positive referrals. Through these strategies, CFPRA can
greatly boost its reputation outside the public relations field to both the academic and business
domains.
o Ride the Trend
Two major upcoming events, the 2008 Olympics in Beijing and the 2010 Shanghai World
Expo, pose excellent opportunities for promoting financial public relations in China. Countless
foreign investors and international companies will visit China to participate in these events and
seek marketing opportunities.
To take advantage of these opportunities, CFPRA will hold a series of seminars to
introduce the Chinese capital market to foreign companies. CFPRA also will offer several
smaller forums in which foreign companies can discuss financial and investment-related topics
and provide advice. By helping foreign investors familiarize themselves with the Chinese
financial situation, CFPRA not only will establish its positive and trustworthy image among
foreign companies, but also promote the Chinese financial public relations industry. CFPRA’s
members will attend these seminars to network with potential foreign investors.

71
China won the right to host the 17
th
IPRA Public Relations World Congress in 2004. The
event is held every three years and the next one will be in October 2008 (CIPRA, 2004). The
event represents a valuable opportunity for CFPRA to promote itself internationally. CFPRA
will take the opportunity to present the overall Chinese financial public relations situation and
the innovative reforms it has created to enhance the industry’s reputation and stimulate its
development. This move is expected to greatly increase positive awareness of CFPRA.
o Leveraging the Well-Designed Public Relations Model
Eastwei Relations created the KDMR model (see Figure 8) for the Chinese PR industry. This
model, which fuses Chinese customs with a practical and professional public relations standard,
skillfully illustrates how to communicate with the media and attain a win-win situation.
CFPRA will seek permission to publish this innovative model on its website and promote it
among PR practitioners with an aim toward forging a more beneficial relationship with the
media.

Figure 8. KDMR Model. Source: Bjorksten, Johan, Wang, Lucia, & Yin, Tau. (2006). Zhongguoshi
Gongguan, The Fall of “Guanxi” PR and The Rise of Knowledge-Driven PR, p. 95, [ "$G}, : ~ ,
Q , C ]. Beijing: China Citic Press.
Business
Need
Target
Audience’s
Need
Choose
Media
Industry
Trend
Media’s
Need
Social Hot
Topic
Write News-
Worthy
Article
Publish

72
Evaluation

The goal of this public relations campaign is to create a model that demonstrates how China’s
financial public relations industry can improve its reputation and increase awareness of its positive
impact on the economy. Periodic monitoring and evaluation of the campaign is crucial for tracking
past performance and giving practitioners the opportunity to pinpoint any errors in the campaign’s
design and/or implementation. This way, if any errors are detected, public relations practitioners can
amend them and create more efficient ways to achieve the goal. As public relations experts point out,
Communication will no longer be effective simply because it looks good and reads well. It
will be effective when it influences the actions of employees to meet the organization’s
business objectives and we can demonstrate this influence…We’ll have to document our goals
and collect data that we have met those goals. In short, we will have the same bottom-line
accountabilities as other organizational functions ("The Changing Role of Today' s
Communicator," Communication World 9, as cited in Cutlip, et al., 2005, p. 404).

Unlike marketing in which positive performance is directly reflected by increased sales, the
positive impact of public relations proves difficult to measure. No direct, measurable index reveals
whether a public relations service has been successful. Therefore, we will need to evaluate available
data, activities and research to infer the impact of this campaign.
Figure 9 illustrates the three stages for evaluating the public relations program. After
determining a goal, deciding on the message and completing strategic and tactical designations, we
must enter the “implementation” stage. In this stage, several indicators can help quantify the effect of
financial public relations. We can track the increase in CFPRA memberships, the click-through rate
on the CFPRA Web site, the number of articles published by CFPRA members, the number of press
releases disseminated by CFPRA, and the amount of coverage of CFPRA and its members.
Additionally, the number of people who attend seminars, workshops and lectures held by CFPRA can
be used as indicators to evaluate the effect of financial public relations in China.

73
Following these steps, we need to conduct evaluative research every six months to assess the
progress of the financial public relations industry. Outside contractors will oversee the survey process
by holding focus groups and releasing questionnaires to ascertain how the public views financial
public relations. Through these methods, contractors will be able to determine whether the public has
changed its attitude toward financial public relations after learning more about it.
Finally, we must monitor how practitioners within the financial public relations industry view
the campaign. It is crucial to understand how insiders feel about the campaign, whether it helped them
learn more about the profession and increase their companies’ reputations and public awareness, and
if the campaign gave them more confidence in carrying out public relations services in China’s market.
Lastly, we will ask practitioners whether the campaign improved the overall quality of services
offered by the financial public relations industry.
After receiving feedback from both the public and public relations practitioners, we can use the
information to further modify the campaign and create new ways to attract a greater audience. By
going through these three stages, we will ensure the campaign’s success and achieve our goal of
advancing China’s financial public relations industry.

74

Figure 9. Stages and Levels for Evaluating Public Relations Programs. Source: Cutlip, Scott M.,
Center, Allen H., & Broom, Glen M. (2005). Effective Public Relations (9th ed.). New Jersey: Pearson
Prentice Hall, p. 368.
Social and cultural change
Adequacy of background information base for designing program
Appropriateness of message and activity content
Quality of message and activity presentations
Number of message sent to media and activities designed
Number of messages placed and activities implemented
Number who receive messages and activities
Number who attend to messages and activities
Number who learn message content
Number who change opinions
Number who change attitudes
Number who behave as desired
Number who repeat behavior
Preparation
Implementation
Impact

75
CONCLUSION
Overall, professional analysts and the public have acknowledged the positive impact of
China’s financial public relations industry on the business sector.
Our empirical tests examine a sample of 184 companies that hired IR firms. We find that
these companies have significant increases in their disclosure, press coverage, trading
activity, institutional investor ownership, analyst following, and market valuation after
hiring the IR firm (Bushee & Miller, 2005, p. 2).

Although still relatively young, the Chinese financial public relations industry has been
successful in demonstrating its value to the public. With added regulations and reforms in place,
coupled with the country’s growing investment market and an increasingly globalized economic
environment, the industry can be expected to expand considerably in the years to come.
China’s financial market faces unique challenges. With a deeply rooted guanxi culture and the
presence of ambiguously defined rules, the development of the financial sector has proven difficult. In
light of these circumstances, the Chinese financial public relations industry has been a critical force in
providing a medium through which businesses, investors and the media are able to communicate with
one another. It has also helped companies understand the necessity for accurately and consistently
disclosing information to the public while simultaneously safeguarding confidential information of
companies and remaining within the boundaries of governmental regulations.
The role of financial public relations will only increase in significance as China’s economic
environment further develops. Earlier this year, China passed a law that permitted individual
ownership of property. Although this law did not signify the abolition of socialism, it symbolized a
fundamental move toward a more capitalistic economic system (Elegant, 2007). As expected, a freer
and more open financial market will stimulate the growth of the economy and attract more foreign
capital into China. Consequently, the Chinese public relations industry is expected to assume a variety
of different and complex tasks to accommodate the increasing number of businesses and investors in
the financial market.
The financial public relations campaign presented in this thesis blends pubic relations theories
of the West with Chinese cultural factors. Through careful and proper implementation, this campaign

76
has the capacity to increase the overall quality of China’s financial public relations and potentially
transform the guanxi culture to a milieu more capable of supporting public relations practices.
Financial public relations in China harbors immense potential. By cultivating a positive attitude, the
appropriate mindset and mutually advantageous relationships between investors, media and
companies, the industry will be able to maximize its effectiveness and become a powerful force in
China’s economic advancement.

77
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87
APPENDICES
Appendix A
Securities Law of the People’s Republic of China (Revised in 2005)
Chapter VIII Securities Trading Service Institutions

Article 169—Where an investment consulting institution, financial advising institution, credit rating
institution, asset appraisal institution or accounting firm engages in any securities trading service, it
shall be subject to the approval of the securities regulatory authority under the State Council and the
relevant administrative departments. The measures for the administration of examination and approval
of the practice of securities trading services, in which an investment consulting institution, financial
advising institution, credit rating institution, asset appraisal institution or accounting firm engages,
shall be formulated by the securities regulatory authority under the State Council and the relevant
administrative departments.

Article 170—The staff of an investment consulting institution, financial advising institution or credit
rating institution who engage in securities trading service shall have the special knowledge of
securities as well as work experience on securities business or securities trading service for more than
two years. The standards for recognizing the securities practice qualification and the measures for
administration thereof shall be formulated by the securities regulatory authority under the State
Council.

Article 171—An investment consulting institution as well as its practitioners that engage in securities
trading services may not have any of the following acts:
(1) Engaging in any securities investment as an agent on behalf of its
entrusting party
(2) Concluding any agreement with an entrusting party on sharing the gains of securities
investment or bearing the loss of securities investment
(3) Purchasing or selling any stock of a listed company, for which the consulting institution
provides services
(4) Providing or disseminating any false or misleading information to investors through media
or by any other means
(5) Having any other act as prohibited by any law or administrative regulation. Any institution
or person that has any of the acts as prescribed in the preceding paragraph herein and thus incurs
any loss to investors shall be subject to the liabilities of compensation.

Article 172—An investment consulting institution or credit rating institution that engages in securities
trading services shall, according to the standards of or measures for charging as formulated by the
relevant administrative department of the State Council, charge the relevant service commissions.

Article 173—Where a securities trading service institution formulates and generates any auditing
report, asset appraisal report, financial advising report, credit rating report or legal opinions for the
issuance, listing and trading of securities, it shall be diligent and responsible by carrying out
examination and verification for the authenticity, accuracy and integrity of the contents of the
documents as formulated and generated. In the case of any false record, misleading statement or major
omission in the documents as formulated and generated, which incurs any loss to any other person,
the relevant securities trading service institution shall bear the joint and several liabilities together
with the relevant issuer and listed company, unless a securities trading service institution has the
ability to prove its exemption of fault.

Source. Securities Law of the People' s Republic of China (revised in 2005) [ !L,˚£ ]. (March
27, 2006). In www.g-view.com.cn. Retrieved March 25, 2007, from http://www.g-
view.com.cn/nei.asp?ID=1105.

88
Appendix B
Regular Member Code of Ethics
As a regular member of the National Investor Relations Institute, I will:
1. Maintain my integrity and credibility by practicing investor relations in accordance with the
highest legal and ethical standards.
2. Avoid even the appearance of professional impropriety in the conduct of my investor
relations responsibilities.
3. Recognize that the integrity of the capital markets is based on transparency of credible
financial and non-financial corporate information, and will to the best of my ability and
knowledge work to ensure that my company or client fully and fairly discloses this important
information.
4. Provide analysts, institutional and individual investors and the media fair access to corporate
information.
5. Honor my obligation to serve the interest of shareholders and other stakeholders.
6. Discharge my responsibilities completely and competently by keeping myself abreast of the
affairs of my company or client as well as the laws and regulations affecting the practice of
investor relations.
7. Maintain the confidentiality of information acquired in the course of my work for my
company or client’s company.
8. Not use confidential information acquired in the course of my work for my personal
advantage nor for the advantage of related parties.
9. Exercise independent professional judgment in the conduct of my duties and responsibilities
on behalf of my company or client.
10. Avoid any professional/business relationships that might affect, or be perceived to potentially
affect, my ethical practice of investor relations.
11. Report to appropriate company authorities if I suspect or recognize fraudulent or illegal acts
within the company.
12. Represent myself in a reputable and dignified manner that reflects the professional stature of
investor relations.
Enforcement and Communication of the NIRI Code of Ethics

NIRI urges compliance with its Code of Ethics by positively communicating the ideals of professional
ethics and practice rather than through negative sanctions.
However, members of NIRI who are sanctioned by an appropriate governmental agency or judicial
body for violating laws or regulations affecting their professional activities may, upon
recommendation of the NIRI Ethics Council, have their membership terminated by the NIRI Board of
Directors following procedures in the institute' s bylaws.

Source. NIRI. (March 11, 2002). Regular Member Code of Ethics. In National Investor Relations
Institute. Retrieved March 25, 2007, from http://www.niri.org/about/CodeOfEthicsRegMember.cfm

Abstract (if available)

Abstract With the rapidly growing capital market in China, the Chinese financial public relations industry, which specializes in communicating with businesses, investors and the media, will increase explosively in the next several years. With China still deeply rooted in "guanxi culture" and the presence of ambiguously defined rules and regulations, development of the public relations industry faces numerous obstacles.

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Asset Metadata

Creator Lin, Yi-Ying Tiffany (author)

Core Title How a strategic public relations campaign can enhance the reputation of China's financial public relations industry

School Annenberg School for Communication

Degree Master of Arts

Degree Program Strategic Public Relations

Publication Date 04/13/2009

Defense Date 04/02/2007

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag campaign,capital market,Communication,financial public relations,investor relations,OAI-PMH Harvest,Public Relations

Place Name China (countries)

Language English

Advisor Floto, Jennifer D. (committee chair), Chen, Baizhu (committee member), Kotler, Jonathan (committee member)

Creator Email liny@usc.edu

Permanent Link (DOI) https://doi.org/10.25549/usctheses-m382

Unique identifier UC1328834

Identifier etd-Lin-20070413 (filename),usctheses-m40 (legacy collection record id),usctheses-c127-402929 (legacy record id),usctheses-m382 (legacy record id)

Legacy Identifier etd-Lin-20070413.pdf

Dmrecord 402929

Document Type Thesis

Rights Lin, Yi-Ying Tiffany

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Repository Name Libraries, University of Southern California

Repository Location Los Angeles, California

Repository Email cisadmin@lib.usc.edu