A Commercial Diplomacy Approach for Small Open States
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Minister Meetings - A Commercial Diplomacy Approach for Small Open States How Danish Minister Meetings can Foster Business Opportunities in China Bjørg Ilsø Klinkby Copenhagen Business School Master of Science in International Business and Politics Advisor: Yang Jiang Second advisor: Stine Hakonsson Date: 1st May 2013 Number of taps: 178354 Minister Meetings - A Commercial Diplomacy Approach for Small Open States Abstract Small open states are vulnerable to economic shifts, since these states often are depending on export. The use of bilateral minister meetings has become a common approach to boost trade relations. It is therefore urgent to explore the dynamics of minister meetings as an approach, because this method has received limited attention in academia. Denmark struggles in times of rapid economic shifts and in search for growth Denmark has turned its eyes towards the Chinese market where growth rates are attractive. 2012 was characterized as a year with record high bilateral interaction at minister-level aimed to promote the opportunities of Danish businesses in China. This master thesis will evaluate the Danish approach to China from a business point of view. The theoretical framework of commercial diplomacy will be used as a point of reference to structure this thesis. A brief historical overview of bilateral interaction between China and Denmark will be provided, were it is argued that the commercial relations of today still benefits from the history between the two countries An empirical analysis of the Danish-Chinese interaction in 2012 will be provided through case studies of actions by individual ministers, based on interviews with actors in Danish commercial diplomacy to China. The case studies illustrate great variety of success in the ministers’ performance considering the different focus on commercial relations the minister visits had. In general, Danish business had influence on the Danish authorities’ actions, but evidence suggests an unfair favoring of some business actors. The success of the collective Danish action is measured by the criteria: access, attitude, agenda, commercial aspects, long term value, open doors, push contracts, partner care, increased visibility, timing, preparation, coordination and cooperation. The analysis of the collective action illustrates that the Danish approach have been upgraded in 2012, though the Danish commercial diplomacy to China still have some weaknesses. At the moment Danish businesses are not fully benefitting from the ‘minister-meeting approach’: Lack of financial resources, unfair selection process and insufficient coordination are the most influential weaknesses in the current Danish commercial diplomacy approach. Based on these findings suggestions for optimization are provided to improve Danish commercial diplomacy to China. The long term value of minister meetings can when it is performed well increasing business potential for growth, which is necessary for the companies in small open states like Denmark. Keywords: Small open state; Denmark; Commercial Diplomacy; minister visits; China; business potential; business interest; growth opportunities Bjørg Ilsø Klinkby 2 Copenhagen Business School Minister Meetings - A Commercial Diplomacy Approach for Small Open States Table of Contents Abstract.................................................................................................................................................... 2 1. Growth Opportunities for a Small Open State ................................................................................ 5 2. Conceptualizing Commercial Diplomacy ......................................................................................... 8 2.1. Definition of Commercial Diplomacy ............................................................................................... 8 2.2. Commercial Diplomacy as an Academic Field ................................................................................. 9 2.3. Actors, Drivers & Shapers ............................................................................................................... 10 2.4. Roles ................................................................................................................................................ 11 2.5. Design of Commercial Diplomacy .................................................................................................. 12 2.6. Market Failure and Criticism of Commercial Diplomacy ............................................................... 13 2.7. Commercial Diplomacy and Other Policies .................................................................................... 14 2.8. Minister Meetings as a Tool of Commercial Diplomacy................................................................. 14 3. Research Design, Method & Case Selection .................................................................................. 14 3.1. Case selection: Denmark vs. China ................................................................................................. 15 3.2. Intentions and Perspective ............................................................................................................... 16 3.3. Research Design............................................................................................................................... 16 3.4. Applied Resources ........................................................................................................................... 17 3.5. Case Studies and Interviews ............................................................................................................ 18 3.6. Selection of Respondents................................................................................................................. 19 3.7. Reliability & Validity of Interviews ................................................................................................ 20 3.8. Evaluation Criteria of Success......................................................................................................... 21 3.9. Implications ..................................................................................................................................... 23 4. The History of Commercial Diplomatic Relations ........................................................................ 23 4.1. Interactions & Developing Relations............................................................................................... 24 4.2. Normative Dilemmas in the Relationship........................................................................................ 25 4.3. Strategic Partnership ........................................................................................................................ 25 4.4. The Europe-China Relations............................................................................................................ 25 4.5. Denmark versus China – Equal friends?.......................................................................................... 27 5. Evaluation of the Danish Commercial Diplomacy to China......................................................... 28 5.1. Growth Market Strategy for China .................................................................................................. 28 5.2. Danish Officials in China ................................................................................................................ 30 5.3. President Hu Jintao’s visit to Denmark ........................................................................................... 32 5.4. Meetings by Prime Minister Helle Thorning-Schmidt .................................................................... 37 5.5. Visit by former Minister of Business and Growth, Ole Sohn.......................................................... 40 5.6. Meetings by Minister of Trade and Investment, Pia Olsen Dyhr .................................................... 41 5.7. Meetings by the Minister for Environment, Ida Auken................................................................... 43 5.8. Meetings by the Minister for Food, Agriculture and Fisheries, Mette Gjerskov............................. 45 5.9. Royal visit ........................................................................................................................................ 46 5.10. Meetings by the Danish Minister for Climate, Energy and Building, Martin Lidegaard .............. 47 5.11. Meetings by Minister of Foreign Affairs, Villy Søvndal............................................................... 48 5.12. Other visits in 2012........................................................................................................................ 49 5.13. Comparative Analysis of Ministers’ Performance......................................................................... 50 6. Assessment of the Collective Action ............................................................................................... 51 6.1. Access and Selection Process .......................................................................................................... 52 6.2. Attitude towards Chinese Colleges.................................................................................................. 55 6.3. Agenda - General Branding or Targeted?........................................................................................ 56 6.4. Commercial Aspects of Meetings...................................................................................................