In the fall of 2022, the 20th National Congress of the Communist Party of China (“CPC”) reelected Xi Jinping as the general secretary of CPC Central Committee and emphasized upholding and strengthening the CPC’s overall leadership in China. Xi Jingping reported at the 20th National Congress that “We must resolutely uphold the Party (CPC) Central Committee’s authority and its centralized, unified leadership and see that Party leadership is exercised in all aspects and every stage of the endeavors of the Party and the country.” This signals a trend for more control and centralized role of the CPC in society.
CPC Cells to be Established in Private Companies
In accordance with the Constitution of the CPC (“CPC Constitution”), primary level CPC organizations shall be established in enterprises where there are three or more official Party members. Article 19 of the Company Law of People’s Republic of China (“PRC”) states that the CPC may, according to the CPC Constitution, establish CPC cells in companies to carry out CPC activities. The company shall provide necessary conditions to facilitate CPC activities.
CPC Organization Activities
In accordance with CPC Constitution and CPC regulations, a CPC cell shall organize CPC members in a company to attend regular Party meetings, group meetings and Party classes, and hold regular meetings of the organization committee if any (together called Three Meetings and One Class) and shall organize a theme Party day on a relatively fixed day every month to organize Party members to “study intensively, live organizational life, carry out democratic discussions and volunteer services”.
Choices and Decisions to be Made and Implemented
Well-informed decision-makers make better decisions. Few international companies have experience with this development. Gathering the right information and perspective to adapt to this situation is very important in
order to know how to adapt to this developing trend. Establishing a CPC cell may significantly affect company operations and may affect traditional functions of each department/executive. Therefore, it is important for the company and executives to prepare in advance for a scenario where a CPC cell must be created and supported.
Pros and Cons of Having a CPC Cell in Your Company
Pros:
- Positioning as a “Party-Friendly” organization might have some benefits including:
- Establish and improve relationships with local government;
- Improve public perception of your organization
- Access better opportunities and networks
- Develop new channels for business development/marketing through CPC activities;
- Find and retain new talent. CPC organizations are well developed in Chinese universities and many students join the Party at that time.
Cons:
- Interaction with local government/different levels of CPC organizations may require extra public relations resources for the company
- Bringing political elements to the company and company culture might not be consistent with the organization’s values
- May increase burden for different departments in order to coordinate with the CPC organization (e.g. management and legal department (interaction with CPC organization and upper level CPC organization and company manual updates), HR (onboarding SOPs may change, personal information management, CPC organization activities coordination, CPC members archives organization and maintenance), finance (funding/budgeting for CPC organization activities), operations (interruption by CPC activities) , IT (data protection issues, IT support for CPC activities), public relations (interaction with CPC organizations and local government))
- Potential conflicts of interest between political beliefs and company values
- Uncertainty for future operation/management when the CPC organization grows
- Potential for split loyalties and conflicts of interest which might result in disclosure of sensitive information.
How to Prepare for CPC Cells in Your Company
Assess Your Attitudes Towards Forming a CPC Cell in the Company
With the new trend /requirement of CPC organization development and popularization in private companies, companies will face more and more pressure to form CPC cells when there are three official CPC members in the company. We see the following two attitudes from the companies toward CPC cell formation before the company meets the requisition:
- Welcome – Green Light
- Conservative – Yellow Light
Make Preparations for Different Attitudes
We suggest making the following preparations for CPC cells in your company:
- Understand (i) current, and (ii) future CPC member employees within the company
- Understand potential future CPC member structure and feasibility in the company
- Understand the potential future structure and compliance with CPC cell within the company
- If Welcome – Green Light
- Connect and communicate with upper level of CPC organization for guidance and support on CPC cell establishment in the company;
- Prepare short term and long term plan for development of CPC cell in the company;
- Prepare relevant corporate policies and update company manual;
- Develop internal training programs for each department/executive officer on CPC cell formation and operation/activities in the company
- If Conservative – Yellow Light
- Actively monitor CPC member status of new hires or implement a no-CPC-member hiring policy for certain period for observation
- Internal determination on how CPC members are allocated in different departments (some department may be welcome and some department may have considerations)
- Prepare short term and long term plan for development of CPC cell in the company;
- Prepare relevant corporate policies and update company manual
- Develop internal training programs for each department/executive officer on CPC cell formation and operation/activities in the company;
- If Welcome – Green Light
For more information on how CPC cells work in a private company and suggested adjustments to different departments/officers, please contact us.