CHINA: Cultural Insights for Business Success – Part 6: Management Staffing

One of the most important concerns in making decisions about management staffing in China is finding someone who can bridge the cultural factors mentioned in this series.

Strategy vs. Execution

On a personal note, I am a strategist at heart, by training and by experience. But I have to say in the strongest possible terms and based on my work with clients in China and other Confucian cultures that “strong execution of a weak strategy” beats every day “weak execution of a strong strategy.”

In my observations, execution is the single first-order effect predicting success, failure or significantly sub-optimal performance. Where I’ve seen poor understanding of the factors mentioned in this series and the resulting poor execution, I’ve seen low performance and, in several cases, outright catastrophic failure characterized by (in the most extreme case I have observed) more than 5 years of negative ROI with little hope of significant improvement. Where I have observed strong strategy combined with strong execution, I have seen extraordinary performance.

In one case, a client I assisted strongly executed a strong strategy. They were the global leader in their category with about $85 MM in annual revenue but only about $1MM in Asia. After 5 years they had over $40 MM in Asia (most in China), had assumed market leader position in Asia, and had taken 100% of the market-share from the number-two market participant. So while China does take patience, it does not take “forever,” given a solid approach.

The decisions a company makes about how and with whom to staff their China leadership are among the most important choices a company will make. The first-order consideration in such a decision should be the bi-cultural capabilities of the leader. Here are a few choices in order of declining attractiveness and some explanations for these conclusions.

Chinese Born and Raised, Chinese Business Experience – Western-Experienced Senior Manager

This choice offers the obvious benefit of an executive having deep understanding of Confucian culture. Likewise, ideally around 10 years of business experience in the West will have created a deep understanding of Western approaches. This sort of executive will ideally be innately skilled in managing internal as well as business development issues in China, yet will have the communication skills and styles to be effective in coordinating, communicating, and easily teaming with HQ Western management.

On a note of caution, one or two years experience in Western business environments is often not long enough to develop easy and natural skill in Western ways. On a similar note, Western experience at a “too-young” age can have the opposite effect of the manager too fully adopting Western ways at the disservice to Confucian approaches such that they are then seen in Confucian societies and business environments as not fitting in and having rude and arrogant approaches – again the key concept here is true “bi-culturalism.”

Company Insider with Extensive Asia Experience

This works extremely well but can of course be quite expensive due to typical expat costs.

Not only do these guys bring the insider knowledge to the local market and team, but they automatically command respect; locals, in every case in my experience, see it as a strong sign of company support to send a high level executive to the region and are very motivated by it.

I have on the other hand worked with businesses that adhere to a strong policy of management localization in an effort to communicate commitment to local staff and to support the career aspirations of local staff. This is wrong-headed on many levels, most notably being a clear violation of beliefs based on xiào that will always dictate that a HQ insider person will have higher status and capability than a local person. It is often also a clear indication of shallow to non-existent understanding of Confucian culture and thereby often additionally harm’s HQ management credibility.

In my experience skillful HQ executives placed in-region have generally commanded a lot of respect (except in cases where they were arrogant, condescending, ill-behaved, or incompetent) and are much appreciated for the insights they can bring as well as for their ability related to regional advocacy.

If the executive does not already have experience in Asia he needs to be:

  • extremely curious
  • a fast and avid learner (especially of cultural issues)
  • willing to adopt some level of the culture and immerse himself in it with no hesitation
  • be patient
  • have a great sense of humor
  • willingness to laugh at the “absurd” situations he will find himself in and at frustrations and obstacles
  • be persistent while being culturally sensitive in finding solutions

Localized Foreigner

This approach brings the benefits noted above but can save some expat expense.

Local Manager

This is generally the worst choice in terms of results but it is the cheapest, and I’ll briefly mention it only in case it may be considered as a stop-gap measure.

This approach must be coupled with intensive attention of an executive willing to fly-in frequently and ideally one with some experience in Confucian cultural management. The executive will also need to be prepared to issue commands. But these will often be mistakes if he or she is not close enough to the business or do not understand deeply enough the culture. And no one is going to “step up” and openly note that mistakes are being made – they will trust blindly (if uncomfortably) in HQ’s “superior” wisdom.

Pan-Regional Management

A word of warning is due here – don’t expect a manager from one Asian country to be entirely successful pan-regionally – it is a rare Asian national who can work pan-Asia due to the deep-seated and un-redressed resentments in the region dating from the WW2 period – not to mention that there are additionally (in spite of a shared Confucian heritage) strong cultural difference across all Asian countries.

It is hard to over-state the depth of negative feelings about one another that cross the national boundaries especially of China, Korea and Japan. These feelings are often not expressed openly but can come as quite a shock to the Western executive who befriends a local to the trusting extent that true feelings are shared.

To just touch the surface, around 20,000,000 Chinese were killed, often in the most brutal and inhumane ways, by Japanese troops during Japanese colonization and war around the WW2 period. Korea was likewise colonized and women forced into prostitution. Chinese citizens were characterized in Japan during this period as inhuman and having lower status than pigs. The Japanese atrocities of the period have never been appropriately apologized nor proper restitution made as was the case in Europe following WW2. Without trying to be complete and only to give a general feeling, many Chinese view Japanese with pure hatred. Many Japanese on the other hand view Chinese as uncivilized, poorly educated, uncouth, and untrustworthy. Korean-Chinese and Korean-Japanese relations suffer as well from strong feelings all around deriving from past conflicts.

If pan-regional management is the goal, a foreign executive will most often be a better choice.

Read the Series: CHINA: Cultural Insights for Business Success

Part 1: Introduction

Part 2: Confucian History and Elements

Part 3: Guanxi

Part 4: Mianzi

Part 5: On the Ground

Part 6: Management Staffing

Tracy Crawford
CEO | Rain8 Group LLC
Managing Partner | CHC Couture Hospitality Concept
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