Developing Local and Global Leadership—At Once—in China
In response to the unprecedented shift of global wealth from West to East, a large number of Western multinationals are globalizing their China operations and redistributing authority to reflect (and capitalize on) China’s economic leadership.
Some companies, for example, have relocated APAC regional headquarters from Singapore or Hong Kong to Mainland China. Many other organizations are restructuring along functional or business unit lines and moving vital segments of these global operations from a centralized headquarters to China.
Both models rely on the availability of Chinese talent that can take on global leadership roles.
Developing global leadership while also encouraging local leadership and retaining Chinese to talent is, therefore, mission critical. It is also a major challenge that many companies are struggling to address. Are Western multinational corporations (MNCs) pursuing an organizational structure not supported by the current Chinese talent pool? If this is the right strategy, how can companies find and develop Chinese leadership talent to execute it?
What makes the talent demands particularly challenging in China today is the need for a very high degree of competence in the local market coupled with global business skills and acumen. Under the previous corporate model, Chinese subsidiaries operated with a great deal of autonomy. Local leadership talent issues could be covered up for years by organic growth and MNCs’ superior technology. But the Chinese market is maturing rapidly, and these talent issues now threaten to expose MNCs’ vulnerability to sophisticated Chinese competitors. The technology gap is closing, and an increasing number of Chinese firms have homegrown talent with in-depth market knowledge, superior customer service, better networks and greater agility. Chinese talent recruited by MNCs on the basis of international experience and English language skills may be at a disadvantage if they lack familiarity with the Chinese market. A Shanghainese high potential working for an American manufacturer points out:
“If you look at the businesses running successfully for the past five years in China, the senior management team is Chinese. Companies with few locals in their senior team have not been as successful. Companies have to link to the local market and operate under the local style. Understanding relationships is key. The first three years after university are crucial because they have the greatest impact on your working style. If this first job experience is outside China, it sets a Western-style working pattern that is hard to break. This is ultimately a disadvantage in the current Chinese market.”
Many leaders echo this and stress the importance of recruiting homegrown Chinese talent with Chinese business savvy over returnees or overseas Chinese.
At the same time that talent stakes are being raised for the local market, the new push to make China a regional and global hub is increasing the demand for Chinese talent who are able to lead globally as well. Large corporations need Chinese leaders who can run regional operations and global business units from China, as well as align with and drive global strategy in an integrated matrix environment. But the transition from the China-only role into regional or global roles is a painful one, often ending in failure. The matrix management structure is particularly challenging for Chinese leaders accustomed to more traditional hierarchical structures; multiple reporting relationships and lack of clarity around who is in charge is often disastrous. Cultural differences and lack of international management experience often lead to communication breakdowns and poor visibility for regional markets.
Leadership experience in the Chinese market does not easily translate into global acumen. Much of this is due to China’s unique business culture and size, which makes the Chinese market particularly consuming and leaves leaders little time for the global picture. A leader at a global commodities firm said,
“When I was in China, I was the general manager for ten years, but I was basically focusing on what was happening in that plant. Ninety percent of my time and thoughts were related to that small plant.”
Is recruiting and developing leadership talent in China possible with homegrown Chinese leaders who are successful in the local market and also able to lead globally, or are these two sets of competencies irreconcilable? Perhaps the more relevant question is whether companies have any other choice but to try and develop both.
What is Working? International Assignments for Global Leadership Development
As a global talent management consulting firm working with many large multinationals, Aperian Global has seen a high degree of success in leadership development programs involving international assignments for ‘homegrown’ Chinese high potentials. While the goal is for these global leaders to return to China, the international experience prepares them for new roles required by highly integrated corporate organizations: global team or project leader, APAC regional director, or global business unit head. As one Chinese high potential put it:
“When I come back to China, I will be initially managing Chinese colleagues, but I will need to be in constant communication with global counterparts and global headquarters because our work is project based. So, it is very important that I get a sense of the cultures outside of China.”
Another high potential concurs,
“A global view is essential to business and also to serving the customer. We are a global team and we need to understand the impact of our actions regionally and globally because we are moving our business units to China. We will be doing local business but working on global accounts.”
This level of international experience is essential for the next generation of Chinese business leaders. A Chinese assignee working in Europe for a global pharmaceutical corporation says:
“Before I came here, I thought that I had a sense of our global work environment, because I had participated in training workshops and had frequent meetings with global counterparts. But, this was not enough. If you really want to have someone understand global business and how it works holistically, you need to send them abroad for on-the-ground experience.”
Some of the most successful components of these leadership development assignments include:
- Boundary-Spanning Opportunities: Create opportunities for assignees to gain experience in as many aspects of the business as possible. Examples could include cross-functional project roles, work shadowing, and open meetings that provide critical insight into global strategy.
- Cultural Training: Provide opportunities to build awareness and skills for working across cultures, accelerate learning, and ensure success in completing assignment objectives.
- Mentoring: Assign a mentor to answer questions, give advice and act as a role model. Focus on transfering people management skills for a diverse workforce.
- Networking, Visibility and Access to Decision Makers: Provide venues and structured opportunities for assignees to build relationships and gain visibility that can later be leveraged towards producing strategic global alignment; such networking is almost always cited as the most valuable part of the assignment.
What Doesn’t Work
Some factors that can undermine assignment success and sabotage the value of the substantial investment involved are:
- Lack of clarity around selection criteria for development assignments
- Lack of structured learning process
- Role not positioned well with local team
- Limited opportunities to contribute critical knowledge about the Chinese market
- Lack of skills development (particularly skills such as running a multicultural team, feedback and performance management, and “influencing without authority”)
The Big Picture
MNCs would do well to address the systemic issues impacting their long-term success in China. These could include assessing current hiring and promotion criteria in China (are we relying too heavily on language and Western-style communication skills?) and increasing knowledge of China for top decision-makers. And as MNCs restructure to reflect the highly integrated global marketplace and China’s leadership role within it, they need Chinese global leadership talent who can spearhead this strategy. Companies who invest intelligently in developing such high caliber Chinese leaders will be ahead of the game.
If your organization is evaluating or restructuring their approach to managing global talent in China, we encourage you to reach out to us. We have more than 25 years of experience working with Global Fortune 100 clients to develop their leaders for both local and global success. Explore our Leadership Development solutions to learn more.