In order to be successful, Western approaches to management in China will need to change.
I recently read an article published by McKinsey Quarterly that discussed the impact of expatriate managers in China (Beyond expats: Better managers for emerging markets). Multi-national companies face specific cultural challenges when bringing in an expat. Not to mention that local talent will look elsewhere for opportunities to take a greater leadership role. In other words, as you seek to grow your business in China, it is more important than ever that you find ways to tap into the local talent pool.
As a business that helps companies expand into China, I believe there is a collaborative approach that needs to be taken. We need to show our willingness to give local leadership a chance to grow within our organization and we also need to transfer a little of our own cultural values as part of the process. For that reason the duties of an expat leader may change.
It's been no secret that keeping talent in China can be tricky. A recent study claimed that as many as 50% of the expatriates that come to china leave within the first year. That's one out of every two people who are not fulfilling their commitments! Think of the costs associated with hiring, relocating, establishing, and training someone to fill what is often a minimum two year commitment. Not to mention that many times these people come back early knowing they are unemployed. It is common practice to build a dis-incentive that if you return early, you give up any employment with the organization you work for.
So what might be a better approach. Here is where we need to find balance, understanding and good communication. The balance comes from having just the right amount of Western interaction with the foreign leadership and the Chinese leadership. We see similar things going on in our own country. Many foreign companies understand the value of hiring local talent instead of importing management from abroad. When tapping into the local pool, you don't necessarily have to worry about culture shock for a new candidate coming in. Here it may be easier to bring in talent for extended stays, but not for a two or three year window where you risk losing good talent.
For me, it is always important to graft in a piece of your corporate culture. In China, it's a matter of adapting. The Chinese have a very powerful cultural presence. You aren't going to change it. However, to some degree you need to be able to carry over your Vision and corporate values. This is why I believe it is important to create a strong interrelationship with local and Western management. Any staff that travels abroad needs a thorough education of the culture and how business is handled. In addition, each expat should have a solid understanding of customs and behaviors so they are able to find ways to adapt while they are on site.
Finally, communication is essential. Without good communication, it's hard to build trust. It is also difficult to deliver the quality and service you are known for. This is closely tied to understanding the culture. Remember, what you believe is important may not be the same in a foreign market. You really need to share what you place value on.
Any organization seeking to do business in China could have a great opportunity. That opportunity will be weighed against their willingness to adapt to a new market they may not fully understand. Educate yourself and understand how you can collaborate for success. The potential to grow your business can be great!
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