MNCs in China Face Big Challenges (Part Two)
Large corporations are complex organizations, with distinctive corporate cultures and styles, each of which takes time on the job to become familiar with. Failure to grasp the nuances of such things can render a manager unable to navigate and operate within the organization, unable to get the job done effectively.
In the process of moving upwards within the ranks of a company’s management, work relationships are formed, which are crucial. “Guanxi” has a particular meaning in China, but the importance of forging relationships in and around the workplace is universal. Wherever you work, this is more challenging if you are an outsider, or a foreigner. It calls for people skills, communication skills, an aptitude for teamwork, and flexibility.
The ideal mix for an effective leader will of course also include the specialized knowledge required of any given industry or profession, as well as the specific knowledge required to perform any given managerial level position.
We’re therefore talking about an extensive collection of skills and knowledge which cannot be quickly acquired, and is certainly not accessible purely through textbooks and classroom experience alone.
The dilemma which MNCs face in markets like China is that they really need top executives with all of the above, plus knowledge, skills and experience of living and working in China. Simply put, the universe of people with all of the above attributes amounts to a small fraction of the current demand.
The flow of recent MBAs and other overseas graduates who hail from the mainland helps; but they are relatively lacking in MNC head office working experience and relationships. MNC HR folks also observe they are often relatively weak in attitudes relating to accountability, teamwork, and innovation.
MNCs, especially from the U.S., also have guidelines and constraints which arise from U.S. laws and regulations which apply to their operations globally, such as the Foreign Corrupt Practices Act, and Sarbanes Oxley. These, plus different national and corporate cultural environments, make MNCs a more complicated work environment for most Chinese – in ways which some may like, but others may not.
So it’s no wonder that for these and other reasons there has been a sea change in the past five years, whereby many of China’s best and brightest young talents now prefer to go to work for Chinese companies, including State-owned Enterprises (SOEs). For the previous 15 years or so, MNCs offered the dream jobs.
I don’t envy the challenges of MNC HR managers or their consultants at this point in time in China. It’s a dog-eat-dog, tough competitive hiring and retention environment out there.
Apart from the challenge of recruiting, hiring, training and retaining the right talent, there are other HR issues which crop up in China more so than in other markets.
One MNC China CEO told the story of how their company chose Shanghai as their China HQ when they first came into the market, after a careful review of the alternatives. Initially they were confident they had made the right choice, because of the many commercial advantages which Shanghai is well known for, as well as its abundant supply of bright young Shanghainese talent.
Scroll forward to the present, however, and the CEO described a big problem which they had not foreseen. Now that China’s 3rd, 4th and 5th tier cities are the hot new emerging markets, his company and many other MNCs are restructuring into regional branch offices to support the growth of their business in these cities.
In his company’s case, they envisioned forming five regional offices. Having been based in Shanghai for some years, they had trained and developed a solid talent pool in their office there, many of whom were qualified to be regional managers in the newly expanded structure.
However, there was one unanticipated problem: virtually none of their Shanghainese managers were the least bit interested in living in Chengdu, for example, or other inland Chinese cities. The CEO said that they had expected that just as in any city, not all managers want to transfer to another city; but the extent of this reaction in Shanghai was far stronger than they had anticipated.
Back to the drawing board! Lesson learned…
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