China CEO E-Book

Juan Antonio Fernandez

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 480

Veröffentlichungsjahr: 2011

Beschreibung

CHINA CEO: Voices of Experience From 20 International Business Leaders is based on interviews with 20 top executives and eight experienced consultants based in China. The book is packed with first-hand, front-line advice from veterans of the China market. Hear directly from the top executives heading up the China operations of Bayer, British Petroleum, Coca-Cola, General Electric, General Motors, Philips, Microsoft, Siemens, Sony and Unilever, plus expert China-based consultants at Boston Consulting Group, Korn/Ferry International, McKinsey & Company, and many more. Each chapter provides practical tips and easy to grasp models that will help new managers in China to be effective. In CHINA CEO, we deliver what other Western authors can't - first-hand reflections based on over 100 years' collective experience in China. The book presents this rich knowledge in a readable, conversational style suitable for time-constrained executives. Each chapter gives specific advice on how to manage Chinese employees, work with Chinese business partners, communicate with headquarters, face competitors, battle intellectual property rights infringers, win-over Chinese consumers, negotiate with the Chinese government, and adapt yourself (and your family) to life in China.

Leseprobe

Foreword: China: A Must-win Market

Introduction: Opportunity and Challenge

Voices of Experience

Challenges of China: Leading the Blind Through a Minefield

What Will I Learn From This Book?

Chapter 1: Qualities of a Successful International Manager in China

Introduction

Interviewee Credentials

The Right Stuff for China?

Conclusion

Chapter 2: Managing Chinese Employees

Introduction

The Problem: China's White-collar Workforce Shortage

The Solution: HR Best Practices

Best HR Defense: Building Employer-Employee Guanxi

Conclusion

Chapter 3: Working With Business Partners

Introduction

Stay Single or Marry (to JV, or Not to JV)?

Partner Selection, Partnership Terms

Managing the Partner-to-partner Relationship

Conclusion

Chapter 4: Communicating With Headquarters

Introduction

Communications Challenges

Growth Phases in China Operations

Ideal China-to-headquarters Communications

Conclusion

Chapter 5: Facing Competitors

Introduction

Global Rivals (Fellow MNCs)

Emerging Domestic Opponents

Strategies for Battling Chinese C ompetitors

Conclusion

Chapter 6: Battling Intellectual Property Rights Infringers

Introduction

China's Long History of IPR Infringement

Reports from the IP Battle Front

Strategies for Battling IPR Pirates

Conclusion

Chapter 7: Winning Over Chinese Consumers

Introduction

The Lure of 1.3 Billion Customers

Regulatory Challenges

Logistical Difficulties

Tough Customers

Best Practices for Reaching Chinese Consumers

Conclusion

Chapter 8: Negotiating With the Chinese Government

Introduction

Pendulum Swings: The Government's Changing Mindset

The New Chinese Bureaucrat

The Need for Special Guanxi

Negotiating With the Government

Business-to-government Best Practices

Conclusion

Chapter 9: Living in China

Introduction

Life in China for the Expatriate Manager

Life in China for the Expatriate Family

Best Practices for Helping Expatriate Families Adapt to Living in China

Conclusion

Chapter 10: Conclusion

Key Points From Chapter 1 Qualities of a Successful International Manager in China

Key Points From Chapter 2 Managing Chinese Employees

Key Points From Chapter 3 Working With Business Partners

Key Points From Chapter 4 Communicating With Headquarters

Key Points From Chapter 5 Facing Competitors

Key Points From Chapter 6 Battling Intellectual Property Rights Infringers

Key Points From Chapter 7 Winning Over Chinese Consumers

Key Points From Chapter 8 Negotiating With the Chinese Government

Key Points From Chapter 9 Living in China

Appendix: Research Methodology

Sample Interview Questions

Index

Copyright © 2006 John Wiley & Sons (Asia) Pte Ltd Published in 2006 by John Wiley & sons (Asia) Pte Ltd 2 Clementi Loop, #02-10, Singapore 129809

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Library of Congress Cataloging-in-Publication Data:

ISBN-13 978-0-470-82192-3

ISBN-10 0-470-82192-2

Cover design and page layout by Alicia Beebe

To my wife, Wu Hanning, for her love and patience and to our son, Simon, for the many happy moments he brings to our marriage. J.A.F.

I never could have finished this project without the support and love of my family and friends. I am extremely thankful to my husband, Jeffrey Wilson, and our children, Sydney and Schafer, for putting up with more than two years of work on “the book.” I am also grateful to my parents Dorothy Staley and Larry Underwood and to my manuscript readers and advisors—Aamir Khan, Madhav Timalsina, Constance Woods, and Cheryl Sheridan—for their honest assessment, steadfast encouragement, and deep friendship. L.U.

Foreword

China: A Must-win Market

“China has telescoped into one generation what other countries took centuries to achieve. No country (let alone one of continental proportions) has tried to accomplish so much in such a short time. China's unique attempt to complete two transitions at once—from a command to a market economy and from a rural to an urban society — is without historical precedent.”

The World Bank, China 2020: Development and Challenges in the New Century

In the late 1990s, it was widely reported that half of the world's cranes were located in a single city: Shanghai. Visitors to that city during those years would have believed it; after all, what other metropolis was being developed faster or further than Shanghai, where the skyline was utterly transformed within the span of one decade? Consider the expansion of the transportation infrastructure alone: since the mid-1990s, China's largest city (population of 20 million, with suburbs) has gained a second international airport, a three-line subway system with 11 additional lines under construction, the Inner and Outer Ring roads, two major elevated freeways, and an elevated mag-lev light rail system. And that says nothing of the rapid morphing of many city neighborhoods, from dark, low-rise concrete homes to glistening apartment buildings, from quiet rice paddies to roaring office parks.

The construction boom in Shanghai is merely the most dramatic example of a vast economic transformation under way throughout China. From its position of international isolation at the end of the Cultural Revolution, the country has risen to assume its current status among the world's largest trading nations. Perhaps most remarkable: while developing nations typically experience periods of boom and bust, China has enjoyed a steady growth-rate above 9% since the 1980s.1 Wealth has increased so rapidly in China's major cities that the average per capita annual income in, for example, Shanghai in 2003 exceeded US$5,7002 while China overall averaged US$1,100.3 Government sources predict that by 2007 per capita gross domestic product (GDP) in Shanghai will reach US$7,900. (When purchasing power parity is factored in, the average income of Shanghai residents already approaches US$15,000.4)

Outside the largest cities, China's transformation is less dramatic but still sweeping. James D. Wolfensohn, then president of the World Bank Group, visited China in 1995 and again in May 2002. After traveling from the underdeveloped west of the country to the prosperous south and east, and meeting with top leaders—then-President Jiang Zemin and Premier Zhu Rongji—as well as private businesspeople and local families, Wolfensohn declared the progress of China in five years to be “impressive and remarkable.” He said, “In a relatively short time, China has emerged as a country of truly global stature, having joined the World Trade Organization [WTO], strengthened ties with ASEAN, and won the right to host the 2008 Olympics. This is a more dynamic, more confident China—and rightly so. The simple fact is that more than 250 million people in the past 20 years have been lifted from poverty here. The problems confronting China have not been totally overcome—far from it—but the magnitude of this achievement in a single generation is such that other countries should learn from it.”

The economic development of China is not lost on multinational corporations (MNCs). For companies the world over, the nation is increasingly seen as a critical component in their global strategy. The Middle Kingdom (a literal translation of the Mandarin-language country name “Zhong Guo”) now reigns as the world's largest destination for foreign direct investment (FDI), attracting nearly US$50 billion in 2002 and overtaking the United States for the first time in history.5 By 2007, annual FDI into China is expected to reach nearly US$65 billion. The investment inflow has sped China's move toward market capitalism, shiting the composition of the economy away from state-owned enterprises (SOEs) toward private companies and encouraging the influx of foreign participation through joint ventures and wholly foreign-owned enterprises (WFOEs).

Business leaders throughout the West already know that China now offers potentially the most attractive investment environment in the world, serving up a heady mix of consistently healthy GDP growth rates plus newly opened industry sectors, political stability, fast-developing human resources, and exploding consumer wealth.

For a growing number of MNCs, this dramatic and ongoing economic transformation increasingly means one thing: China is now, in the words of one top manager profiled in this book, a “must-win market.” The nation is critical both as a manufacturing base for export and as a destination market itself. In the three decades since Deng Xiaoping opened China's borders to international trade, MNCs increasingly have made this region a focal point within their global business strategy. The urgency among global players entering or expanding in the nation has only heightened since the country's 2001 entry into the WTO.

Consider the experiences of the 28 China-based top executives and consultants profiled in this book. From Alcatel to Sony, Bayer to Unilever, the message repeated again and again was this: in the words of Du Pont China President Charles Browne, MNCs now have “a laser light focused on China.” Du Pont now receives 5% of its corporate sales from China, but that figure is growing steadily. Browne: “China is one of the few countries nowadays where the economy doesn't show signs of slowing down. It is strategically important for the future because of the growth rate. If you go to our headquarters and ask which region we are concentrating on, the answer is that we are focused on China, China, China.”

Other senior executives expressed equally great dedication to their China operations. Consider that:

For the Coca-Cola Company, China is now the fastest growing market in consumption volume worldwide. In 2005, China was Coke's fifth-largest market in terms of consumption volume, behind the U.S., Mexico, Brazil, and Japan; by 2008, China will likely rank third. Says Coca-Cola China president Paul Etchells: “The business climate [in China] is much more positive—economic growth here is much high-er—than in most other places in the world. So we are geting better growth here than in most other places. ... China is very, very important to the Coca-Cola Company.” For Siemens, China is now the number 3 market worldwide ater the U.S. and Europe, and will likely move to number 1 by 2010. China president and CEO Dr. Ernst Behrens says, “The China market is right at the center of Siemens. The growth potential of the China market is significantly higher than that of the more saturated European or U.S. markets.” China is a “must-win” market for Unilever, according to Unilever China chairman Alan Brown. Brown calls the country Unilever's “strategic focal point” and its primary growth market. “Any consumer goods company with global aspirations would say China is of the highest long-term strategic priority.”

The central message from our 28 top executives and consultants in China was simple and clear: China is a country that international companies cannot ignore. Since you probably can't beat it, you're better off joining it. Chances are that most of your competitors are in China already and, perhaps even more important, the nation is now producing new international competitors as domestic Chinese firms develop and expand globally. Sooner or later, you will find that China is changing the rules of the business game no matter what your industry is or where your main target markets are located. It is best to learn the new rules of the game, rather than find yourself relegated to the sidelines.

1 Some independent estimates are lower. For the 1980s-1990s, the World Bank reduces the PRC government rate by 1.2 percentage points, while the Organization for Economic Cooperation and Development (OECD) cuts 3.8 percentage points. Even after such adjustments are made, China's economic growth remains impressive.

2Shanghai Statistical Yearbook, 2004.

3China Statistical Yearbook, 2004.

4 USDA Foreign Agricultural Service (www.fas.usda.gov)

5 A note of caution concerning China surpassing the United States as the top FDI destination in the world: U.S.-bound investments plunged in 2001 and 2002, from previous levels near US$300 billion.

Introduction

Opportunity and Challenge

“Nowhere in the world is there a market like this—nowhere. To me, the 21st century will be the Chinese century. China will change the economic balance of the world.”

Guy McLeod, President, Airbus China

Deng Xiaoping declared on June 29, 1985 that, “[China's reform] is a great experiment that is not described in books.” Ironically, it is this “great experiment” statement that has formed the impetus for this book. As Deng so aptly stated, the economic transition now under way in China is unprecedented. Any business executive who frequents China today will agree that the nation is pioneering its own path in the transformation from a planned economy to one that embraces market capitalism—albeit a form with Chinese characteristics. The prevailing characteristic of this journey is uncertainty: uncharted territory, false starts, trial and error.

In the pages that follow, it is our goal as authors to prove the last half of Deng's statement wrong: we have in fact written a book describing the “great experiment.” In China CEO: Voices of Experience from 20 International Business Leaders, we detail the chaotic, confusing, but highly compelling Chinese business environment, as seen from the eyes of the CEOs and country managers leading the China operations of multinational companies. It is our hope that you will learn as much from these top executives as we did in the course of writing this book.

“The purpose of this book is to identify and address the primary challenges facing the presidents and managing directors of multinational companies operating in today's China.”

The authors

China CEO

We began our research with a series of in-depth meetings with 20 U.S., European, and Japanese top executives managing China operations for Fortune 500 companies. We matched the first-hand insights and strategies gleaned from these interviews against the assessments of eight China-based expert consultants from broader disciplines—human resources, law, strategy, and family counseling. Our interviewees hail from a wide spectrum of fields and specialties, and our discussions with them cover a broad range of topics.

What surprised us while analyzing our interview transcripts was the high degree of agreement among interviewees on the ideal basic characteristics and skills deemed critical for international (non-Chinese) managers in China. Despite vast differences in the backgrounds of our profiled executives—they work in 20 distinct industries—a rough consensus quickly emerged.

Voices of Experience

The purpose of this book is to identify and address the primary challenges facing the presidents and managing directors of MNCs operating in today's China. Our interviewees were chosen from a wide range of fields—from cars to cosmetics, software to supermarkets—but each had to meet a set of criteria: each one is the top executive for a successful MNC in China. The companies profiled employ a combined three million people worldwide, including 126,200 in China (125,000 Chinese nationals and 1,200 expatriates). Together, these enterprises have amassed 512 years of operating experience in China, for an average of 26 years per company. Three of the profiled companies were operating in China before the communist “liberation”: Standard Chartered was established in the Middle Kingdom when it was under the rule of the last emperor (ousted in 1912), while Unilever set up in 1923 and Coca-Cola in 1927. Five other companies have been in the country for more than 20 years, since the very beginning of Deng Xiaoping's reforms.

The professional experience of the 20 individual senior executives we profile is in some ways even more impressive. This group of China hands1 has a combined total of 466 years of work experience in their companies, including 294 years spent overseas and 105 years spent in China. If we were to create a composite “average” interviewee, he (all of our profiled senior executives are men) would be aged in his early fifties, and would have enjoyed a long and very stable career with the same company (23 years is the average), including 15 years of international experience and five years in China. The basic job description is extremely broad, typically characterized as “oversees operations in China.” Specific responsibilities, of course, vary widely; however, each position includes a mix of directing all aspects of the company's current work, leading future growth in China (or Greater China or North Asia), and serving as the company's key representative in external interactions with government, business partners, and customers, as well as internally with global headquarters and local employees. (For a listing of all featured interviewees, see “Who Is in This Book?”, below.)

Challenges of China: Leading the Blind Through a Minefield

For all of its allure to multinational companies, China offers international investors at least as much risk as it does promise. All MNCs in China suffer, at least to some extent, in the struggle to straddle two business environments and two social and political systems. So many China ventures fail that not even the fastest growing international firm in China would dare refer to the country as an “easy win.” The tension between the foreign motivation to enter this market and China's desire to protect itself is an old, old story spanning many centuries. (Accounts of European traders entering China date back at least to Marco Polo's journeys to Asia in the 13th century.) All of which brings us to the challenges of managing operations in China.

When multinationals begin operating in China, their interaction with Chinese counterparts—officials, clients, customers—often suffers from a degree of disconnect. The mismatch is like a pair of dancers in which the male partner is moving quickly and the female partner is dancing slowly. Only as the dancers deepen their understanding of each other can they begin to move gracefully and in synch. For MNCs, learning to synchronize operations with the pace of the Chinese business environment is a difficult lesson.

Our profiled legal expert, Norman Givant, Shanghai office managing partner in the China Practice Group of Freshfields Bruckhaus Deringer, sums up the needs of many international companies new to China: “Many of our clients first coming to China have very little understanding of this environment—economic, political, social, and psychological. They frequently make the mistake we all do: presuming that this place is just like home, that people think like you do back in Peoria [Illinois]. You have different cultural mores, different values, different methods of interaction. ... I use the metaphor that we are like a guide-dog leading the blind through a minefield.... There are many potential problems in investing in a foreign country, especially one that has a socialist or communist tradition, like mainland China.”

In the chapters that follow, our expert interviewees offer their frank assessment of how to handle the biggest of the challenges faced in China. The 20 CEOs and eight expert consultants interviewed share their struggles and answer the following questions:

What skills do I need to manage business operations in China today? Should I adapt my management style to China? How can I recruit and retain top-grade professional personnel in China's highly competitive market? What is the secret to forming successful joint venture (JV) or business partnerships? How should I establish effective communication with corporate headquarters? How can my company atract China's newly demanding and fickle consumers? How should I prepare to fight China's rising domestic competitors in my field?

Methodology

It is a chilly April morning at one of Shanghai's most prestigious shopping-and-office complexes, the glittering Plaza 66 on Nanjing Road. On the 17th floor, we are ushered into a small meeting room in the well-appointed offices of General Electric China. After a few moments spent setting up our digital recorder, camera, and laptop, the chairman and CEO, Steve Schneider, bursts into the room. We quickly get down to business. He has read the outline of the book and the interview questions (see the appendix to this book); he confirms the data we have collected on GE's operations in China. A formal air settles as the interview begins. Should we go through the questions one by one, he asks, or make the discussion more conversational? We mention the format we followed last week while interviewing Philip Murtaugh, chairman and CEO of GM China. Suddenly, the atmosphere changes. “Phil is in this book, too?” Schneider asks with a laugh. Then he adds, “Will you tell me how he answered the questions?”

We were asked this question recurrently in the course of researching China CEO: Voices of Experience from 20 International Business Leaders. As our featured executives looked over the roster of fellow interviewees, many asked what their peers had told us. They wondered what the others had advised on maintaining good relations with the government, for example, or on adapting their management style to match Chinese business culture. It is exactly this curiosity that we hope to spark in our readers.

Our research method was to go directly to the source, by interviewing 20 American, European, and Japanese top executives from Fortune 500 corporations operating successfully in China, plus eight respected, high-profile consultants expert at assisting international clients to thrive in China.

During the interviews, we followed a structured question-and-answer format. Each session was conducted by the authors along with a research assistant. We took detailed notes as well as recording each interview, then drafted a full transcript. After each transcription was checked and confirmed by the authors and our research assistant, we began compiling interviewee answers into key topics. This provided the basis for our chapters.

The result is a collection of first-hand, battlefield-tested insights on leading the China operations of a multinational company. The advice and strategies outlined in the following chapters focus on two main themes: maximizing the opportunities and overcoming the challenges inevitable in the business environment of China today.

What is the best strategy for safeguarding intellectual property rights? How can my company form good relations with the Chinese government? How can I ensure that I—and my spouse or partner and children—lead a satisfying life in China?

What Will I Learn From This Book?

When we began this project, our main objective was simply to share the learnings we have gleaned in our respective careers as a professor of management and business journalist. During our collective 22 years in Greater China, we have worked directly with international businesspeople, listening to, reporting on, and assessing their problems, frustrations, and achievements.

The list of the most common challenges identified to us by international executives in China forms the basis for the chapters of this book:

Chapter 1: Qualities of a Successful International Manager in China

Chapter 2: Managing Chinese Employees

Chapter 3: Working With Business Partners

Chapter 4: Communicating With Headquarters

Chapter 5: Facing Competitors

Chapter 6: Battling Intellectual Property Rights Infringers

Chapter 7: Winning Over Chinese Consumers

Chapter 8: Negotiating With the Chinese Government

Chapter 9: Living in China

We are like a guide-dog leading the blind through a minefield. ... There are many po tential pro blems in investing in a foreign country, especially one that has a socialist or communist tradition, like mainland China.”

Norman Givant

Shanghai Office Managing Partner, China Practice Group, Freshfields Bruckhaus Deringer

In organizing the specific chapters of this book, we have developed a simple model illustrating the different relationships that top executives must manage in China: internal relations, external relations, and personal relations. The book is structured according to this basic framework, with one chapter dedicated to each of the topics listed.

The book pivots around the figure of the international manager in China, our protagonist. This manager occupies the central position in the model, and each chapter outlines his dealings with a key internal or external group (employees, partners, headquarters, etc.).

One final point: Before we begin sharing the insights of our interviewees, we must introduce the concept of guanxi, or relationships developed based on obligation and favor swapping. Throughout our interviews with our top executives and China-based consultants, guanxi, or “Chinese-style networking,” was identified as one of the most important aspects of doing business in China. The concept emerged as such a strong central message that relationships became a central theme of the book. (For a full explanation, see “Guanxi Defined” (Parts I and II) in Chapters 1 and 8.)

We conclude this Introduction with a Chinese saying that sums up the essence of guanxi: “When I make things difficult for you, I also make things difficult for myself.” Stated in the positive, the saying reads: “When I make things easy for you, I also make things easy for me.” Let this idiom serve as our first lesson of successful management in China. Many more lessons will follow. Enjoy!

1 “China hand” is a common expression among managers of multinationals to indicate those with ample China experience.

Chapter 1

Qualities of a Successful International Manager in China

“If I had to focus on any one message [for incoming managers], I would emphasize that relationships are very important. … It is really about people—relationships between people and the confidence they have in each other. China is even more that way than in Europe or in the States.”

Dr. Gary Dirks, President and CEO, British Petroleum China

INSIDE CHAPTER 1

Interviewee Credentials

The Right Stuff for China?

Conclusion

Introduction

One of our primary goals in researching this book was to identify the critical success qualities (CSQs) necessary in an international (non-Chinese citizen) manager who operates successfully in China. Our method for researching this was simple: we asked each of our 20 China-based top executive interviewees, “What qualities would you look for in finding a successor to your current position?” Their answers form the basis for this chapter.

Interviewee Credentials

Before we share our findings on the essential qualities for a successful international manager in China, we wish to share a word on our interviewees—the 20 top executives for China operations profiled in this book. We want you to be sure of their credentials for determining what kind of expatriate manager survives best in China. We set several strict criteria before seeking interviews. Each interviewee must represent the top level of management for his company in China, be based full-time in China (rather than commuting from Hong Kong, for example), and have been working in China for more than a year. Nearly all the interviewees far exceeded these requirements. The record for time spent abroad goes to Volkmar Ruebel, general manager of Hilton Hotels, Shanghai, who as this book goes to press boasts 41 years of international experience, 37 years in the same company, and 11 years in China. Also having a decade of China experience under their belts are Philip Murtaugh, chairman and CEO of General Motors China, Dr. Gary Dirks, group vice president and chief executive of British Petroleum China, and Paolo Gasparrini, president and managing director of L'Oréal China.