To make this happen also means expanding its Chinese workforce from 700 to around 4,000 by 2008. Moreover, developing local managerial talent is key to helping the company find solutions to the challenges of growing quickly in China.
But some Chinese behavioural norms can prove less than ideal for Danfoss' business culture and needs. Whereas Danes are raised to speak frankly and to disagree in public, the Chinese rarely disagree with a higher-ranking person and won't speak until asked to do so.
To address this difference, Danfoss, with the help of the Copenhagen School of Economics, has designed a three-month development programme for Chinese and other Asian leadership talent. Using psychologists, the idea is to teach ways to bridge cultural differences.
The company claims very high local retention rates, with only a handful of leavers from its senior Chinese cohort. Additionally, being able to describe the business locally as a genuinely Chinese company - both developing and making products in China, as well as creating employment (albeit with Danish management practices) - has helped create credibility with customers and government officials.
Source: Making China your second home market: an interview with the CEO of Danfoss,
William E Hoover Jr, McKinsey director
The McKinsey Quarterly 2006, No 1
Review by Steve Lodge