Business in developing economies: Enter the dragons' den

As the most confident Chinese and Indian firms expand beyond their national borders, ambitious western high-flyers are realising that the fast-track of tomorrow will belong to those bold souls who dive in and join an Asian firm.

by Alicia Clegg
Last Updated: 09 Oct 2013

Doing a turn in the emerging markets of the east has been a key part of any wannabe multinational CEO's career plan for years now, as western firms look enviously at the double-digit growth, energy and vigour demonstrated by the red-blooded economies of Asia. But, as a new generation of Chinese and Indian corporations starts to spread its wings and move west from Beijing, Shanghai and Mumbai, it's clear that the coming generations of business leaders will be increasingly dominated by a new breed. The successful careers of the future will belong not to those who cut their teeth in the old way, as corporate tourists working for the distant outpost of a western firm, but to those hardy souls who enter the belly of the beast and work for a home-grown firm, becoming a fully paid-up member of Team Asia.

Indeed, the most confident and ambitious of these emerging new titans already dream of making it big outside their domestic markets, and realise that to do so they will need to vastly improve their insight into western habits and consumers. Consequently, they are scrambling to scoop up top talent over here - brand builders, managers and technical experts - to spearhead their global ambitions. For enterprising westerners, that's a career gamechanger: the chance to live and breathe the adventure from the inside.

And just as eastern firms want to hire more westerners, so more westerners want to head east. James Mendes, Asia managing director at recruiter Futurestep, says that since the occidental economies took a nosedive in 2008, his firm has seen an upsurge in candidates seeking new opportunities and a new life in Asia.

All of which sounds like a perfect example of the market in action. Unfortunately, there are no guarantees that such west-meets-east unions produce happy endings. Rather the reverse, if anything: a 2009 briefing by headhunters Russell Reynolds Associates, looking at westernised Chinese executives recruited from multinationals into Chinese firms, concluded that fewer than half make the transition successfully. Most don't last a year.

One westerner who found himself working for a Chinese company without ever planning to was former IBM employee Chad Duhon. In 2005, Chinese IT company Lenovo bought IBM's PC division and Duhon (now director of IdeaPad product marketing for Lenovo) went from working for a US company to working for a Chinese one. Last September, he and his wife and two children moved from North Carolina to Beijing, where Lenovo is headquartered. Although nothing was 'spelt out', he says, there had been some 'pretty clear signals' that getting China experience would be 'a good indicator' for people career-wise. But, he adds, 'it's just common sense that if you understand headquarters, you will make yourself more valuable'.

One of the keys to making it work is to realise that, while westerners are hired for their knowledge of their own cultures and markets, their new employer will expect them to fit in with existing corporate culture. Play the game the way they play it, in other words. Since merging with Lenovo, Duhon says, the US business has become much more focused on 'driving execution'. However, in Beijing this is taken to the extreme. 'Within 30 minutes of a meeting ending, someone will have sent out the actions, the owners and the turnaround times,' he says. 'It sounds pretty basic, but it wasn't in the heritage.' Outof-hours socialising is also a much bigger feature of working life at all levels in both India and China. 'In the US, we might go bowling,' he says. 'But there's a bit of a sense of people saying to themselves: "OK, this is the mandatory fun." In China, extending work relationships really matters to people.'

Studying informal power bases is another tip. Guanxi - which translates loosely as 'relationships' - is required to get almost anything done in China, but the people with the best guanxi are not always the ones with the biggest desks, smartest offices or grandest job titles. Similarly, in Chinese entrepreneur-led businesses, look out for the yuanlao, says Grace Cheng, managing director, Greater China at Russell Reynolds. These are the first generation of employees who helped set up the company and enjoy privileged status. 'Along with the boss and his family,' she says, 'these are the people whose egos you need to take care of.'

Of course, there are exceptions and it is possible to overdo such national stereotypes. British-born Matthew Vallance is the chief executive of Firstsource, a Mumbai-based business process outsourcer, which has mostly western clients. He characterises the mindset of his organisation as 'global'. Many of his Indian colleagues, he points out, have had careers in western multinationals. Similarly, expect the culture of hotshot Chinese tech businesses (many of which - search giant Baidu, for example, the 'Chinese Google' - have been founded by returning Silicon Valley alumni) to differ from metal-bashing automakers, such as Geely (which bought Volvo in 2010), or state-owned enterprises.

Can western managers make it to the top of such firms? Up to a point. At Infosys, the Indian IT giant, foreign nationals today make up one-third of managers two rungs down from the founders. In a few years, they will be storming the inner sanctum of the boardroom, predicts Nandita Gurjar, senior vice president and group head, human resources. 'I'm confident that in 10 years it will happen,' she says. The business is also pushing for gender diversity, although it has a long way to go - just 12% of its senior managers are women - by experimenting with family-friendly innovations, such as career-break sabbaticals.

But if the door to top talent from abroad is opening in India, it's not doing so all that smoothly, and westerners looking to head east need to keep their eyes open. In January 2010, Tata Motors hired Carl-Peter Forster, the UK-born former BMW and GM car industry veteran, as its group CEO. The appointment was a landmark, but Forster didn't last long. He resigned in September last year, citing 'unavoidable personal circumstances'.

What of China? Here, life is even more complicated. First, there is the challenge of mastering Mandarin - if you can't join in the water-cooler politics, it's odds-on you won't make the boardroom. Then there is the ticklish relationship between business and state. As well as state-owned enterprises, where a foreign CEO is a total non-starter, the Chinese government has a big presence in the private sector. Firms in strategically important industries - telecoms, for example - benefit from generous state subsidiaries, at the price, it is alleged, of much behind-the-scenes interference. That said, many China-watchers reckon the appointment of a foreign CEO to a Chinese firm in a non-strategic sector is only a matter of time. Professor John Quelch, dean of Shanghai's China Europe International Business School, says: 'It will probably be a second or a third player, which is emphasising international sales, and where appointing a seasoned western executive would add to investor confidence.'

The logic compelling Chinese companies to court western talent also applies to western companies chasing market share in China. Kerry Brown, head of the Asia Programme at the think-tank Chatham House, speculates that a bank with big Asian ambitions, such as Standard Chartered, could be the first major western business to appoint a Chinese national as its head. Alternatively, the scoop could go to a heavily China-invested consumer business. One name in the frame is Yum! Brands, the company behind KFC and Pizza Hut, which is opening restaurants across China at breakneck speed, and already has a Chinese national, Sam Su, as its global number two. Whatever the outcome, says Brown, 'I am sure that in 10 years' time, there will be a huge number of international Chinese business people sitting on foreign boards, just as I am sure that there will be foreigners sitting on Chinese boards.'

So, if a turn in the east is on your to-do list and you are not afraid of taking a risk, why not go local? It could be the career move that defines you - so long as you're ready to deal with a hefty dose of culture shock and spending a lot of time well outside your comfort zone. 'If you can laugh it off, you'll love it; if you can't, you'll end up crazy,' counsels Lenovo's Duhon.

THE GLOBAL TRADER - LINDA KOZLOWSKI, DIRECTOR, GLOBAL MARKETING  AND CUSTOMER EXPERIENCE,  ALIBABA.COM

'We could see there were a lot of exciting things happening in Asia and a lot of opportunity, particularly in China, so we packed up and went,' says US national and former San Francisco-based PR executive Linda Kozlowski. That was in 2009. In Hong Kong, a friend introduced her to the head of corporate affairs at Alibaba Group, which is how 'I come to be working here', she says. As head of global marketing and customer experience at Alibaba.com, she has a key role in its expansion - its auction and marketplace sites have over 65 million users and its 2007 IPO in Hong Kong was the largest for an internet company after Google.

Her biggest challenge is communication. 'As I don't speak Mandarin, I don't overhear the same conversations as other people. That means I have to be extra diligent in asking all the right questions,' she says. Language aside, Kozlowski says she hasn't had too many problems, which may reflect the international outlook of her Hangzhou-based employer. She characterises Alibaba - an entrepreneur-led venture - as 'a global company with more the feel of an internet company than one that is, necessarily, Chinese'. It has relatively few layers and there are a good number of senior women, among them Kozlowski's boss.

That said, winning the trust of Chinese colleagues has meant modifying the management style that she favoured in San Francisco with communications consultants Fleishman-Hillard. 'Europe and the US are very email-heavy cultures,' she says, 'whereas in China, the most successful conversations happen in person.'

As a manager, Kozlowski observes that Chinese employees are much less vocal than their western counterparts. 'In the US, people are very willing to express their opinion. This is something that, in China, people are still learning,' she says. Her top tip for western emigres is not to alienate people by coming across as arrogant.

THE CONSULTANT - JENNIFER STANZL, HR ASSISTANT MANAGER, TATA Consultancy SERVICES (TCS)

German-born and US-raised Jennifer Stanzl joined TCS in London in 2008 on an international traineeship after spotting that business 'was moving eastward'. She has just returned from a six-month secondment to TCS's Mumbai HQ, where she worked on a women's leadership programme.

'I can honestly say that I felt very comfortable with my Indian colleagues, male as well as female, Stanzl observes. 'I certainly didn't feel that because I was a woman there were any barriers to my development.' That said, challenging the assumption that women won't have high-powered careers is a high priority in TCS. 'In India, there is a very big cultural emphasis on women owning the family responsibilities,' Stanzl says. 'But, really, the problem exists worldwide, as you can tell from the numbers of women in senior leadership roles.'

Indian culture is very relationship-based. 'Often, I would go to a meeting and there wouldn't be an agenda, which is so unlike the UK. But once you have built a relationship in India, you have someone you can call and that person will connect you to other people. It's how a lot of things get done,' she says. Having grown up in two famously direct cultures, she struggled with the idea that, in India, people may say 'yes' when, really, they mean 'no'. Eventually, she realised the solution was to 'use open questions' and ask: 'when will this be done?' rather than 'will this be done tomorrow?', which forces a choice between a polite 'yes' and a culturally impolite 'no'. Similarly, getting a senior manager to do something demands a more respectful form of address in India. Bullet point summaries, considered efficient in the UK, can come across in India as 'telling me what to do', she warns.

Her advice? 'Go with an open mind' - stereotypes often mislead. And talk to as many different people as possible: colleagues, people you meet socially, taxi drivers, restaurant owners. 'The more people you connect with, the easier you will find it to adapt to other cultures,' she says.

EASING YOUR PASSAGE EAST - TOP TIPS TO GET ON IN CHINA

  • Face-saving really matters. 'Face' is about dignity and respect and a person's social role. It is not just about feelings, but a key part of what holds society together - there's an old Chinese saying that a person would rather die than lose face. Face can be lost by declining a social or business function on a weak pretext, refusing a present, showing uncontrolled emotions or being too independent. Loss of face can result in reduced social resources and a poorer personal network.
  • So does harmony. This is an old Confucian concept favouring group stability over individual achievement. So standing out from the crowd by, for example, being the first to come up with a new idea can be seen as showing off and is frowned upon.
  • Sometimes courtesy trumps truth. Especially when face is at stake. For example, Chinese employees leaving a company for a new job elsewhere may tell their existing boss that a family member is ill, or that their partner has to move to another city, even if it is not true. This is because the employees want to show their appreciation.
  • Decisions take time. Westerners believe in the value of making quick decisions and then taking action. Chinese want to be sure that all angles of an issue are reviewed and all matters are thought through before coming to a conclusion. This process often involves starting the thinking and the discussion again.
  • Chinese people don't like to say 'no'. Such bluntness involves disharmony and loss of face, so never assume a deal is struck until you are told so explicitly.

- Taken from the book Chinese Leadership, by Barbara Xiaoyu Wang and Harold Chee of Ashridge Business School, published by Palgrave Macmillan (£26).

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