Horasis:The Global Visions Community Horasis China and business Asian business Asian business globalization systemic risk sustainability management consulting Asian trade globe visions leadership skills scenario-building World Economic Forum Frank-Jürgen Richter Frank-Jurgen Richter Frank-Juergen Richter Frank Richter
      Home Site Map Email
Home
Philosophy
Management
Events
Contact
Opinions
 
2017
Time is right for Chinese firms to invest in Europe
Robots to the rescue for China?
Asian Multinationals are Going Global, But to Where?
China ratchets forward with energy efforts
China’s calm necessary for globalization push
Bridging managerial gaps involves trust-building
China well-placed to power its future through green technology advances
China's new 'springtime' is here
2016
China’s moves show it’s banking on the future
Mindset for action at the G20 summit will be determined by Chinese presidency
Chinese head-hunting intensifies for rare managers that can steer overseas firms
US talk of isolation jars with growing links in Europe and Asia
Electoral rhetoric on global trade not in sync with reality
Is it time to be prudent and consider austerity policies again?
What will we do if we have no oil?
Unlock talent by finding the right fit for a person
The benefits are real and tangible
Trade along China’s ‘One Belt, One Road’ won’t succeed without the currency of trust
Reasons for optimism about the long term
2015
Can big oil go green and win?
Poorer Nations Could Sway Climate Talks
Combating Idleness and Deprivation
How China can be a model of food sustainability for the developing world
Kyoto II – Is it a Done Deal?
A meeting of the two largest economic powers
Why China will experience a 'soft' landing
Beware of superstitions
The Elephant and Dragon move ahead
G-7 target on fossil fuels raises many questions
Why Battle for Net Neutrality in the US Matters Globally
China’s resurgence – the ‘normal new’
Wanted: A managerial culture that embraces cultural differences
China's early education plan a smart investment in the future
The New Normal for China and India
2014
China's infrastructure push offers a sure track to better growth
US-China climate pact a good start, but not quite enough
Rethink the human’s place in the ‘digital revolution’
China springs a carbon surprise
Infrastructure - the invisible hand in full view
Dialogue vital for survival of Iraqi nation
China must nurture a new generation of beautiful minds
Great expectations in China and India
GM Cereals – The Pros and Corns
Time to be Honest about Our Energy Prospects
Weathering the Storm of Climate Change
Making a Big Decision? Beware of Your Biases
West Deserves Better Logistics Infrastructure
Digital Currencies do Represent the Future
From 'Printed' Houses to Wooden Skyscrapers
It’s time to bail out our schools, not our firms
Solution to India’s housing shortage – print new ones!
And the most promising green technologies of 2014 are ...
Transport infrastructure key to domestic, export growth
Oil stopgaps: Not worth risking
2013
Why the US should grant Edward Snowden amnesty
May we be more optimistic!
China headed for another massive social experiment?
A dialogue that worked
Yes, politicians deserve vacations - because we benefit
NPOs, NGOs invaluable as creators of dialogue
Look closer and ask: Is America reinventing itself?
Boston bombings case underlines need for dialogue
Millennium Development Goals or own goals?
As usual it's about balance - and timing - of course
Chinese strategists make right moves for growth
2012
Preparing for tomorrow
Austerity or growth?
Japan in danger of becoming 'just a place to fly over'
Beware of the business cycle?
An inconvenient truth
Limited offer sale: Buy a country
Where did our money go?
Leading from behind - a year of elections is almost over
Driving towards a green future
Waiting for springtime
Preserve or Perish
Startlingly similar Asia policy for Obama, Romney
Globalisation remains an irresistible trend
Google has the edge in smartphone war
U.S. Braces for China's Rise
Mankind’s General Scourge
The summer holidays are over and nothing has changed!
Put the hidden trillions to work
Making sense of India’s woes and wonders
Storm in a teacup!
Let’s give bad bankers a venue to admit their sins
News is about depth, not puff or velocity
Booming India, but too few toilets
Delayed Court decisions doesn't mean one may continue to play 'Great Game'
We need media to reflect on data and offer public a balanced view
Big polluters can lead in forging common purpose
The weighty issue of choosing a leader
EU-India Relations - Facing similar challenges
Educating with a goal
The Judicial Malaise
We are growing out, but not growing up
EU´s retrenchment enigma
Urbulence in the Eurozone and the effect on SMEs
Skolkovo May Help Russia to Diversify
Make things more effective
Tapping into the Commonwealth connection
Innovative models for public finance
Facebook revolution but Indian style
The feel-good factor
Asian investors - a private equity opportunity
India needs to be taller and stronger
China´s low sales volume...
Nations playing leapfrog
Shafts of sunlight
What webs we weave
As performers go to Davos, the circus steals the show
Can we control the politicians?
 
2011
Europe’s reminiscence
China firms should go for win-win in overseas ventures
Of procrastination...
Making sense of profiteering
Truth about financial mess must be laid bare
Small is also beautiful
China can help Europe with debt crisis
Excising the cancer of global corruption
Education, a critical asset
Arab uprisings set in motion forces of creative destruction
A new era of change
We must ensure better education for all
Beijing wary of bankrolling a lost cause
Asean's re-emergence as a local and global leader
Why India's Role in the Global Economy is Still Work in Progress
Its the leadership, stupid!
Reverse globalisation: The new buzzword
Bridging managerial gaps involves trust-building
By Frank-Jürgen Richter
Global Times, February 9, 2017
 

On reading the Global Times article "Chinese firms should start exporting managerial experience as well as technology" in late January I smiled in sympathy. What the article said is indeed true but there is no magic bullet to cure the issue. Instead time, perseverance and trust-building are needed. To an extent China's extensive geographic spread is an issue, as is its growing middle class who look to buy "Made in China" goods. Thus the managers of Chinese firms, who may have a sufficiently large bank balance to buy firms overseas, choose to remain Chinese and serve the local market. They are not to be derided, but herein I wish to add my comments upon firms who venture abroad.

Within China market exploration only takes managers into regions where the laws are known and clients speak Chinese. Business expansion professors all state that moving to the next country over is always easier than going afar as one might presume nearest neighbours hold similar viewpoints and their languages might even be similar. Further, the time to travel between a close new venture and headquarters is quite short, even in China, where most places are not much further than 12 hours by train from Beijing, and "closer" by airplane.

The desire to integrate a foreign firm into one's own line of business implies strong interactive management. It demands a good understanding of the foreign language and its quirky phrases, and an understanding of the behavioral traits of the others who might seem too ready to be aggressive, passive, talkative, silent and every other conundrum including expressing gender differences that prevent easy interaction. These aspects are not taught in engineering degrees or often mentioned in MBA programs. But everything involves people - being able to work with them and being able to develop trust - and that takes time and patience.

One difficulty for Chinese managerial study is that there are too few texts aligned to Chinese businesses and their case studies. Case studies allow postmodern deconstruction and a critique prior to a synthesis of paths that managers of the firm might have chosen to be more successful. As yet, few business schools in China adopt this dynamic approach but it is needed when "going global." Too many professors adopt US textbooks as they are cheap and easily acquired. Often they give a spurious sense of confidence to the student as there are many case studies - but they have been derived from research on firms in the US. Possibly it is good research but it is not precisely applicable for a Chinese manager venturing into, say, Africa. They give too much credence to US-centric business methods, and too little to the fundamentals of good Chinese sense-making.

Let me offer one or two examples. The automotive industry once comprised of national firms prior to being bought out by a globalizing foreign firm - think of Ford, Benz, General Motors, Toyota or Nissan/Renault. They have manufacturing facilities in many countries and local managers, as well as regional group headquarters supporting the Americas, Europe plus Africa, and Asia. Corporate headquarters through regional and local management groups direct the total process of assembly via a myriad of supply chains, then to sales via distribution chains - any of which may cross international borders. The managers in local firms may have been placed by corporate headquarters to gain an understanding of foreign operations, returning later to corporate headquarters and still later move to a management post in the regional HQ. A form of guanxi is developed by these global staff which comes into play, as does the natural guanxi in China, when issues need resolving quietly and quickly. Planned managerial progression allows individual managers to appreciate national differences. If one is alone in a foreign land such interactive support is not available and quite likely, as the Global Times article has said, the foreign venture will fail.

The second example might be called "the Peninsular Effect," a nod to Napoleon's difficulties in Spain in the early 1800s from being too reliant on long supply chains and thus constantly short of supplies. Within globalized supply chains one might not think this applies, but it does when firms ramp-up an overseas venture. The major question is whether the foreign venturing firm should be "global while working locally" or whether they should demand fealty from at-home suppliers and persuade them to also venture overseas. If the latter, at least the main firm will have a guaranteed first tier supplier with known characteristics and the same business language. But first tier firms have a worse senior staff availability than the lead firm, they will always be totally stretched, spending most hours flying rather than managing.

At present China faces several imponderables. In general terms many firms carry considerable cash reserves so overseas acquisitions look attractive to extend their brand image. But it is too easy to hit the Peninsular Effect, and internationally experienced Chinese staffs are few. And to further confuse matters, the US, currently the leading global economy, is struggling to understand its repositioning under its new president, and the eurozone is rebooting (its Purchasing Manufacturing Index in January rose to 55.2, up from 54.9 in December) while the UK, the fifth largest global economy is about to initiate a split from the EU and is also welcoming good growth potential (its January PMI was 55.9). Where indeed ought Chinese managers invest?

I would urge caution. I would suggest Chinese firms should concentrate on hubs that will appear along the Belt and Road initiative and take the time to train managers in "long distance decision making."

There are plenty of opportunities to invest in Europe or the UK in the near future akin to the Sino-Swiss Free Trade Agreement. Being patient and learning new skills will create a strong Chinese managerial ethos better able to confidently engage in the Americas or Africa.

 

The author is founder and chairman of Horasis, a global visions community. Horasis hosts the annual Horasis China Meeting - the 2017 edition of the event will be held in Sheffield, UK.

 


Horasis is a global visions community committed to enact visions for a sustainable future. (http://www.horasis.org)

For more information, please contact:
 
Communications and Public Affairs
Horasis. The Global Visions Community
phone: +41 79 305 3110
fax: +41 44 214 6502
e-mail: visions@horasis.org
 
 
Copyright © 2005 Horasis Web by Toronto Web Design