In this Jeitocast, Karen Beaman interviews Alsen Hsein, Senior China Advisor with Jeitosa Group based in Shanghai. Alsen has been working in China for the last 40 years, and seen the the legal and regulatory environment change significantly. The biggest challenge that China will be facing for the coming four to five years is in acquiring and retaining talented and experienced managers. Current projections are that China needs 75,000 manager level individuals just to fill their current open positions. Alsen talks about some of the strategies that Chinese companies are implementing to help meet their talent challenges.

 

 What's changing in the HR landscape in China? [19:26m]: Play Now | Play in Popup | Download

In this Jeitocast, Karen Beaman interviews Michael Novak, CEO of Tertia Corporation, U.S. representative for China’s International Software Services Fair — the Comdex of China — and past president of Clark Consulting Group, the largest intercultural communications company in the U.S. with a focus on U.S.-Asia business communications. The jeito Karen and Michael discuss is:

What do companies need to know about doing business in China?

Michael begins by discussing some of the cultural differences that organizations need to be aware of when doing business in China:

1- Group Decision-Making: Decision-making and information sharing are considerably more consensus based and group-oriented, which can be a source of conflict when coming in contact with more individualistic cultures, such as the U.S.
2- Saving Face: The importance of saving face in a group and not putting someone in the position where they have to make a decision in front of others is important. There is a Chinese saying, “A person needs face like a tree needs bark.”
3- Demonstrating Humility: Humility is highly valued in China, particularly when talking about yourself or your family. Conflict can arise with the U.S. culture where much value is placed on self-promotion: this is seen as boastful in China.
4- Universal Knowledge: The Daoist tradition says that knowledge is universal: everyone is entitled to knowledge and wisdom. The cultural conflict shows up in issues around intellectual property, where in China ideas are seen as belonging to everyone.
5- Minimizing Idle Chatter: The Buddhist tradition values putting thought into everything you say; thus, typical Western activities like brainstorming can be more difficult in China as they are seen as wasting people’s energy.

Michael says there are four main reasons that companies are expanding their business into China:

1- Selling into consumer market, bringing growth opportunities outside of the first tier countries.
2- Lower costs, starting as a distributor and moving to set up offshore outsourcing operations.
3- Privatization of state-owned enterprises, offering significant new business opportunities.
4- Proximity to Korea and Japan, bringing access to other countries through regional operations.

 

 What do I need to know about doing business in China? [19:46m]: Play Now | Play in Popup | Download

I recently read an article about how doing business in China means turning the old adage, “Think Global, Act Local,” on its head. Frankly, it occurs to me that this inverse thinking, “Think Local, Act Global”¹ applies not only to working in China, and that many companies go about globalization completely the wrong way. In thinking globally first, organizations have ended up forcing standards and practices on local operations that are at best ineffective, because they simply aren’t relevant, or at worse counterproductive, because they’re demotivating and maybe even unethical or illegal in that culture. It is only by thinking locally first and truly understanding the specific business situation, the cultural context, the political/legal environment, the market pressures, and the competitive challenges that can you really hope to integrate the local business needs into an effective global solution.

The authors of this article go on to say, “The ‘think local, act global’ strategy implies a need for seemingly contradictory management skills. Managers do need to be local in their understanding, but they also must be global in their behavior. They must have real global experience and a mature understanding of (and appreciation for) MNCs’ global business conduct.”

To help you in your globalization journey, following is a list of The Behavioral Mistakes of Multinationals that global leaders must seek to avoid if they want to be effective in the world of Global 2.0:

1. Don’t apply double standards
2. Know the law and follow it
3. Don’t bend the rules
4. Avoid making symbolic moves
5. Avoid aggressive tactics over intellectual property
6. Guard against management insensitivity
7. Don’t strip-mine the profits
8. Don’t use local operations as “test labs”

We all need to challenge the status quo a bit more often and invert our thinking sometimes if we want to achieve breakthrough results.
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¹“The Challenge for Multinational Corporations in China: Think Local, Act Global.” By Seung Ho Park and Wilfried R. Vanhonacker. MIT Sloan Management Review. 31 May 2007.