Is your management getting better — or are your standards dropping?  Beware the dangers of “standards slip” as your China management career gets underway. You know the story well enough when you see it in OPM (Other People’s Multinationals).  The receptionist who can’t speak English, the sales reps who don’t return phone calls, the seemingly simple transactions that require half a dozen group conferences to complete.  And why is it that at certain Starbucks around Shanghai there will be half a dozen Starbucks Rangers bustling around behind the counter, but only one befuddled trainee actually interacting with customers? 

Who runs the operations at these so-called “multinationals”?  Have they never heard of quality control?  Training?  Performance reviews?  Job interviews?  Which overpaid expat incompetent is responsible for these debacles? 

Well, it just may be YOU.   Yes, these are just a few symptoms of the dreaded Slipping Standards Syndrome that is threatening to undermine the careers of many long-term expat, overseas Chinese and returnee careers in places like Shanghai, Beijing, and Shenzhen. It all starts innocently enough.  Your brilliant new hire needs 25 minutes to make a photocopy.  A college graduate with 2 years experience claims to not know what a search engine is.  Your star salesman constructs elaborate arguments against the use of spell-check.  Lunch has become a 3 tiered affair, comprised of the “preparation phase”, the “errand phase” and the “actual eating phase”, which combine to occupy anywhere from 20 minutes to 3 hours.  Before you know it, you are spending more time explaining things than correcting them. 

Do you have SSS?  Check for warning signs.  There are 4 phases: Denial, Windmilling, Compromise and Acceptance.  

In the Denial phase, you simply can’t believe your eyes.  “No,” you’ll say.  “That seemingly competent, intelligent woman did not just spend 2 hours sitting at her desk staring a blank screen because the cable to the CPU got accidentally disconnected by the cleaning lady.  Nope.  Didn’t happen.  I don’t have time to figure it out, but there has to be a logical explanation.

 Next comes the Windmilling phase, named after Don Quixote’s famous delusional battle with an imaginary yet undefeatable foe.  You will change things.  You will be a beacon of efficiency that pierces the post-socialist haze of incompetence and waste!  You will make the office assistant change stationary stores from one that never gets the order right and overcharges all the time to one that DOES get the order right and DOES NOT overcharge.  “It will be simple,” you say, “if I am just patient and explain my goals and reasoning clearly”.    We’ve lost a lot of good young managers to this phase of the syndrome.  It’s not pretty. 

Next comes Compromise.  This is the phase where those wide-eyed, optimistic overseas managers can be heard muttering to themselves on the way to the coffee-machine.  “It’s ok for them to come in at 9:30 everyday, but they’ll just have to make up the work in the evening.”  Or, “well, if it takes 3 people to send out the brochures in this office, then that’s what it takes.  At least we’re accomplishing this important task”.  The Compromise phase is usually accompanied by an up tick in attendance at Happy Hours, and occasionally a relaxation of one’s grooming and wardrobe maintenance.  

And finally, there is Acceptance.  “I’ll hire the first guy who knows how to shake hands.”  Next you hear yourself saying things like, ”Well, of course it took the HR manager 2 months and 16 interviews to hire the new sales assistant.  Everyone here KNOWS that her aunt’s classmate’s sister’s daughter-in-law is having an operation next month, and the HR manager is the only one who can make the arrangements”.   And so on, until you catch yourself displaying symptoms of full-blown SSS.  It’s confirmed when you utter that dreaded phase, ”Yeah, well, that’s the way we do it in China.”   

And then it’s all over.    

I don?t want to be a buzz-kill, but it’s time to inject a little bit of reality into the China market debate that seems to be raging all over the internet. (Somebody had to do it, and I’ve got a little time this morning. You’re welcome.)

China is not going to take over the world tomorrow.
China is not a bubble that is going to fade away.

It is a large, rapidly developing market. It is going to be extremely important for the rest of our business lives. It is a world class production center, and a very important market for finished goods and some raw materials. There is no appreciable service sector. The Chinese are great some things, weak at others, and working hard to improve across the spectrum. Let’s all just get a grip.

For you China Cheerleaders and know-it-all Chundits (China Pundits):

Take a pill and relax. I know about Haier. I know about Huawei. Yeah, the same with TCL. These are manufacturing stories. If you haven’t factored in that China is a leading production center by now, you need to poke your head out of the cave. Lenova buying IBM does not signal anything about the China economy other than the fact that Lenova bought IBM. Talk to me about the service sector. That’s when I’ll get anxious about the China juggernaut putting a dent in the western lifestyle. Until China cranks up its IP machine and can make it pay, I don’t want to hear any more hyperventilating about China Inc. taking over the world. I’ve done my time in Taiwan and Japan. Heard it all before.

Stop trying to invent a China Management Model. Stop trying to back every weird organizational quirk into a brilliant grand strategy. It isn’t there. The large organizations are still trying to shake off the post Cultural Revolution operating restrictions held over from the days when Chinese SOEs were governed by social orientations and not market orientations. They are desperately trying to impose the same kind of management structures and control mechanisms that Western companies are supposed to have. If you ever listen to a clued-in Chinese manager in his 30s, he’ll tell you the same thing. That’s why there are so many Chinese managers in MBA and EMBA programs — to learn about international management best practices. (By the way –telling Chinese management teams how wonderful they are is a lousy way to win management consulting contracts. Try a ‘tough-love’ thing.)

Write this next bit down: When you say ‘inscrutable’ or “cultural differences”, we all hear indecisive, inconsistent, and maybe even dishonest. Breaking an agreement is breaking an agreement. Anywhere. You think Chinese victims of Chinese fraud shrug it off and say, ‘why, that Mr. Chen certainly is inscrutable!’ ? Why do you think that developing the legal system is such a high priority? Stop making excuses for individuals who are simply wrong. Most Chinese are honest and try their best to honor their word. Stop using bad sociology to excuse the behavior of a few assholes.

Yeah, there are lots and lots of MBAs. But counting MBAs is just the modern equivalent of counting coal-cars. It gives you a very broad picture of an economy, but doesn’t really tell you much. We were never too excited about the raw number of MBAs back home, and I don’t see why we should get too excited about it here.

25 years in to the market opening, we are ahead of schedule on some things, behind on others.

And all you Casandras who can’t wait to see the China Market crash:

China is not a bubble. Real estate prices went up quickly, but they have already started coming down - in a controlled sell-off - in many places. The infrastructure is good, the market mechanisms are functioning and people really do ‘get it’. Enough already with the Chicken Little thing. The sky is not falling, and neither is the China market.

This is one of the best governments in Asia, and maybe anywhere. I know. It hurts to hear. It hurts to say, too. But it’s true. They’ve shown a willingness to do the hard things. Foreign investment seems to be protected. The legal system is developing at a steady pace. What nation’s people have benefited more in the last 25 years — and through 3 successive governments? Besides, look at what you’ve got back home. Are you really the one to pass judgment? I know I?m not.

Consumerism is a good goal for the 21st century. You make snide comments because the kids are fat in Shanghai and Beijing. The kids are fat in the US and Europe, too. What would you say if the kids were skinny? That the parents can?t feed them?
‘The Chinese spoil their children.’ You want to hear what my brother?s kids got for Christmas? All parents and grandparents spoil kids. It’s part of the job description.
‘The Chinese are becoming gross over-consumers.’ Go to a mall back home for a day. Stop being a hypocrite. Gross over-consumption is always ugly and sinful, unless you are the one doing the consuming.

This is the most open economy for a developing market ever. Taiwan, Korea, Japan - during their development stages, they were like armed camps compared to China. There has never been a business opportunity like the China market. That’s why we’re here. Is there bureaucracy, red tape and corruption? Welcome to the modern world, honey. Ask a haigui (returning Chinese) about the visa and residency requirements in the US or the EU. I didn’t have to line up to be interviewed before I got my China visa, did you?

Yes, the work force here needs more careful managing here than back home. Workers in China can be expensive, infuriating, incompetent and disloyal. But so is the workforce back home. It’s a different kind of frustration, that’s all. Train more, supervise more, and decide who you want to hold on to — and then make it worthwhile for them to stay (think ‘job title’, not just pay raise).

I know that there are too many MBAs who can’t really do much. I got my MBA in NY in the late 80s. It’s deja vu all over again. Strangers literally sneered at me when I told them. But over time, the general improvement in business training filters in to the economy. Now you all hate know-nothing MBAs. 5 years from now you will be hating the know-it-all MBAs.

In conclusion:

China has been opening for 25 years, give or take. We are ahead of schedule on some things, behind on others. Japan, Taiwan, and Korea - they all followed a similar pattern. The potential market is huge, but so is the pool of potential competitors. In short, the China market will continue to be important and provide many opportunities. China managers and Chundits (China pundits) need to get a grip on reality. Like any business opportunity, the winners in China will be clear-headed optimists who can focus on their market segments and execute consistently. So — No more gushing, no more whining.

Get back to work.

China Management: Loose-Tight Properties

Peters and Waterman are the two management visionaries who built a mini-industry around their book,
In Search of Excellence. They listed 8 characteristics that all truly outstanding companies shared — including a puzzling observation that organizations should encompass both loose and tight management characteristics. Many students of the managerial arts have spent long hours pondering the significance of this pronouncement, while others of a more philosophical bent have responded, “who the hell are Peters and Waterman?”.

And thus the argument devolves to China, where we have loose-tight issues of our own. As many successful managers have discovered, China is a market that requires flexibility to maintain ones sanity – but it also requires firm control to prevent chaos and “terminal standards slippage”.

Let’s take a look at when and how to be “tight” when managing your China operation. Maybe the concept of Management By Objective (MBO) will catch on here someday, but we are not really there yet. One of the worst mistakes new managers make is to assume that people understand goals and objectives. I remember giving a bright young graduate instructions to do research on internet newsletters and permission based email marketing. I was very explicit about my goals and the procedures I wanted him to follow, and even wrote down a list of questions I wanted answered. We discussed deadlines, and I called to check on progress at various points throughout the project. Every time we spoke, I was told the project was proceeding on track, that there were no difficulties, and that I had nothing to be concerned about. 2 months later he submitted his results, there was not a single word about newsletters, email or internet marketing. I asked why not, and then he told me – he had no idea what those things were. (I later confided that story to some more experienced China mangers, and they weren’t a bit surprised.)

How can you tighten your China management processes? The more you can break down a task into discrete parts, the better. Take the time to make each process as granular as possible. Then enforce it with specific deadlines for each section. Checklists work best here. If it can be checked off on a list, it will get done. Back home, many managers will explain how a specific task fits in with the “big picture”, but that is less successful here. You are better off developing very specific, comprehensive milestones and interim deadlines. The less you assume, the better. Every instruction you give should include some clear-cut, foolproof means of verification. If you assume that common sense will ask as a natural safeguard against mistakes, you may find yourself very disappointed. Be skeptical, particularly if the personnel in question are new or the task involves innovative procedures.

There’s an old rule for managing in China – ask the same questions 3 different times. You will be amazed at how important that advice can be in your management career here.

There are times, however, when it is counter-productive to be too controlling. If you have made your goals and processes clear – and have confirmed that everyone understands what must be done and how to do it – then prepare to stand back and let the teamwork magic happen. Local organizations thrive on group assignments, and if any given task doesn’t start out as a group task, there is a good chance it will end up that way. I once saw a simple order for office supplies morph into a 5 man logistics challenge that took about two dozen phone calls over 3 hours. A vast waste of resources? Yeah, maybe. But it seems to work out in the end. Try not to be too alarmed as unkempt strangers drift in to your office to consult on high-priority confidential projects or when you own key personnel disappear at critical times. Groups seem to form, swell, redirect and then dissipate in accordance with some inertia of unknown origin. If you try to control the processes too closely, you may very well end up throttling the life out of your organization.

Good luck out there.

Never underestimate just how clueless your overseas office or clients are about the situation in China. If you are not making a concerted effort to manage expectations back home, you are playing with fire.

The new China Syndrome takes two forms of gross self-delusion. One manifestation is the “simple peasant complex”. A potential overseas client or someone from you home office will ask, “Have they heard of California?” or “Do they know what ‘branding’ means in China?”.

Then there is the opposite extreme, where everyone in China is assumed to be a Wharton MBA. “They all speak English, right?” “I’m sure someone over there will know about US customs regulations.” “It should only take 1 or 2 business days to wire transfer the funds to the US, correct?”

Ironically, the same person can suffer from both misconceptions simultaneously, and never see the contradiction. Don’t make the mistake of thinking that your colleagues and clients who have been to China will be more clued-in. For some reason, they are can be the worst offenders.

I recently got a call from a friend of mine in the US. I worked with him in Taiwan in the early 90s, and he speaks the best Mandarin of any westerner I’ve ever met. He has an idea for a product he wants to market in China, and asked me if using California on the label will give it more prestige, or will it look “too foreign”. Granted, this guy has been out of action for 3 years and has never lived in Mainland — but still! People who haven’t worked in the market don’t realize how sophisticated – and jaded — the market has become. I suggested that “California” as a marketing tool was already a bit played out, and he might want to build a brand around something more specific – like a town or county or geographic region in California. I told him that the average 15 year old Shanghaiese was already more brand-aware than he was. He wisely decided to come out here to see for himself.

Your clients, reading the headline GDP numbers, will assume that the market is clamoring for anything bright and shiny. Your head of HR (back in the overseas HQ) will expect low wages, worker loyalty and high productivity. Your marketing people (back home) may still expect to build long-term relationships that open doors and give them preferential treatment. Your finance people will look for low costs and efficiencies of scale.

Basically, you have two strategies for managing successfully in China.

Option 1) Change China.
Option 2) Manage the expectations of your China stakeholders.

It’s your call.

Have a happy & a healthy 2006.

-Andrew

Scheduling and timetable in China

We China managers have a lot of free time on our hands to think deep thoughts about how much free time we have on our hands. It’s holiday season in Shanghai, and if you are in the city you realize that the pace of life may have slowed a bit. It’s hard to know for sure – everyone always says they are busy, but now they are busy seeing their families or traveling out of town.

If you look at the official calendar, scheduling in China doesn’t appear all that daunting. You’ve got three major holidays – Spring Festival (Chinese New Year), May Day and National Day. Each one is a week long, but the government thoughtfully minimizes the downtime by requiring everyone to work on the preceding weekend. And as everyone knows, Christmas and New Years aren’t holidays in China, so no worries. All in all, the number of official holidays in China isn’t so different from that in Western countries.

Well, yes and no. That’s the official story, but like much else in China it just doesn’t seem to work out that way in real life.

First of all, every 5 day holiday is actually more like 3 weeks. The week before is dead time, since everyone is planning for the holiday. The week after is semi-productive at best as everyone gets back up to speed and tries to wade through all the international correspondence that has piled up during the previous two weeks. Imagine trying to schedule productive meetings for December 22 or January 3 in NY or London. Well, as many of you are figuring out, we have 3 sets of dead calendar time in China. And those weekend workdays are more like “paid errand and holiday preparation” days.

And with the internationalization of Shanghai and the Chinese economy, the entire stretch from Christmas to Chinese NY is of questionable value. “But that’s almost 2 months”, I can practically hear you cry out in despair! Yes, it is. Sure, your staff is showing up at the office. They are just going through the motions, though. The general has to count the “walking-wounded”, and the China manager must account for the “working-vacants”. Their bodies may be at the desks, but their minds are with their families around a boiling hot-pot.

Much of my work is free-lance, so I figured that maybe I see the worst of it. But recently a friend of mine in the logistics business told me that his Chinese partner told him to stop scheduling shipments in mid December. The reason? If the ships were delayed and arrived too close to Spring Festival, they would be stuck in port for a long time because the customs people would not look at the paperwork.

What can you do? Well, the multiple vacations in China will probably come to an end some day, but it isn’t going to happen any time soon. The traditions that involve paid holidays are always the hardest to break (and that’s not just a China thing). So how do China-based managers with international HQs to report to deal with the Chinese calendar. Well, if you work for a European firm all you have to do is say that it is the holiday season. Hell, I’ve heard that some Euro-firms with big China operations have started giving the Paris and Frankfurt offices time off for Spring Festival. [ Blatant lie –ed. ]

But if you are still fighting the tide and want to boost your winter-time productivity up to a whopping 15% of potential, then we have the following suggestions for scheduling around the problem:

Simple, countable tasks.

If your departments have anything to do that requires mundane, mindless chores – particularly those that can be counted or measured, this is the time to do it.
* Paperwork needs filing?
* Spreadsheets need updating?
* Storerooms organized?
* Paperclips counted?

Low priority issues.

* Has some wise-ass MBA from NY stepped onto your turf with a stupid China-marketing idea that you’d like to see fail spectacularly? Make it a priority for 2 weeks before Spring Festival, and watch it fall apart. That’ll teach the little bastard.
* Any orientations, policy updates, training films, tests or evaluations that you consider to be low priorities but someone in another office cares deeply about? Now is the time
* HR been bugging you about revising job descriptions or the global “sensitivity to everyone’s needs” policy? Turn it into a department lunch or make a contest out of it. Inflatable desk-pillows for the winner!

Marketers and sales managers – Don’t pretend that your people will be productive if they aren’t going to be, but don’t punt on the entire winter season, either.

*This is a great time for Skills Training and workshops.
*New Product Development. Yes, this includes you service organizations.
* Revise marketing material and sales collateral.
* Time to look over all those expensive market research reports and figure out what they may really mean to your company or department. Call it a brainstorming session. Yeah, that’ll work.

Avoid the temptation to send your cute young sales associates traipsing around town with gifts for your clients until the last possible moment.

This usually signals the official end of the work-year.
Inexperienced China managers have been known to bow to pressure to jump the gun on this one. I heard of one China novice who once got talked into starting the company “holiday gift march” in late October. Now she’s some kind of Buddhist nun in Thailand or something.

Final Managing Tip for the long Chinese winter – if there is any way at all to turn something into a group activity, then by all means give it a shot.

-Happy Holidays

5 Digits. Salaries over 10,000 rmb per month. This is the new benchmark for local salaries — at least in Shanghai. Choke back your indignation and try not to laugh when they tell you “everyone is getting it now”.

de-Localization The HR policy of opening up job searches to non-locals. Becoming more and more common in Shanghai. As the Chinese economy internationalizes and local salaries rise to within striking distance of Western expat range, look for a new breed of expat workers. These will be young grads– only 1 or 2 years of experience — and willing to take their first real career step in China. Last seen in Taipei in the early 90s and HK before that, they will be spotted in Shanghai and Beijing with increasing regularity. They seem cute and harmless at first. You have been warned.

Value-Added Like “Win Win” in 2005, “Value Added” is shaping up to be the new semi-meaningless buzz-word of choice in Chinese management. Not that there’s anything wrong with the concept. But as overseas HQs and local Country Heads start demanding more results, look for the phrase “value-added” to be thrown around to justify higher prices, higher salaries, and longer lead times.

Climbing the Value Chain Related to Value-Added, this one will be heard from your former OEM suppliers and assorted China “pundits” in year of the Dog. Will usually accompany “Branding”…

Branding Ok, not a new one. But as China Inc. starts looking at Profit more than Sales, many OEM manufacturers are going to start slapping brand names and cool logos on their private-label electronics and hawking them as the new “Samsung o f China”.

Rolling Recession We’ve already started hearing this in Shanghai real estate. Look for some shakeouts in manufacturing, automakers and service sector this year. It’s not really a recession, mind you — just the natural result of poor management, sloppy research and market economics. But it’s easier to just say “RR”.

Chinaprenuer The VCs are a-swarming, so that means every Chinese EMBA with 6 months of experience at an MNC will be slapping together a business plan and looking for their VC check in the mail. The real winner? Business Plan writing software companies. You heard it here first.

CVC Chinese Venture Capitalist. The self-satisfaction of Silicon Valley + the arrogance of Emerging Market investors = engaged, humble professionals who really understand the big picture. Yes, they will be insufferable and obnoxious. But look on the bright side — 90% of them will be bankrupt within 18 months.