Hit the ground running in China 2.0. Part B: What’s your ex-pat raison d’etre?

Hey Ex-pat! Why are you here? What are you bringing to the table?

Even before the Great Recession of 2007, expats in China were grappling with an existential crisis. On the one hand, it was getting harder and harder for HQ to justify the huge expense of exporting a management team who couldn’t speak the language or manage front-line workers effectively. But localization led to all sorts of terrible unforeseen consequences - not the least of which were loss of intellectual property and destruction of brand equity. Combined with increased Chinese government involvement in business and a string of highly adverse and restrictive regulations, it seemed that top decision-makers in western HQs had no choice but to scale back their China plans. But on the OTHER, other hand a quick glance at Fortune 500 earnings reports showed that big chunks of bottom line profits are coming from the Middle Kingdom.

In or out, foreign or domestic, local or expat? China’s international business community needs to develop a new model for expat managers.


It’s not 2006 anymore
Managing in China was never easy, but over the last few years there have been a host of new problems facing international bosses in China. Aside from the external travails of economic collapse, international tensions and skyrocketing costs, there was the raging internal debate about WHAT exactly it was that ex-pat managers were supposed to be doing in China.

Changing times have revealed 2 myths about ex-pat managers in China

1. The Skills Thing. Local Chinese can’t do what I do.
There are two problems with this justification for importing expensive expats. The first is the obvious – over the last decade or so it has become a lot less true. MNCs have been training local Chinese managers for 3 decades now, and the standards among local & JV companies has been rising rapidly as well. All of those MBA, EMBA and business school professors lecturing, writing and pontificating over the years have also made some impact (bless our hearts). China hasn’t so much educated a class of professional managers as they have MASS MOBILIZED one.

This leads to the second problem with the ‘locals can’t do what I do’ myth: it is rooted in the dubious assumption that they should be doing what you do. When expat managers were here to oversee cheap manufacturing of products headed back to western markets, it was ok to try shoehorn US best practices into a Chinese operation. But once you start setting your sights on the Chinese market (or making use of Chinese R&D or design talent) then the equation changes quickly. If your product or process is so completely alien to local Chinese that you can’t even teach them how to do it, then maybe the real challenge lay with you and not them.

2. The Vision Thing. Top management has to come from HQ.
Common wisdom is that in order to maintain the corporate vision, we need leadership that comes from the home office. Local Chinese don’t have the skills, the global experience or the corporate culture to work the C-Suite – and a coterie of high-powered senior bosses requires a support structure of even more expats.
Once again, this made much more sense when we came to China to reduce expenses and not to make sales or coordinate a regional operation. While many international MNCs will admit that sourcing their country heads in the Mainland would be great, they have no idea where those local leaders might come from. That causes many western boards to decide that their least-worst option is to helicopter in top management from HQ. This creates a self-fulfilling prophesy of top Chinese managers who jump ship early and often- and institutionalizes the dreaded ‘bamboo ceiling’.

The New Expat Imperatives – Winning strategies for international management in China.

1) The Obsolescence imperative.

Bring in an expat with the sole intention of making himself obsolete. It sounds counter-productive and, well, cruel – but the fact is that it can be just the opposite. Two of the greatest challenges to success in the China branch are the expense and ineffectiveness of westerners and the general flakiness of locals who don’t seem to have any vested interest in the company’s success. Defining a new expat role that combines recruiter, trainer, supervisor and HQ counter-part could help to solve both problems. The average ex-pat American’s effective China tenure is about 18 months (of an official 24 month contract - once you factor in the orientation period, the final ‘lame duck’ 2 months and early bug-outs). Coincidentally, 18 months is about how long the average local hire lasts. Both are too low.

If we stop ignoring the problem and start embracing it then the whole process can be reworked for greater effectiveness. Start training teams of westerners and Chinese together. The newly posted American ex-pat can teach locals about technical and corporate issues while the Chinese hires can teach the American about local markets and customs. Together they can develop a set of best practices that plays to the strengths of both cultures (instead of pretending that differences don’t exist). After the ex-pats return home the team can continue to cooperate and evolve together.

2) The strategy imperative.

A key function for the ex-pat of the future will be to coordinate local operations with global policy. More and more, however, this will not mean supervising Chinese to do things the company way - but rather advocating Chinese proposals to HQ. There is always a gap between formal, intended strategy and practical, emerged strategy – but for many China branch operations there is only the vaguest of resemblance between the two. Giant MNCs have learned to integrate local and global best practices, but for many it was a slow, evolutionary and unstructured process. Going forward, the better international operations will find ways to institutionalize two-way, high level communication. Many companies now only have such dialogue when things go wrong. In the future this will be the process that drives things that go right.

Next:
The new Expat training curriculum

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