CKGSB Knowledge Authors

The global implications of the rise of Chinese leaders

June 29, 2011

As their companies globalize, Chinese leaders will also have to adapt and adjust to a universal culture.

There are certain qualities a leader must have that have stood the test of time.

Certain character traits such as diligence, intelligence, and integrity, as well as the ability to see the big picture and have a clear purpose of where their company is headed, are essential skills for any business leader. Today’s Chinese business leaders must possess the ability to communicate in a unique and effective way in order to motivate their employees to believe in themselves enough so they can compete successfully on the international stage.

Over the last two decades, Chinese companies have achieved great success and growth, resulting in China bypassing Japan to become the world’s second-largest economy. Chinese companies such as Huawei, Haier and Vanke are good examples of the emergence of high quality companies since the reforms began in the late1970s.

With China’s current period of rapid growth, innovation, and competition, is it still effective to impose western concepts and solutions on the East?

Although Chinese companies may study successful business models from the West, ultimately, Chinese businesses need to find their own solutions and business strategies that reflect China’s specific cultural traits and conditions.

Wang Shi, the Chairman of China Vanke Co., a housing developer, started to learn western organizational structure, processes and corporate culture, and implemented a professional management system in 2001. Vanke president Yu Liang said that, “we would rather lose some efficiency, but we will let you speak.”

Here’s an interview with Professor of Managerial Practice Shalom Saada Saar, who shares his expertise on China’s growth and integration into the global economy and its implications for business leaders.

Q. In your experience teaching leadership and management, in addition to working with top international executives and organizations, what would you consider to be the three consistent qualities of effective leaders that are needed as Chinese companies expand globally?

A. Most effective leaders that I have worked with from all over the world are propelled by a very clear purpose in mind. They have a crystal clear vision of what they are after. They are determined that they will make this company number one, or the company is going to expand into a new market, or be more innovative. Leaders have a very clear purpose in terms of where they are headed.

Leaders also have a unique, if not superb, ability to communicate. Not only do they have the vision in mind, but they also have a great skill and disposition on how to communicate by their words, interactions and ability to listen. I have always been fond of the Chinese character to listen. It has three components: listening with the ear, listening with the eye, and listening with the heart. Leaders must listen to the words, watch the body language and listen to the heart of the communicator. A good leader mobilizes people through the power of communication and the integrity of the vision in a way that makes people want to join that vision.

What really distinguishes a leader from a manager is their ability to coach. The worst kind of leader limits the talent of the team to their own talent. A great leader has the ability to coach so that the collective sum of the team talent and skills become far more powerful than any individual participating in the team. This requires teaching, coaching and flexibility. A leader is a coach who is able to take people to a place where they never thought they could get to.

Q. China is now in a period of steep growth, innovation, and competition. Can you share any insights for managing the changes that Chinese leaders will begin to face now that the Five-Year Plan calls for reducing China’s reliance on exports and creating more environmental sustainability?

A. China is a different ball game. For the last five years that I have been here, I have been against taking western solutions and imposing them on the East. There is nothing wrong with searching for examples of successful business models and human aspects of motivation, but at the end of the day China needs to find its own solution to its situation.

I think China is facing both management and leadership challenges. Management refers to their ability to have a very clear strategy of wanting to go global and sticking to that with long-term goals in mind. You cannot only focus on the immediate goal, or the quick gain, if you want success in the long haul.

Q. In the past, what did you find to challenge leaders the most, and in China are you seeing these challenges change?

A. One of China’s biggest challenges is to create structure in a way so people do not feel its boundaries. If you feel walls surrounding you, then you will not be creative. Creating a structure so people know the boundaries but do not feel them will be critical to fueling growth and innovative thinking.

Leaders have to focus on talent. Chinese people honor authority and very often when you honor authority you are submissive. Even though you may know how to do things better, the structure, or the culture, does not encourage you to take action. For China to grow, they must come up with ways to break through this submissive approach to authority. This is going to be, in my view, an uphill battle. Innovation requires not just processes but also the removal of constraints caused by fear of failure.

Q. Is there one vital skill that is needed for future leaders and innovators right now that would not have been in the mix 10 years ago?

A. To listen more and also be willing to change in light of what they hear. The success of Chinese leaders is credited to their ability to focus. They are very focused on the goal. You see a piece of land today and it is a high rise building tomorrow. They are execution driven. This is a great quality but if you want to grow, you have to slow down to listen to the people around you. Sometimes the solution is bigger and more powerful than the individual.

Leaders must also implement more participation and more inclusion of people and their ideas. When I teach, I use the Chinese example of when people come to leaders they come with a gift. Their gift is their talent, but this gift is wrapped. The role of the leader is to help them unwrap their gifts in order to reach their full potential and demonstrate their talents. The greatest quality of future leaders in China, besides listening, will be finding ways to unleash the talent and potential of the people that come into their organization.

Q. Since you have helped organizations articulate strategic direction and identify core competencies all over the world, how would you advise leaders in these growing Chinese companies as they compete with experienced global players?

A. Brand reputation is going to be very critical for Chinese companies. In the 1970s, “Made in Japan” was junk and you did not buy it. Today when you talk about “Made in Japan,” it is almost like “Made in Germany.” The brand reputations of Lexus and Sony are similar to when you talk about Mercedes or BMW.

I think this is the greatest lesson to learn from, as well as one of the greatest challenges for Chinese companies to achieve global success. To succeed at global expansion and achieve sustainability, leaders must have the clear vision that quality will be in the DNA of Chinese products and services.

As Chinese companies move outside of China, leaders will also have to adapt and adjust to a universal culture. The human spirit is universal, inspiring them to do the right thing and unleashing their full potential is universal. Chinese companies and their leaders will need to predict whether they are perceived globally in a welcoming manner. They have to be perceived as more than their investments and exporters or importers of money, but they have to be perceived as exporters and importers of knowledge, sustainability, compassion and social responsibility. Reputation, branding, quality, sustainability and universal standards are going to be the makers and breakers of Chinese expansion.

Q. As you are in the midst of writing a book on the importance of both teamwork and leadership, can you share with us some of the challenges this relationship faces as more domestic companies in China branch out internationally and global management teams are put into place?

A. Problems are becoming far more complex than they used to be. Today we have issues with the environment, of sustainability and within the human condition. I do not think there is one person who can address these problems alone. I do not think there is a dichotomy between leadership and teamwork – in fact, I think they are complementary. A great leader can engage people around the challenge through collective brainstorming, listening, and honest dialogue. It does not take power away from the leader to say, “I have listened and let’s take a vote.”

On the other hand, a good leader can also distinguish if the issue is an emergency and is able to strike a direction while taking both the risks and benefits. It is a balance, the yin and yang. At times, the leader must be soft and willing to listen. At other times, the leader must be bold enough to take initiative. Leaders must always take the consequences of their actions no matter what the outcome.

Q. As more Chinese companies go global, do you have advice for dealing with cross-cultural differences in leadership?

A. My secret regarding cultural differences is that I think we use it as an excuse when things do not go well. It is an excuse for when you don’t want to take responsibility for lack of sensitivity, elegance or perception. I talk about the human condition in my book as the last unconquered frontier. Most leaders have been able to fully understand all of the diverse needs and beliefs of people and their surroundings. In the Chinese military text The Art of War, military general Sun Tzu says, “A great general is the one who adapts to the terrain like the water adapts to the ground.”

A leader must be sensitive to their surroundings and be able to adapt and adjust. Great leaders do not impose their values, but they take their time to understand their surroundings. They listen more than they talk. Are there cultural differences? Sure, but I think we make a far more big deal out of them than we need to.

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