Many Chinese companies are surprised to see the local employees much less hungry than the employees they are used to managing in China. Compared to the typical aspiring Chinese workers, in most Southeast Asian countries, people are more relaxed and content despite making less money. You can debate whether it is the influence of religion or culture, whether the attitude is good or bad, but the net effect is the same – you cannot expect to get work done faster and better just by paying more money.
- Many Chinese companies are uncomfortable managing people different from their own. When I was a strategy consultant years ago advising American, European, Japanese and Korean companies doing business in China, we often challenged them “have you localized your management team in accordance with your customer base?” Showing the pie charts of the two to highlight the gaps was one of our favorite exercises. Today, when it becomes our turn to go international, we only found our Chinese companies doing a much lesser job. Even Huawei, one of the most respected Chinese companies for its international success, often staffs its operations in a country with hundreds if not thousands of PRC Chinese, including even many of the assistants. Also, we used to laugh at the multinational corporations in China who had no choice but to limit their talent pool to English speakers and to paying a lot of money for them. Now, we see similar situations of Chinese companies coming to Southeast Asia seeking Mandarin speakers or overseas Chinese for the language and culture familiarity. Chinese companies are much less international in culture, organization and managerial practices than our products.
Yet, there is hope. We can gain confidence looking at the success stories of generations of Chinese who left China at times of war and despair and prospered elsewhere, building numerous businesses from nothing. Behind those successes, it was determination, resilience and willingness to adapt and learn. Today, we are in much better conditions with technology, capital, government support and acceptance by the locals.
However, significant changes in managerial styles are needed for Chinese businesses to be successful in Southeast Asian markets. Some practices that would work include:
- Appoint the adaptive ones. It starts when companies select internal Chinese executives to lead the expansion in Southeast Asia. When assessing internal candidates, it is important to appoint someone who is flexible, open-minded and fast in learning. When it comes to prior record, it is more important that a person has shown success and progress in diverse environments than the size of the success itself.
- Hire for fundamentals not experiences. When hiring local teams, companies will find it more beneficial to employ people based on fundamental qualities (e.g., intellect, drive, leadership capabilities) than whether they have done exactly the same job previously. Companies need to be more open-minded about the background of person as it is better to choose excellent people with little experience over mediocre people with a lot of experience. Then, companies need to be thoughtful and proactive in developing those people into the exact talent needed.
- Be the “micro-manager.” Operating in environments where capability levels are not as high as China, managers will have to be more hands-on. They often need to be very specific about what needs to be done and how to do it. They also must be rigorous in following up. The style that would be considered as non-inspirational micro-managing in markets where people are highly capable and proactive is often effective and even appreciated by employees – as they think the directions are clear and theyare helped.
- Balance between performance and community. There are many high-context countries in Southeast Asia, most notably Indonesia, Thailand and Philippines. In those countries, people build strong personal connections in the workplace. Management practices such as performance ratings, rewarding stars and weeding out low performers often backfires. Companies which do not manage the sensitivities properly end up seeing the whole team morale suffers when one team member is let go, or high performers having tremendous social pressure after being recognized with a big individual bonus. However, this does not mean that companies should give up on performance culture. They just need to execute it with more sensitivity and with a softer touch. For example, companies can adopt performance ratings but with less granularity, recognize star teams instead of star individuals or set aside some performance incentive for team events and family benefits.
- Most importantly, be patient and resilient. In any new market a company just entered, there will be a learning curve and there will be mistakes. Staying motivated and focused despite initial challenges will be critical for success. Sometimes, it will be most helpful to “forget about China”, especially “forget about how great we did in China,” as any comparison to its remarkable growth will make a Chinese company’s efforts in Southeast Asia look daunting and the prizes look small.
Yet, the opportunities are there and can be captured with patience and resilience. If you think about all those qualities, aren’t they exactly what is needed to lead any business in competitive and difficult situations? Being able to succeed in Southeast Asia may in the end be more than prospering in Southeast Asia. It can help Chinese companies to build a winning strategy that may last beyond the boom days.
