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The Challenges Of Strategic Leadership In China

How should multinationals manage their operations in China?

17Mar

As predicted by Jim O’Neil back in 2001, China has become one of the world’s most rapidly emerging economies. There’s been an injection of wealth into the middle class, which has seen the demand for western brands and products slowly rise. Along with this, there’s been a massive push for infrastructural improvements by the Government, making it easier for multinational companies to operate.

These opportunities are not confined to Western companies looking to expand into Asia, Chinese companies now have their own global ambitions and are looking to success on home-soil to act as a foundation. Like many developing economies, devising company strategy is difficult - China is actually a collection of different sub-markets, all of which have differing cultural and economic characteristics.

Due to this, it can be difficult for managers, who have no experience of managing projects in China, to come in and make a difference quickly. The sheer variety of stakeholders that strategy leaders in China have to deal with means that they have to be experts in taking a Western brand and transforming it so that it fits in with the demographics of the region.

The journey to strategic success will be one that’s fraught with danger for managers working in Asia, with leadership shortages, new legislation and the deployment of people overseas to name only a few.

Approaches to leadership in Asia and the West have always been different, and this continues to be the case. As more Asian leaders get employed by Western companies the more likely it’ll be that their style will mould to the Western model, which is participative, not autocratic.

Strategic leaders operating in China will have to prepare themselves for a business environment that’s expanding at considerable speed. Aspiring leaders should be aware of the cultural pressure points affecting their operations, but also be savvy enough to know that many people in China demand Westernised goods. It will be a real balancing act, and will require someone who has the strategic ability to combine these two elements.

Whatever the case, expansion into China will not be as simple as promoting someone from your London or New York office, it needs someone whose got an extensive knowledge of Chinese culture. 

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