Talentor China – Interview with our partner Michael Wang in Shanghai
Michael, you work with many international companies – especially from Europe. What has changed in the last 5 years?
I have seen a big change in the expectations for China market. In the past, multinational corporations were focusing on establishing a production base and supply chain to take advantage of lower labour and material costs. In recent years, there has been a shift to more and more market driven initiatives. The fast-growing market opportunities come from both government-driven upgrades to manufacturing and growing middle-class for high quality consumer products. Now China has become the world’s second largest economy, which no business leader should ignore.
However, it’s not an easy change for everyone. A successful strategy relies on a strong local organization and a synergy with the different cultures in the global organization. The demand for experienced business leaders and professional sales & marketing personnel who understand cultural differences and the local business environment has been increasing tremendously.
One thing I should also mention is the rise of Chinese e-commerce/IT companies. The huge success of giant IT companies, BATJ (Baidu, Alibaba, Tencent, JD) has inspired many entrepreneurs to fight for their own success. They could soon be challengers to international companies if they adopt the latest digital technologies. Recently Starbucks launched an online ordering platform in cooperation with Alibaba. The reason is a fast-growing local challenger, Luckin Coffee, which was established only one year ago and mainly promotes cheaper coffee online.
Are more international companies going to China?
Absolutely yes. Some people might not agree with me because they have heard in the news that foreign companies are retreating by moving their production out of China or closing down some factories. That is happening in labour intensive industries, such as textile or those that don’t require high manufacturing efficiency.
In the other areas such as advanced machinery, industrial robotics, consumer electronics and medical devices, I have seen more international players starting up local sales and marketing organizations in China. I think it reflects the upgrading of both industrial and consumer markets.
Where do foreign companies usually need consulting?
For newcomers, it’s very important to set up a strong start-up team. How do you find reliable people? What should expect from the initial local employees? How do you build up trust between the head office and the local team? These issues are normally challenges for foreign companies. A typical mistake that many failed businesses make is focusing too much on language skills and underestimating key competences such as leadership and business acumens.
Another area is communication between western managers and local employees. The culture differences often become a barrier for delivering clear messages. Chinese people are traditionally indirect and non-aggressive. This often frustrates western mangers. On the other hand, the local employees often complain their western managers are not showing enough respect to Chinese culture or not adapting to local business environment. In the end, it damages the trust and the faith in the long-term commitment.
How is the business climate in China these days? Are there any visible effects from a trade war?
So far there are not many. People are for sure concerned about what’s going to happen in 2019. Companies that rely heavily on import/export see uncertainty regarding their business growth. We can feel there’s a hesitation when it comes to further investment or expansion. Some industries, like automotive, are slowing down. But the positive side is that most people don’t want to miss the potential opportunities in the world’s second largest economy. We also have a powerful central government, which I believe can still find more economic drivers from their policy arsenal. I don’t see many signs of panic. I’m still very optimistic that we’re nowhere close to the next recession.
Workshop with Chinese Customers in Shanghai
Our international Talentor Partner Meeting takes place in Shanghai on the 19th and 20th March 2019. Part of this meeting is a workshop together with clients of our Chinese Partner, Michael Wang. Topic of this afternoon session: How to Develop A Multicultural Team!
Register Here: WORKSHOP SHANGHAI