Corporate life in China
Multinational corporations focus on getting a firm footing and strong presence in China for a number of reasons: to compete for China’s growing consumer base; to capitalize on China’s well-educated, highly skilled, and growing work force; and to take advantage of lower salaries, wages, and other operating costs of doing business in China. At the same time, China’s economy continues to boom, boosting the growth of domestic enterprises.
Interacting with associates and coworkers
“You need to be more flexible when working in China, because you are facing an emerging, fast-growing, diversified business environment,” says Charlotte Ye, MBA ’00. “However, the fundamentals are similar: integrity, diligence, professionalism, and teamwork.”
Here are a few other differences and similarities you can expect to find in corporate life in China:
More deference to authority. “Chinese state-owned enterprises in particular tend to be more deferential to authority; more top-down, control-oriented,” says Geoffrey Lim, MBA ‘00.
Less sharing ideas with superiors. The Chinese are conditioned to avoid confrontation, says Ah Lay Ang, MBA ‘75, and employees generally don’t challenge their superiors — especially not in a Chinese-managed or state-owned enterprise. Ang is trying to change this by encouraging interaction and participation in his company. “With my encouragement and within the right framework, employees will speak (or write) their minds and share,” he says. “I will always say to them that I am a willing listener, although I always emphasize that we can disagree — and often we do! This approach has yielded much goodwill and robust interaction.”
More formal. Professor Glen Dowell recalls a moment on a movie studio tour, when the guards saluted the VP of the studio as he was leaving the set. There was no irony, Dowell says; it was a customary show of respect.
Less direct. “Chinese social patterns and interactions are Confucianism-based, emphasizing virtues such as order, hierarchy, respect, and harmony,” says Ang. “For example, Chinese are likely to be indirect in words and deeds. They will favor courtesy and face-saving and be less aggressive and confrontational, sometimes even at the expense of truth and efficacy. Face-saving has a much deeper meaning in China than in the West, and many Chinese instinctively react to save their face or someone else’s, especially if that someone is on a higher status.”
More respect for seniority. “Chinese culture accords deep respect for age and treats seniors (anyone older than oneself) with appropriate reverence,” says Ang.
Work/Life Balance: What’s that?
“In China, the work ethic is unbelievable … people work extra hard to get ahead in life. In the U.S. there’s more of a work/life balance: You relax on weekends, take vacations. If you’re an American working in China, you might find yourself working weekends. No one leaves until the boss leaves.” — Sean Alexander ’94, MBA ’01, division director at Macquarie Group in Hong Kong
“There’s not much of a work/life balance, something that’s become more important for younger workers. ‘Well-being’ is a popular topic received with great enthusiasm among MBA and EMBA students in most business schools in China these days.”
— Professor Ya-Ru Chen
What are some of the biggest blunders Westerners typically make when they go to work in China for the first time? Faculty and alumni interviewed for this story pinpointed these:
Cutting right to the chase, versus building a relationship first. Recognize the opportunity, and take the time, to build relationships. Americans tend to be too direct, and focus on getting down to business right away. The Chinese are generally indirect, and focus on building relationships, guanxi.
Not listening, getting impatient. “If someone wants to spend 30 minutes introducing their company to you, whereas you may be eager to get to discuss business, you sit and listen,” says Sean Alexander. “In America, there’s a higher tolerance for jumping to business. In China, pay attention to where your hosts are taking you.”
Lack of humility. Thinking that the U.S. knows all the answers, and failing to listen to your coworkers, will guarantee you a reputation as arrogant or naïve.
Discussing politics. “Politics is a no-go zone in Mainland China, and rarely discussed in Hong Kong business,” says Alexander. Others say discussing social problems, politics, and pollution at work can be okay; just be culturally sensitive about it. Since there’s some disagreement on this point, the best policy is to attune yourself to your environment.
Assuming people are ignoring your emails. Use of email is much more common here. There, phone and texting is more the norm. In China, people don’t check emails often. Moreover, people generally don’t respond until they have complete answers. It’s important to develop a common understanding regarding process.
China’s rapid growth has created a great demand for Western-trained
MBAs who have experience working in multinational
corporations in the United States or Europe, and many are eager for
the opportunity, including mainland Chinese nationals who return
to China after earning their MBAs, and ethnic Chinese (from Taiwan
and Hong Kong as well as the mainland) returning to China
after many years of working abroad for multinational corporations
— familiarly known as “sea turtles.” Many European or American
expatriates — for whom knowing Mandarin is becoming more of
an imperative — are responding to the growing demand for trained,
experienced managers, as well.
What is corporate life like in China, and how is it different from the West? What should you know about interacting with corporate partners or clients in China? How can you avoid cultural misunderstandings? In this story, members of the Johnson School community familiar with China, many of whom work there now, share their insights and advice.
Fast -paced work environment
“Pressure tends to be high in local Chinese companies,” agrees Jiang. “In terms of resources, those companies cannot compare to multinationals; thus they have to beat them on speed. The positive side is that you can grow rich very fast.”
In many respects, this breakneck pace makes for an exhilarating work environment. “Many companies in China are very young, very entrepreneurial and ambitious,” says Julia Xu ’95, MBA ’04, especially compared to “established state-owned enterprises.” Like many alumni interviewed for this story, Xu returned to China after earning her MBA “to capitalize on the exciting opportunities” in China. She played her cards right, gaining multinational experience at Deutsche Bank in Hong Kong before taking on a senior management position as CFO at ReneSola, a five-year-old, NYSE-listed, Chinese-owned solar company in Zhejiang. “Your good experience in a multinational and Western education is what gets you the senior management job in a young and fast-growing Chinese-owned company,” she says.
“The business landscape is extremely vibrant and full of contrasts,” says Geoffrey Lim, MBA ’00, director of CLSA Capital Partners, the alternative investment management arm of CLSA Asia-Pacific Markets, based in Hong Kong. “The growth and the buzz here is phenomenal, but it’s also amorphous and volatile, like its roller-coaster stock markets. Things could change very quickly. Sometimes you never know what next week will bring. There are a lot of opportunities, but there are many pitfalls as well.”
Another pitfall is inattention to quality. “The negative side [of the rapid growth rate] is that very few people have the patience to get a job done in a very ‘thorough’ way,” says Jiang. “Most people will take a shortcut whenever there is a chance. The final result is a compromised product that is ‘workable’ but does not ‘last’.”
What’s missing: rules of the game
“At the current stage of the economic development cycle, the Chinese are largely unaccustomed and alien to the international concepts of quality control and high performance standards,” says Ah Lay Ang, MBA ’75, CEO of Frasers Property in Hong Kong. “China still does not have robust government institutions to properly and adequately regulate, supervise, and control social, economic, political, and legal activities. Therefore, there is a tendency to indulge in firefighting, and control mechanisms are piecemeal or inconsistent.”
The seat-of-the-pants decision making and expediency characteristic of a lot of China’s rapid-fire growth often lies behind the inconsistent or poor quality that makes big headlines in the West. “Food and product safety scandals (such as the melamine-contaminated baby-formula scandal in 2008) are common occurrences because supervision is weak, under-resourced, corrupt and/or incompetent to perform to an acceptable standard,” Ang says. “The notoriously ambiguous judiciary system with weak rule of law makes managing businesses a big challenge!”
Such a freewheeling environment makes it imperative for every business entity operating in China to “create, disseminate, and adhere to its own corporate and workplace culture — those unquantifiable but essential attitudes, mindsets, and relationship patterns necessary to create a successful operating environment,” says Ang.
Training, retraining, and leading by example are key to creating an environment capable of upholding high quality standards. “Even a simple habit like being on time for a meeting —which I constantly practice as the CEO — sends a powerful signal that standards have to be maintained by all employees at all times,” Ang notes.
Expect the unexpected
A few factors unique to China — situations that don’t occur in the
West — catch managers off guard. Sudden shifts in government-controlled
commodity prices is one such example.
“I’ve never worked anywhere more unpredictable,” says Sandy Argabrite, MBA ’85, who served as finance director, Great China Sales, for Procter & Gamble in Guangzhou, China, 2008-2010, and is now P&G finance manager for Glad Joint Venture in the Bay Area. “You need to be ready to deal with some new business or government impact every day, some of which you can only guess at.”
“Government is everywhere, and myriad decisions are made at the jurisdiction of the government,” says Glen Dowell, assistant professor of management and organizations, who has led several Johnson School study trips to China. “And government is not one entity; local government matters, and there are 22 provincial governments, plus a few city-states.”
Guanxi – get it , you’ll need it
The dearth of strong, cohesive regulatory and legal structures, the
absence of strict quality-control standards, and the power of governments
— combined, these realities underscore the need to develop
other means of ensuring that expectations are met. That’s where the
importance of building guanxi (pronounced, roughly, gwan-shee)
comes in. Guanxi literally means “connections” in Chinese, and it’s often likened to networking in the West, but the full connotations
and impact of guanxi run far deeper.
“Guanxi is especially important in the absence of strong legal structure; it reinforces and ensures deals are truly honored, terms fully executed,” says Ya-Ru Chen. If you fail to live up to an agreement solidified through guanxi, “it backfires through the entire network.”
“If you don’t have guanxi, you’d better find some,” says Dowell. “In China’s complex environment, connections are incredibly important.” An example Dowell encountered on a trip to China involved a movie studio that relies on guanxi to get scripts approved by the censorship office. You can gain this kind of influence by partnering with a government-owned entity, or with a company in good standing with Beijing. Guanxi greases the skids and speeds the process. But it’s all carefully built on deep personal relationships.
Sean Alexander ’94, MBA ’01, division director at Macquarie Group in Hong Kong, tells a story that helps to explain how you can develop and build guanxi. When someone he’d known for many years moved to an important position in a new company, Alexander gave him a call. Immediately, his friend asked, “Sean, how can I help you?” What both tacitly understand is that someday this friend may need something from Alexander, and he’ll then repay the favor. The upshot: “I brought my boss in to meet him and his boss,” says Alexander. “He knew it would make me look good. In the U.S., you wouldn’t ask for it, the meeting would have to have a purpose.” This meeting was just to introduce the bosses, setting the cornerstone for a new relationship.
“There’s nothing illegal or cutting corners about guanxi, it’s just a process of who you know, and building relationships,” says Alexander. In the U.S., you can go in, sit down, and, in a few minutes, do business with someone you never met before. Here, it’s important to meet first. In China, you do have to know who you’re doing business with.”