HEC Paris professor raised a tough question to Chinese entrepreneurs: Are you adaptive to the crisis?
by Ying Zhao from www.whichmba.net
"Although thousands of companies have received financial support since the beginning of the global economic crisis, many fear that the assistance will not continue.
Companies caught in this trap face bankruptcy yet they do not know how to prevent it. This is the challenge Professor Brian To, from HEC Paris, addressed at the NDRC-HEC EMBA "Crisis and Leadership Forum" in Jin Jiang Hall,Shanghai, July 28th.
In his address, "Are you adaptive to the crisis?" Dr. To illustrated practices that Chinese entrepreneurs usually ignore:
1. CEOs of major companies, including the Fortune Global 500, are changed, on average, every 5 years. Few are given a second term. This indicates the directors and stockholders' desire to maintain active and up to date leadership in its top management team.
2. Major leadership reshuffle take place every 15 years. It is difficult to find organizations, especially in the TOP 100, with their original leadership. This is because of the decline in the quality of personnel in the market.
Chinese entrepreneurs should seriously consider if their current successes can be repeated in the future. China, the global market, especially the areas of politics, culture, technology, and economics, are constantly changing. How do you guide development in an environment of constant change? Technology, but it requires skill as well as an art to use it effectively.
While teaching the HEC EMBA China Program, Dr. To observed that may Chinese entrepreneurs use the I-give-orders/you-follow-orders style of management. This style has been suitable for China's specific conditions, especially during this period of rapid development. This style has the benefit of enforcing strategic decision with high efficiency. As a result, the enterprises experiences fast growth.
However, this approach does not work when applied to overseas investments. Because of cultural differences, investing overseas challenges Chinese top management.
Chinese entrepreneurs are quick to recognize commercial opportunities. They are quick to master manufacturing. They sell directly to overseas distributors and believe that everything is settled. The weak point in this method is in details.
Chinese entrepreneurs seldom do market surveys. They know little of the habits or cultural characteristics of the end-users.
Many entrepreneurs have high hopes of selling more goods in America such as convenience foods yet they have no idea that the demand for these items is slowing down. However, on the other hand, demand for convenience foods in Brazil and Russia has grown.
"What should you do?"
Mainland Chinese entrepreneurs should learn global business practices from their peers in Hong Kong and other areas in Asia. Usually, a big family owned enterprise will have a "shadow cabinet." The "shadow cabinet" may consist of locally-born Chinese. They are more flexible because of their intimate knowledge of local conditions.
This low-profile "shadow-cabinet" should be given power to play the role of a "bridge" linking the different cultures and backgrounds.
It is likely to be served as a guidance counselor which is important to decision making.
Dr. To emphasized that local businessmen should be included on the board of directors of the oversea investment. This combines the strength of various areas and is the key to success of oversea expansion. This is also the biggest challenge Chinese entrepreneurs now face under the current circumstances.
The forum was attended by entrepreneurs from many foreign companies, State-owned enterprises and private businesses. People shared the common view that Professor To's comments on the topic of management with a global horizon was of great benefit.
Rupert Hoogewerf, who is very familiar with Chinese private enterprises and is the initiator of the Hurun Report, also spoke and participated in the following discussion.
