Appointing the Right General Manager for China
With substantial growth predicted in the life sciences industry, appointing the right General Manager (GM) in China has never been more important. But where should he or she come from? RSA talks to three GMs working in China with very different backgrounds.
The individual manager chosen to guide an organization through the process of Eastern set up and expansion plays a critical role. He or she must possess market insight and cultural adaptability, as well as tried and tested industry knowledge. But this doesn’t necessarily mean a preference for local talent over expats, or vice versa. In fact, the GMs of today’s Chinese life sciences companies can come from three distinct camps: the expat, the returnee and the local.
Expat general managers have a lot to offer expanding life sciences businesses in the Far East. They are likely to have strong industry knowledge and a good understanding of processes and operations. However, they may have less insight into the local market. Expat GMs may come with a limited ‘shelf life’. Many will come to China with families and spouses in tow, and see their move as a time-limited career step – not a life-long commitment.
“Learn Chinese, i.e., Mandarin – and the sooner the better. Through learning the language you gain a much more in-depth understanding of the local culture and values of the people.” Liam Condon works for Bayer Healthcare, and recently returned from a five-year assignment to China. He explains how the market has been changing. “In the 1990s and early 2000s the China market seemed to be very chaotic and highly dependent on relationships,” he says. However, in recent years Liam has noticed significant changes. “It’s still chaotic due to the high speed of development, but the chaos is starting to give way to more structured approaches with a higher appreciation of the value of innovation” he notes. “Relationships are still very important but they are not enough on their own: necessary but not sufficient sums it up pretty accurately.”
According to Liam, to be a successful GM in China takes a diverse set of skills. Classical management and strong leadership skills are crucial. “There is such a high energy level to manage; it’s so dynamic here and things are moving so fast. It helps to be an organized, structured person, in order to be able to create some structure in the chaos,” he says. “You need strong interpersonal skills. You also need to be very pragmatic and flexible, otherwise your long-term strategy will ultimately fail, as it is essential to be constantly willing to adapt to the fast market changes.”
“But for an expat to flourish as a general manager, he needs the backing of his company. The main need is for genuine support from HQ, the sort that does not become interference,” he explains. Home life can also be important, he adds. For Liam, expat GMs can bring several important skills to the role in the Far East. “Strategic orientation, process focus and project management skills are rarely found in local management teams, so an expat can add a lot of value by emphasizing these skills,” he says. “Bringing international experience and perspective is also important for the local team, but particularly also for communicating adequately with the global headquarters.”
“Having experience of working in China will become increasingly important for global HQ leaders,” he explains. “It will be a huge plus in the future, in much the same way that this used to be true of the USA and partially for Japan.” Liam recommends learning Mandarin to any executive considering a move to China: “Learn Chinese, i.e., Mandarin – and the sooner the better. Through learning the language you gain a much more in-depth understanding of the local culture and values of the people.”
Often returning from Europe or the US, ‘returnee’ executives have extensive multinational experience, and can utilize a combination of international and local know-how to drive their businesses. However, Chinese business and society have both changed drastically since many of these ambitious returnees left for the West in the 1970s, 80s or 90s. As such, returnees are not immune to the culture shock experienced by some of their expat colleagues.
James Xue originally left China in the early 1990s to study in the USA, but has since returned to work as GM for Genzyme. When he returned, he faced some challenges he hadn’t anticipated. “I was tasked with establishing a market and company infrastructure for Genzyme in China,” explains James. “The major challenges I encountered achieving this all boiled down to people – more specifically, overcoming the shortage of local management talent in order to adequately staff up and grow a fully functioning local operation.”
According to James, local managers are an increasingly valid proposition to fill general manager roles. “The skills gap is certainly narrowing between local Chinese and returnee managers.” He adds: “Local executives are increasingly globally aware, but still face challenges. Due to the nature of the Chinese talent development culture, local executives sometimes lack the ‘soft skills’ – communication, project management, and leadership – that Western executives are taught from their first days in business school. “For James, ‘people sourcing’ is a key issue for managers in China. “Young, ambitious managers in China are in high demand. Today, established multinationals offer these managers lucrative opportunities to manage large teams, alongside a clear path up the corporate ladder. So it can be difficult for a little known company to attract the cream of young Chinese talent. “He adds: “The sheer pace of business growth in emerging markets like China means talented managers expect short reward cycles, and also have quite high expectations for personal growth. It is not surprising to see people rewarded with major promotions every two years, and because start-ups simply cannot guarantee such growth opportunities, finding a stable and dedicated management team becomes a major challenge.”
James feels returnee general mangers bring a variety of skills to the table that others may struggle with. “When setting up in China it is not easy for either expat or locally grown managers to ensure corporate objectives always align with the local business needs,” he says. But he cautions: “Maintaining a strong, communicative relationship with HQ is critical to gaining the resources necessary to building a sound infrastructure for the business in China.”
James also emphasizes how returning managers should not expect China to remain unchanged if they go back. “Returnees must remember that China today is a very different world than the one they grew up in. The culture is changing rapidly, and what’s more, most returnees will have no experience of the Chinese business world – having learned their management skills and business etiquette in the West,” he says. “To say returnees may experience culture shock is a bit of an understatement.”
Some international operations have discovered the benefits of localizing their workforce by starting at the top and appointing a locally-educated CEO. These individuals can offer vast local intelligence, but can run into challenges integrating into traditional Western company cultures.
Henry Lee was born in Hong Kong, and originally started working for US companies as a sales rep. After working in the pharmaceutical industry for 19 years he joined Eisai China. Since he began working in China he has already seen several changes in the industry. “We have had healthcare reform since 2006. We have become more open and transparent, and higher executives are now coming from everywhere, especially returnees. We have also seen huge centralization,” he says. Henry also faced recruitment issues when he arrived. “It was difficult to recruit the right people. There was a war for talent in progress. It created pressure to raise compensation packages,” he adds. “Initially we had high levels of staff turnover among reps.”
Henry feels local GMs can offer several benefits over expat or returnee GMs. “For example, the government keeps changing its policies. It’s difficult enough for me as a local to keep up with the changes and I’m here on the ground and tuned in automatically to change. The other side of it is that I know everybody here and they know me. I have a strong network and I believe I have the trust of the people in it.”
Local GMs also offer an in-depth knowledge of the Chinese market, as well as an ability to understand and communicate in Chinese. Expat and returnee GMs must also be able to deal with the emerging market. Overseas challenges For life sciences companies in search of the right individual to lead their Eastern expansion, it’s clear there are distinct benefits in pursuing each ‘type’ of executive. And for individuals looking to steer the future of the life sciences industry, leading an expanding Chinese operation can be a complex, but highly rewarding challenge.