Roads Ahead for Chinese Companies Going Global

Chinese companies that aim to become the global giants of tomorrow must overcome their weaknesses in the soft skills - organization and leadership. Why? Chinese companies that become global will have their value chain activities geographically dispersed. Their key managers may come from many different nationalities separated by a huge distance of time, language and cultures. And so in that case, a command and control system doesn’t work. Of course, companies will always have hierarchies but if the person reporting to you is sitting 10,000 miles away, the fact that he or she reports to you is irrelevant because essentially it becomes a lateral, horizontal relationship.

Given China’s history of a more of a command and control economy, a culture that respects hierarchy, a country that’s relatively very homogenous, that the DNA of Chinese business leaders hasn’t taught them as a natural course how to work horizontally, how to work across diversity will be an immense challenge. And I think that’s the single biggest area where Chinese companies need to figure out how they build those capabilities.
And they’re working on that. But it’s something that is going to take time. China has the capital and the hard capabilities, but what still needs to be accumulated and cultivated and built are the soft capabilities.

Posted on October 23rd, 2008 by Haiyan Wang
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