[photopress:board_sirkin.jpg,full,alignright]Harold L. Sirkin from Boston Consulting Group Inc has been advising companies on their China operations for eight years. He spoke recently with BusinessWeek B-schools editor Louis Lavelle about the rise of China’s B-schools and whether the MBA holds the key to solving the multinationals’ leadership problems in China.
He said the No. 1 concern for U.S. companies doing business in China is talent. Most senior Chinese executives are unfamiliar with Western management techniques, so big multinationals frequently have little choice but to import talent from the States. But then the companies are headed by executives who may have little understanding of Chinese business practices.
U.S. companies need capable managers in China. Given the growth in demand for foreign investment in China, there’s a real shortage. More education — both in the Chinese ways of doing business and the Western ways — becomes absolutely critical to compete and grow in China.
There are just different ways of doing business in China. Even inside the major cities, infrastructure problems are monumental. Making sure you have the road network, making sure you have the right truck drivers, making sure you can get in and out of the ports, making sure you can deal with other suppliers — it’s important to understand how to do business in China, and it happens in a very different way than it does in the U.S.
We’re beginning to see a wave of Chinese companies challenging Western companies for position. Growth is a more important factor in how the Chinese think about their business: It’s less about short-term profits and more about growth. Having MBAs with experience may embolden them a little bit more in that direction.
You’re going to see more expansion within China and outside of China. There will be a greater focus on profitability and on efficiency. There are different social contracts, so it may be more difficult to create some of those efficiencies.
China will be a critical part of the world economy, and just like the Americans who go to study at INSEAD, the same thing will happen in China. But the number of people taking Mandarin is still quite limited. So language is going to be a barrier. There is a shortage of talent as a result, and there will be a shortage of talent for a very long time.
Source: Business Week