CEOs in China - East vs West

Hey Everyone, I just read an excellent post on bnet.com by Peter Galuszka, that can be found here: http://blogs.bnet.com/ceo/?p=1247 . It takes a look at a report from McKinsey on How corporate China is evolving:

Particularly it talks about how CEOs in China have to work well "between [their] corporate business dealings" as well as "strategizing public policy functions for the Communist Party."

It basically talks about how Chinese CEOs (particularly in state-owned or partly state-owned Enterprises) often times have to switch from working as a climber of the corporate ladder to a Communist Party member, then back to climbing up the ladder, and back again to maybe becoming Mayor of a city or region, then back again to corporate dealings, and so on.

It talks about some other things as well, but the reason this article is interesting, is because it can help people understand some of the great differences in operating businesses in a foreign country.

Knowing this explains well why sometimes Chinese CEOs behave more like Emperors of a country at times, than business strategists trying to maximize the benefits of team-work and trying to improve the efficiency of the company. This article tells me that they are, in fact, being concerned, not only with navigating a political system within the company, but are also actually caught in the Real political system themselves.

Some of the starking differences between Chinese CEOs and Foreign CEOs operating in China is the methodology of commanding their subordinates, and is one of the things that stood out to me as the most shocking difference. In China, within businesses, there is a hierarchy which must be followed and is highly respected. Respect is shown in many ways. Particularly during meetings involving the staff and their managers, the lower staff is expected to keep quiet, and not voice their opinion, especially if it is to disagree or to voice a new idea that has not been thought of . Because of this, often times the staff does not care to make opinions on pressing subjects and will seem disinterested or detached to foreign observers.

I found that those who did care to voice their opinion in front of their superiors during meetings would often be violating "the code" and would be reprimanded in one way or another. Often times by being passed up by others in promotions, etc.

In China, if you want to climb up the ladder you have to show respect to your superiors and not seem like a threat to them. And through favors, dinners (which often times involve heavy drinking), etc, can you make "political alliances" which in the future can be returned as promotions, raises or political favors.

This was the first lesson I learned in dealing with businesses in China.

So what does this mean for Businesses interested in China?

An understanding of the behavior of Chinese CEOs is crucial in today's day and age. Most Foreign Owned Enterprises can not rely on foreign CEOs to come in and turn things around unless they themselves have an understanding of the business workings. In fact, hiring Chinese CEOs who are sharp and understand the political system in China is one of the best ways for Firms to improve their footing in China.

The real challenge then becomes, how do you find those Sharp CEOs?

What do you guys think? What is the best way for a foreign company to get a strong footing in China?