DiligenceChina

5 years ago, ex-pat managers in China were likely to be entrepreneurs or employees of big multinational corporations. The common factor was that the China-based manager was a China specialist. Running and managing a China operation was a huge, mind bogglingly complex endeavor, and the typical ex-pat had his hands full just trying to keep the doors open.

The new breed of ex-pat manager in China is likely to be personally responsible for running daily ops at his company’s main facility back in the US or Europe. That raises the difficulty level significantly. On the plus side, the SMINT (small & medium sized international company) is probably very clear on China goals and objectives. But that SMINT owner or senior manager will eventually need to go home and take care of business – so has some tough decisions to make about how to handle China.

2 good options, a multitude of bad ones:

Some poor options for managing your new China operation:

Bad option 1: the Joint Venture
Bad option 2: Hire a good resume in Shanghai
Bad option 3: Living in the airport
Bad option 4: Send anyone
Bad option 5: Virtual Company

Options 1 and 2 are, unfortunately, making a come-back. Even though every “old hand” in China knows that forming a Joint Venture with a local company is an invitation to disaster and mental anguish, it still looks like a great option to a stressed, confused US business owner. The new variation is to hire a local with international experience to be your “country head” and manage the opening of your new branch like any other project management task. It all sounds great, but will end in tears. 1&2 are shortcuts that will save you time, but cost you money, opportunity and IP. You can’t run your China operation with just a few phone calls a month. If your JV partner or new Country Head are allowed to think that they are running the operation independently of YOU, then you are in for a very difficult China career. Don’t let it happen.

Option 3 is how many potential ex-pats start their China career. They live in airports, constantly shuttling back and forth between cities and countries. This is ok at the beginning, but it quickly starts to take its toll. Eventually, you will have to take the plunge and set up some kind of China operation. Don’t wait until you are on the brink of exhaustion and/or bankruptcy to figure out that 2 trips to China every month isn’t going to work.

Option 4 is another common solution to the China Branch challenge. You have your key management team back home, but you can’t or won’t spare any of them to break ground in the Shanghai operation. Instead, you’ll send someone younger or hire someone at home for the express purpose of running the China op. And then they’ll fly off into the sunset, handle all your problems and you’ll all live happily ever after. Or not. Eventually this person may get it right, if you’re lucky and patient and pay enough. The odds are, however, that your Assistant VP with limited experience isn’t up for one of the toughest management challenges on the planet today. Designating a Country Head is a great idea — but its not going to save you time or effort in the short run. You have to stay engaged in your China operation, and any alternative that doesn’t include you putting in a lot of face time on a systematic schedule is going to end badly.

Option 5: The virtual company. Reading a site like this one, you discover that there are plenty of high-quality, experienced consultants, freelancers, sourcers, BPOs and other service providers available in the big Chinese cities. You’ll pay a little more, but you can hire a team of consultants and freelancers to build a virtual company here in Shanghai or Shenzhen. While this isn’t a bad first step, you will quickly run into trouble if you try to make this your permanent management strategy. First of all, you may have regulatory and legal issues to deal with. But more significantly, you are still trying to run China by making a few phone calls every week. You are not likely to get the results you want from this or any other remote-control management strategy.

Ok, if those are the pitfalls, what’s the right path? Successful managers have followed 2 practices that seem to work. Neither is easy or simple, but both have a solid track record of success for ex-pat managers:

Good option 1: Set up an effective management team in China.
Good option 2: Make China your second #1 market, and run it yourself. Find someone to take care of things back in the home market.

Setting up an effective management team in China is very time consuming, but it can be planned and executed systematically. Ideally, you’ll be finding a good management team in China and then investing the time and effort to train them properly and build a good base. Some ex-pat managers like to take their new local hires back to the home office and train them there – but keep an eye on the calendar. Measure your early training trips by weeks – not months. All the action is here, and you are better off brining your key HQ people out to China to do the training and team-building. When you are setting up your China ops and finding the right people, look for communication skills (NOT just English skills, but the ability to communicate important business concepts effectively) and international experience. You should discuss goals and communication styles. Don’t assume that they will call you when something significant happens. A common ex-pat complaint about local managers is that they seem reluctant to pick up the phone. You will probably want to task someone in your Home Office with keeping tabs on your China operations.

Some ex-pats have taken a look at the challenges and opportunities of the China market and decided that they had to take charge of the entire operation themselves. Their logic is that they have 3 or 4 people in the home office who are qualified to deal with the US operation, but no one that could do the job out here. They designate someone else to run the HQ, and they come out to Shanghai to build the operation here. This makes more sense if you are looking to sell into the China market, and want to develop the skills and experience yourself.

No matter which option you choose, you are going to want to be very systematic in your approach to communications, feedback, measurement, and goal-setting. The most successful overseas ventures have lots of contact between senior managements, with many Chinese managers training in the home office, and many leaders from HQ visiting the China op.

Ideally, you will develop multiple points of communication between the two teams. If your China Country Head is your organization’s sole point of contact within the China operation, you are asking for trouble. As a senior manager, one of your primary goals will be to instill the new organization with a transparent, open policy towards information and reporting. You people on both sides of the operation need to know that you are in charge and engaged with all aspects of your growing international business.