Global pioneers of ‘China Inc’

When Alex Li attended his first meeting as head of Lenovo India, he understood less than 40 per cent of what was said. After being asked if he wanted the job in April 2009, the then marketing director for the consumer business at China’s largest PC maker found himself in New Delhi just three weeks later – with no more than the rudimentary English skills left over from high school English classes and a Lonely Planet travel guide as preparation. Lenovo has 40 Chinese executives posted overseas, more than double the number just two years ago. Its expansion mirrors that of other Chinese companies, making Mr Li one of a growing army of managers sent abroad by “China Inc”.

The managers who run these overseas operations have a very different experience from their peers in western and Japanese multinationals, however. Chinese companies are at a different stage of globalisation and their executives are often pioneers, left to their own devices in the face of hardship rather than corporate-provided home comforts. “The difference is huge,” says Katherine Xin, associate dean of the China Europe International Business School (Ceibs) and co-author of The Globalization of Chinese Companies. “The people sent abroad by western companies normally have very good support systems in place, and they typically take over a business which already exists.”

In many Chinese companies, she continues, an overseas posting is seen as an opportunity to prove oneself, and the suggestion by headquarters to go abroad is not easily refused.

One former executive of ZTE, China’s second-largest telecoms equipment maker, says he was hired for the explicit purpose of being sent abroad. He went to Norway to help manage the construction of a fixed-line network under the company’s first contract with Telenor, the Norwegian telecoms operator, as part of ZTE’s efforts to break into the European market.

The young engineers on the project were put up in rented houses in Oslo and had to commute to the work site early every morning, but none of the young men knew how to cook. “I lost 10kg in three months because we lived on just one piece of bread and a bottle of water a day,” he says.

Such an experience is not unusual for Chinese expatriates. Staff sent to countries in South Asia by Gezhouba Construction Group, a state-owned dam builder, are housed in rented villas three or four to a room if they are on temporary project work. According to a Chinese manager in Pakistan, if they go on a posting for more than a year, they get single rooms.

Taking families and leading a “normal” life in the foreign country is also still out of the question for many Chinese expatriates.

For some companies, the rules are changing. Following its rapid expansion into overseas markets, ZTE introduced new rules earlier this year allowing expats above certain seniority levels to take their families with them when working abroad. This has put it in line with a small group of Chinese multinationals such as Lenovo, Haier, the consumer electronics company, and Huawei, the world’s second-largest telecoms network equipment maker.

Lenovo has also greatly expanded such systems since Mr Li was sent to India. Its “exportable talent programme” includes pre-posting assessment of English skills, cultural sensitivity and training to help executives deal with the transition overseas.

But such efforts often fall short as the expertise of most coaches in China focuses on western markets, even though a large proportion of Chinese expats is being sent to emerging markets in south and south-east Asia, Africa and the Middle East.
“When we were sent to Afghanistan, lessons about which fork and knife to use were completely worthless,” says a ZTE executive. “It was crucial for survival to understand that you can’t hang out on the roof bare-chested to cool down from the heat – the neighbours will shoot you as they think you intend to molest their wives.”

What makes Chinese expats suffer most, however, is the lack of authentic Chinese food. “They miss proper Chinese food much more than western managers miss western food,” says Gary Liu, another professor at Ceibs. As Lenovo’s Mr Li puts it: “Real Indian food is much better than Indian Chinese food.”

Apart from food, language is the main obstacle for many Chinese expats. “What we learn at school is mute English,” says Mr Li, referring to teaching practices that make students memorise lots of vocabulary to score well in tests but leave them with minimal conversational skills.

Chinese managers say this hampers expansion considerably. In many companies, only the country head has English skills fit for negotiating. So, when middle managers and engineers run into misunderstandings with customers, the most senior executive on the ground has to be called in to resolve the problem.

The challenge for Chinese companies to better manage expatriate workers is going to become more acute. In 2010, Chinese companies invested $59bn overseas – up 36.6 per cent from 2009 and from just $900m in 1990.

But because Chinese managers often view overseas postings as a hardship, few are willing to stay more than one or two years – too short to get serious work done or to help the company build a body of knowledge and experience in those markets.

According to Prof Xin, however, that newcomer status can also be an advantage. “As Chinese companies are less set in their way of doing things abroad, their managers can be more flexible,” she says.

Mr Li may be a case in point. During his three-year posting, he has travelled most of India, bringing back a huge collection of photographs and enthusiastic accounts of the country’s cultural riches. He tried to break through the communication barrier by befriending local staff and even performing southern Indian dances on stage in full costume.

The results are impressive. Mr Li now speaks English with an Indian accent, and has a statue of Ganesha, the elephant-headed Indian god of success, in his car. Coincidentally, Lenovo’s share of the Indian market rose 2.2 percentage points to 9.2 per cent last year.