Executive Opportunities

Unique insight into management changes

by Chris Johnson

Craig Pepples, chief operating officer, Global Sources

China's export boom has been accompanied by the import of management thinking from overseas

The rapid development of China's economy over the past two decades has brought with it a corresponding change in management practices in almost every business. A more international approach has been introduced, not just by the big multinational corporations, but also by state-owned enterprises undergoing reform and smaller start-up entrepreneurs eager to compete with the world's best.

One person who has observed these changes, and from two distinct perspectives, is Craig Pepples, chief operating officer of Global Sources. With a current China workforce of over 1000 in 44 different locations, he has experience of managing his own company's expansion and development through a period of phenomenal change. In addition, he has gained a unique insight into what has caused other companies to succeed or fail.

This has been possible because, for over 20 years, Global Sources, a NASDAQ-listed media company, has been providing information to international buyers and integrated marketing services to suppliers. By means of trade publications, CD-ROMs, trade shows and an online marketplace, they have created a "two-way information bridge" to pair suppliers of manufactured goods with interested importers overseas. Data is gathered in on-site visits to factories throughout China and has led to the creation of an unparalleled network of contacts and an enviable store of management knowledge.

Furthermore, as publisher of a monthly management magazine, Chief Executive China, Mr Pepples has had an insider's view of the concerns and challenges facing top-level executives. "We work very closely with clients and readers and see a little bit behind the mask," he explains. "People dealing with triple-digit growth year after year find they are basically managing a different company at the end of the year. They need new strategies and systems, and we try to provide ideas that fit."

Making adjustments

Many companies go through a lot of pain figuring out the changes needed. Some take a "carbon copy" approach, establishing or importing a method and duplicating it everywhere. Others adjust and modify. Both can work, but Global Sources has found that, in its own case, it is better to modify.

"China's geographical and cultural diversity has to be taken into account," notes Mr Pepples. "With a scattered network of offices you must be able to adapt training strategies and communications." South China's more pragmatic, down-to-earth style gives way to more abstract thinking and more hierarchy as you go north, and such factors should not be underestimated.

No matter what the industry or location, proper training in the company's operations and products is essential. This especially applies to those in sales. "In China, there has been no tradition of selling in the western sense," says Mr Pepples. With the planned economy, the major concern was simply meeting quotas and too many people still treat sales as nothing more than price-cutting. "A more consultative, problem-solving approach to selling has to be learnt. This is very appropriate in China, but you have to show salespeople both the theory and practice." For this reason, Global Sources has been closely involved with the China Europe International Business School in Shanghai. Since June 2000, they have jointly developed a three-day programme on export marketing using a western-style curriculum, but with all case studies based on Chinese companies. "We found that new concepts will work best if they can be presented and related to the realities of China," Mr Pepples says. "Participants then see the strengths and benefits of a different way of working."

Mistakes made

In many cases, the mistakes of others provide the best instruction. Multinationals, for example, completely overturned the accepted scales of pay when they first set up in China. "Particularly in Shanghai and Beijing, the market was totally skewered," recalls Mr Pepples. "It was admittedly hard to find experienced staff, but totally unrealistic expectations were created."

His advice, therefore, is for international businesses to get a good HR person in China to guide those outside the country. By just following Chinese HR regulations to the letter or imposing an external company policy, difficulties are sure to arise. Someone with experience is vital to navigate issues like tax, retirement benefits and pay scales.

At the same time, employers are advised to look beyond remuneration as the sole means of motivating staff. They should highlight learning or travel opportunities and foster a sense of belonging. The ideal, of course, is to create an environment where staff feel their personal values match those of the company.

Looking ahead, Mr Pepples says that employees have to realise that career advancement is not always a series of upward steps. "Staff in China still struggle with this," he explains. "Nevertheless, a sideways move often leads to broader experience and a more rounded viewpoint."

Also, he predicts that Chinese companies will steadily concentrate more on their core competencies. "Growth has been dizzying in many sectors, but as competition heats up it will force some careful thinking about the longer-term direction." This is already visible in the electronics industry in Shenzhen. Exporters there have adopted strategies focusing on product improvement, price and promotion in order to remain competitive.

Mr Pepples has no doubts about the opportunities in mainland China. "Get over there!" he says. "But remember it takes time to understand what is happening, so a bit of patience helps."

High-speed learning

  • Chinese companies are dealing with a host of new management challenges
  • International concepts and strategies are increasingly important
  • Training programmes specific to the company should be developed
  • As the rate of economic growth slows, further changes are inevitable

Taken from Career Times 2004/8/13

Taken from Career Times 13 August 2004
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