Foreign Executives in Private Enterprises

When Chinese private enterprises meet the foreign executives, what kinds of stories will happen?

China’s private companies trotting on the way of upgrading and transformation are in urging need of talents. However, due to many factors, it is hard for the private companies to retain talents, which has already been a major hurdle for their development.

Some private companies attempt to extend their recruitment arms to the foreign countries. They directly hire foreigners as their senior executive or department heads. Some private companies sell their shares to foreigners, through which they can reach cooperation with foreign companies.

What makes foreign executives popular among China’s private companies? What makes them willing to stay in and contribute their strength and intelligence to the private companies? Are they competent for their posts?

The Chinese private companies want to hire foreign executives to improve their technological and managerial level. Foreign executive, attracted by the vigor of China, would like to realize their ambitions in the Chinese companies.

In April 2010, Jiangsu-headquartered Yuexing Group published the news of “recruiting foreign CEO with ten-million-yuan salary”, which was soon spread. In only one after publishing the bulletin, there had been ten thousand overseas talents expressing their will to join in the company.

“The high-end projects need high-end talents, who are worth the high salary we provide,” said Ding Zuohong, board chairman of Yuexing Group.

In China, more and more private companies turned their focus on the overseas talents market. The companies in Zhejiang even raised a wave of “hiring overseas talents” which aimed at recruiting the global top scientists, designers and managerial masters. According to the data from the Zhejiang Provincial Talents Office, there have been 6,000 talented people with the experience of studying overseas serving in the Chinese companies in Zhejiang.

The Swarming Foreign Executives

There are many examples that Zhejiang-based private companies hire foreign executives with high salaries. Ding Yi, board chairman of Zhejiang Noblelift Equipment Joint Stock Co. (Noblelift), is looking proper talents for the company’s third-phase project. About 10 senior executive from 7 foreign countries were newly recruited by him.

The newly appointed foreign executives of Noblelift all have the experience of working in big foreign companies. Some of them are experts from BMW and Toyota. Each foreign executive’s annual salary is around 100 thousand euros. The real payment will be higher than this amount.

Dr. Yang Liyou, general manager of Astronergy, once worked in several US companies as engineers and developers. In 2006, Yang received the invitation of Nan Cunhui, board chairman of Chint Electric Group and returned to China. They founded Astronergy, where Yang served as general manager and engineer-in-chief.

In the processing plant of Ningbo Nanlian Frozen Foods Co., Ltd, Luis from Peru is teaching the workers how to work with the help of interpreters. Apart from him, an Italian expert also worked in the company as the general manager of the herring processing plant.

In June 2009, Kaishan Group engaged Dr. Tang Yam, a veteran expert in compressor. Dr. Tang once worked as vice president and engineer-in-chief in the US-based Quincy Compressor. His appointment established the leading role of Kaishan Group in the field of compressor in the world.

In September 2009, Xie Tao, former operating director of Disney was appointed vice president of Zhongnan-Cartoon.

The intensive appointments of foreign executives have become a new landscape for the companies in Zhejiang. “These talents are short of money. They just want to pursuer more ambitious goals in China to realize their personal value,” said an expert.

Where the Dream Starts

The foreign executives’ coming to China is due to two major factors: a), the enterprises have the need of upgrading and transformation; b), the foreign executives are bullish on China’s economy.

“They can bring us advanced technology and management,” said Wu Jianrong. His Zhongnan Group is one of the private companies seeing successful transformation. Several years ago, he spent a lot of money investing the cartoon industry. “There was a great shortage in the cartoon talents in China. We had to look for them in the foreign countries.”

Olivier in the Xizi Trust Co., Ltd previously worked in French company Otis. When he came to Hangzhou, he was fascinated by the beautiful scenes there and decided to stay.

“China’s economy is a miracle and I came here to meet the challenge,” said an Australian assistant to president of Zhongzhou Group. He considered his work in China as a challenge. For many foreign executives, joining in Chinese enterprises is where their dreams start.

Which Kinds of Talents Are the Most Popular?

The private companies have different ways to attract foreign executives. They choose the talents based on their own situations. Sanhua Group began to make use of overseas experts in the way of outer brain years ago. When the company’s size grew to a certain level, it directly engaged the foreign experts.

“Consultant on Sunday” is a way of using foreign intelligence. Every month, a Zhejiang company specializing in soldering tin sent people to Wenzhou airport to pick up a senior engineer from the USA. This expert spent his weekends in finding and solving the problems haunting this company.

The aforementioned foreign executives are specialists in technologies. They have rich experience in their fields. According to the statistics, 80% of the foreign executives private companies in Zhejiang recruited are technological talents.

“This is related with the industrial structure in Zhejiang. The companies there need to improve their ability of developing new products and techniques,” said the expert.

Actually, there are not many foreign executives specializing in operation. “People may feel unsafe to let a foreigner operate the companies,” said an entrepreneur.

Another notable factor is that most of the foreign executives recruited by private companies have been retired or are going to retire. “These people have been working for more than 30 years, in which they accumulated abundant professional knowledge. In addition, these people are more likely to join in.”

Joy and Pain with Foreign Executives

The grass-root private companies and foreign executives need some time to get accustomed to each other. The process of getting accustomed is the conflict and combination of western and Chinese culture.

Are the foreign executives really so amazing? Are they worth what their employers pay? Can local entrepreneurs work well with these foreign executives? These problems are quite notable.

One: Are they worth their salary?

“The fees of recruiting foreign executives usually take 20% of the companies’ total cost,” said Xiong Fazhang from Feiying Group. His company has recruited about ten experts from Italy, Germany and the other countries. “Though the cost is high, the result is very good.”

According to Ye Xiaoling, board chairman of Ningbo Nanlian Frozen Foods Co., Ltd, the company previously thought of processing the materials after getting. When the “foreign executives” came, they suggested making experiments on samples and then decide the volume of purchasing and processing based on the result.

This suggestion greatly improved the efficiency of the company. Later Ye Xiaoling put forward the “theory of pre- and post-management”, which not only saves the production cost but also improves the production capacity by 50%. Encouraged by the successful experience, Ye Xiaoling planned to recruit more experts from foreign countries.

After surviving the financial crisis, more and more private companies know the importance of the modern enterprises’ management style. The foreign executives recruited by Noblelift not only brought about brand new management experience, but also urged the birth of new corporate culture and operation concept. Hans Metz from Germany is a high-spirited man who always finds problems in the production process and ordered the workers to correct it in time. “I am responsible for finding problems and putting forward the ideas of correction.” There are more than 10 foreign executives like Hans in Noblelift. One advice from Hans lowered the disqualification rate of suppliers’ products to one fifth of the previous level and saved 7 million yuan (USD 29.5 million) for the company.

Soon after joining in Transfar Agribio Co., Ltd, Japanese seedling expert Maiko Iuchi helped the company solve the technological problem and multiplied its sales volume.

“If we say our products are good things, foreign customers may not believe it. But the same words from our foreign executives are more convicing,” said Lu Shoucheng from Transfar Agribio Co., Ltd. “With the help of Maiko Iuchi, the volume of our products sold to foreign countries increases to multi-million yuan.” Maiko Iuchi’s annual salary is about 200 thousand yuan (USD 30.1 thousand), even lower than some local executives’.

Two: Accompanied with Annoyance

The foreign executives’ benefits for the enterprises are easy to see. Recruiting foreign employees is not only a symbol of internationalization and epitome of the company’s power. But, these benefits are usually accompanied with annoyance and trouble.

Wang Liping chairing Guangbo Group once met an occasion: an American, a Korean and a Swiss and several Chinese were sitting in the conference room. Once the conference started, the translators were busy translating each sentence from Chinese to the language the foreigners could understand and vice versa.

Such a situation will be more and more frequently seen in the private companies’ conference rooms in the future. Bosses are usually puzzled by the barriers of languages and culture.

Chen Risheng, board chairman of Senken Group once met a dilemma when he took part in an important contract negotiation. People present in the negotiation are all foreigners but him and his interpreter. During the negotiation, the interpreter went out for a while. Chen Risheng didn’t know what to say and wanted his American consultant to speak for him. But the American didn’t get the boss’ meaning and didn’t speak, which pushed the negotiation into an awkward situation.

The foreigners are used to the weekly salary and are usually not satisfactory with the monthly salary that prevails in China. Some foreign technicians have bad temper and easily get quarrels with their Chinese colleagues…

Due to the different cultural background, Chinese local employees usually can not get accustomed to their foreign executives’ ways of doing things.

Straude from Germany was the “quality supervisor” in Noblelift. He holds the regular conference about quality every Saturday. He requires the technicians to solve the problems he has detected in a few days, which is not acceptable for some Chinese technicians familiar their previous slow pattern.

“Though foreign executives have rich experience and high professional dedication, most of them don’t know the situation in China. What they bring about can not be absorbed by the companies in a short while,” said an expert. Conflicts are easy to see during the process of cooperation, but some of foreign executives can not bear the conflicts and leave soon. This is the most troublesome problem for private companies recruiting foreign executives.

Cultural Conflict as the Biggest Problem

“Cultural conflict exists in every multinational,” said the expert. The private companies must know how to solve the problem before going on the way of internationalization.

“The foreign executives need some time to get used their new working environment. So are the companies,” said the expert. Before recruiting the foreign employees, the companies should make clear of why they are engaged. In addition, corporate profile in proper language and translators are necessary. Consultants should be employed, if necessary, to help foreigners get used to living in China. In addition, enough respect and space must be given to them, allowing them to make best use of their knowledge and technologies. Above all, assistants are needed for them to know the corporate culture and the way of how Chinese do things.

Fortunately, more and more private companies have paid attention to the problems of recruiting foreign executives. Measures are taken to solve these problems. The private entrepreneurs are more and more rational to recruit the foreign executives, with the hope of getting more benefits and real development from them.