No place like home– Why are more top Chinese execs heading home?
As China’s economy continues to grow, and becomes more open, diversified and sophisticated, its appetite for new talent grows stronger, too. The country’s continued success depends on continually expanding its talent pool in the face of evolving global economic trends to sustain its growth engine while also allowing it to develop new competitive edges across key industries.
Chinese professionals working abroad represent an invaluable source of exactly this kind of talent. Not only do they understand the subtle nuances of China’s market and its corporate culture, they also have learned new strategies and approaches that have allowed them to succeed overseas. If China is to fuel its economic growth, a steady infusion of new thinking will be vital.
A tidal shift – Chinese top talent turns towards home
Currently, it is estimated that there are more than 60 million Chinese professionals living and working outside of China. Increasingly though, the pull to come back to China is growing stronger. Over the past three years, over two million Chinese nationals who were working overseas have returned with the intention to resettle, live and work in China. Around a third of these were business leaders at a managerial level or higher, who initially left China to study abroad and then decided to stay overseas to build their career.
2020 represented a significant spike in this returning professionals, partly prompted by the impact of the COVID-19 pandemic, as 800,000 Chinese nationals returned from overseas – a 38% increase on 2019. There was also a massive 195% year-on-year increase during the second quarter of 2020, when China’s COVID outlook was significantly more stable than most other major nations worldwide.
But what specifically is drawing China-born professionals, particularly senior executives, back to their country of birth? We discussed the different pull factors at play with four of our Global EMBA alumni who have all returned to China after lengthy periods in the US, Sweden and New Zealand.
Delan Ren is currently the Deputy General Manager of the Retail Segment Hua-Shi Pharmacy of Shanghai Pharmaceuticals (SPH), the second-largest pharma distributor in China. Delan spent over 12 years in New Zealand, first achieving a Bachelor’s and then Master’s degree there, while taking on various senior IT roles, including as a CTO.
Delan, CEIBS Global EMBA 2018
Amber Li is the HECC (Healthcare, Environment, Consumer, Construction) Commercial Director for the international chemical company Solvay. She completed her PhD in Chemistry from Columbia University in 2009, before deciding to return to China after a short internship in New Jersey.
Amber (right), CEIBS Global EMBA 2019
Wenjie Wang is currently Honeywell’s CIO for the Greater China region. Prior to returning to Shanghai, Wenjie spent over 10 years living in the US and travelling extensively across the States, Europe and Asia while working for IBM as a SAP specialist consultant.
Wenjie (left), CEIBS Global EMBA 2017
Haiyuan Bu is the VP of Global Customer Engineering and Sales for the Greater China region at Fingerprint Cards, a high-tech Swedish biometrics company. Haiyuan spent over ten years in Sweden working for Ericsson in an engineering role, before moving back to China.
Haiyuan, CEIBS Global EMBA 2016
What is drawing top executives back to China?
Across the answers given by our four interviewees, there were two common threads in their reasons for heading home. First, they each sensed that a return to China represented a greater opportunity to grow, adapt, experiment and succeed in their respective careers. This was closely tied to the second main factor – the increasingly rapid and innovative development path that China has been following for more than 20 years.
Amber: In 2009, when I completed my PhD, China’s potential was becoming clear. Major events like the Beijing Olympics and the global financial crisis had shown this was going be a period of substantial change. I’d heard that the Chinese government was investing heavily in improving the environment, making big initiatives to clean up our air, water, etc. Overall, this was the kind of growth that I really wanted be a part of.
This sense that China was growing in a new, positive direction was felt by all four executives, despite their different industries, specialties and academic/professional experiences. Both Delan and Haiyuan spoke about the ‘high-energy’ atmosphere of their respective working environments when they returned to China.
Delan: In New Zealand, I was the CTO of a company that had only around 30 employees in total. Jumping back into a large organisation in China, in a high-pressure, fast-paced commercial environment, that was an eye-opener! The contrast couldn’t have been clearer, but that was a big part of my decision-making process; I wanted to explore the new opportunities that China presented.
Haiyuan: Coming back to China, for me, was always a question of ‘when’ not ‘if’. Before 2010, the opportunities for building a career and doing different, exciting things in China were already obvious. This was hardly an industry-specific situation either, it applied across almost every sector.
As well as the career development opportunities, the lure of coming back to China also lay in the country’s growing confidence to move beyond the imitation of global best practices, and start setting them instead. Leading Chinese companies are increasingly demonstrating their ability to experiment widely, and innovate successfully, to the point where China is now the breeding ground for industry-changing trends.
Wenjie: At the time I was considering moving back, Honeywell’s aerospace division was thinking hard about how to differentiate itself from its competitors. They thought that it was no good trying to be like Boeing or Airbus (that would be like trying to be like Frank Sinatra). Instead of imitating what was already successful, they wanted to discover what the market would need next, and position their offering to satisfy that need. This is also exactly what I wanted to do, and China was increasingly looking like the best place to do it and to test new approaches in a very dynamic market.
Practical challenges– Readjusting to Chinese business culture
Despite the significant ‘pull’ factors drawing executives back to China from abroad, the practical challenges of negotiating the change in corporate culture should not be underestimated. As much as Chinese companies are eager to absorb the experiences and insights of their globetrotting executives, there remains a potential for conflict.
Chinese companies often rely more on informal channels and interpersonal relationships to determine business strategy, rather than creating formal communications structures and defined roles. While this does allow for an added degree of internal flexibility, it also creates the potential for confusion over role scopes and how employees are evaluated and rewarded. At the same time, when considering the hierarchy of Chinese companies, there is generally less acceptance of criticism coming up from below than is the case in Western companies. This is an observation that was echoed in the experience of our four alumni.
Amber: In US organisations, you often find that employees are not so bound to hierarchy, compared to Chinese companies, particularly SOEs. Obviously, there is respect for leadership, but the structure is more open and there are more opportunities for staff to communicate freely across the organisation through formal channels.
Wenjie: There is an openness and directness about the way US companies handle high-level communications that is valuable. I could comment on my team’s performance, but I could also openly talk about someone else’s team’s performance. And they can do the same, and nobody would walk away from the session with a bad feeling. It’s all about working for the benefit of the company.
This phenomenon is being recognised and understood by more of China’s leading companies, who are looking to create more avenues for intra-organisation communication. While the dynamics of Chinese workplace roles and responsibilities can sometimes lead to miscommunication and a stifling of professional feedback, there is a growing sense that this too is gradually changing. Senior executives with international experience are quickly becoming a vital part of this change, as they incorporate what they’ve seen and learned while abroad.
Delan: Learning how to question things in a constructive, business-sensitive way – this is a major benefit from my time in New Zealand. I’ve definitely brought this back to China with me. Here, there is often an assumption that your immediate boss or line manager won’t like being challenged on their decisions. However, if you can establish a good working dialogue with them, where you discuss key decisions freely, they will likely come to value your advice. They will see that you are thinking about the bigger picture, and are trying to look after the company, and them by extension.
Haiyuan: Admittedly, there was a readjustment process when I came back. But I quickly realised that, wherever you are, there is no one ‘right way’ to work. All that matters is discovering what works best where you currently are. If you look back maybe 20 years ago, many Chinese companies were keen to imitate Western management practices as closely as possible. This isn’t the case anymore, as confidence and innovation levels in China are very high. Organisations are becoming more flexible and adaptive, so we as individuals need to do the same.
Looking ahead – What do China’s executives think about its future?
Having returned and settled back in China, that optimism and sense of opportunity that encouraged them to return home has been proven correct, as each executive has seen their industry rapidly innovate and adapt to the shifting global business landscape since their return.
Delan: For the pharma industry, the economic power of China is being paired with innovation power. You can see that more clearly now. In New Zealand, even big pharma companies don’t really operate R&D centres there. Whereas here in China, more MNCs are setting up R&D facilities as well as sales units. It’s not just economies of scale that is a big advantage here, it’s also the growing marketplace of ideas that is making China much more competitive.
China’s innovation journey goes beyond just the high profile examples of tech-driven industries. China jumped to 12th place in the Global Innovation Index in 2021, which places it ahead of regional competitors such as Japan (13th) and Malaysia (36th), as well as European and Middle Eastern innovation hubs such as Israel (15th), the UAE (33rd) and Norway (20th).
The accelerating pace of change is being felt at both the industry and national level, with world-leading companies outside of China looking on with increasing interest. Huawei is now ranked 8th in BCG’s survey of the world’s 50 most innovative companies, putting it just behind global tech giants Alphabet/Google, Amazon and Microsoft. China has also largely shed its reputation as a ‘global copycat’, and its market leaders are inspiring some of the biggest global brand names. Facebook, for example, only added an integrated payment option to its chat function in 2019, a full five years after WeChat had provided this feature to its vast audience.
Across China, there is an atmosphere of innovation-led change, and it is led by necessity. China’s aging population requires the enthusiastic embracing of new ways of doing things, rather than relying on what has worked before. According to the Chinese National Bureau of Statistics, China will have 81 million fewer working-age population in 2030 than in 2015. It is no coincidence that such an important prediction regarding China’s future productivity power is prompting substantial changes right now.
Amber: I’m confident about the future because China is adding new strengths to its traditional ones. Chinese people are hardworking but there’s an understanding that this needs to be married to innovation and adaptiveness. You can see this in the way education reform is happening and in more open-handed trade policy ideas coming through.
Haiyuan: During my time in Ericsson, I saw long-term planning influence every part of the business, that’s a big part of the Swedish approach. This is coming through stronger now in China too, with spectacular results. Look at Huawei – they paid a lot of money in the early 2000s to IBM to help them comprehensively evolve into a more professional and innovative company, and look where they are now.
Once again, the views of our alumni describe an ongoing shift in China’s business culture from its past state of being reactive and imitative to the point where Chinese companies and industries are setting the global standard. While innovation plays a key role in this process, another important factor is how the size and complexity of the Chinese market make it fertile ground for building solutions that will succeed abroad.
Wenjie: What’s really encouraging is the change in global perception of China amongst MNCs. Take China’s cybersecurity laws, which are necessarily getting stricter, this actually allows us to get ahead of the global trend of tightening cybersecurity regulation. Then, if the solution works in China, we know that it will be suitable for global markets. This is a positive change; execs are talking about ‘China solutions’ (i.e., how Chinese companies are developing solutions that work for the China market and thus are the standard to aim for).
The next chapter in China’s development
The consensus is that China’s business culture is changing more rapidly and that the change is defined by pragmatism, by a practical need to embrace innovative thinking and new approaches to age-old problems as well as novel ones. Regardless of their industry, senior executives now have to think more globally, as influential ideas flow out from China as well as into it from abroad.
As such, we may continue to see a premium being placed on international experience by those leading Chinese companies who have global aspirations. The development of China’s talent pool requires a greater level of familiarity with international business practices, not just for the purposes of setting up deals, partnerships and M&A activities with foreign business entities, but also for stimulating wholly new ideas and approaches within Chinese organisations themselves.
We will leave you with some final thoughts from our four alumni. Their experiences both in China and overseas may be different, but the common threads between them illustrate just how wide-ranging the changes in China’s business culture today really are.
Delan: The value of experiencing different cultures is being recognised much more strongly by Chinese companies, particularly those who want to go global, or expand their global reach. Now, if we consider any major acquisition abroad, we always want to have someone who is well-versed in the business culture of the target company’s country. This isn’t just for making the best deal, it’s essential for the long-term understanding of how best to manage the new acquisition.
Haiyuan: I think that speed of adaptation is China’s principal strength today. The strength of our established supply chains is a supporting strength too. This allows us to try new things easily, so we can continue to experiment and innovate.
Amber: China as a market is always exciting because it is vast and changing. Now the emphasis, particularly in my industry, is on high-grade manufacturing, high quality products. Equally, our local Chinese competitors are improving very, very quickly. There’s more of a focus on R&D investment and improvements in things like intellectual property management. The Chinese market is maturing very quickly.
Wenjie: China is particularly skilled at reinventing itself. This applies to its cities and its key industries. Every time China does this, it involves experimentation on a grand scale, which attracts investment capital on a similarly grand scale. Everyone is looking on, placing bets on what’s going to come out of this big incubator or laboratory. Nobody knows exactly how it will turn out, except that there will be a lot of big failures, a lot of big successes, and plenty of excitement. That’s a major part of why I want to be here, to witness the next shakeup, and to play a very small part in it.
Writer | Tom Murray
Editors | Marcel Austin-Martin and Michael Thede