The Blackwood Report, published earlier in 2011 revealed FTSE 100 firms miss out on growth opportunities in China due to lack of cultural understanding. According to the report, companies operating in China have to deal with the twin problems of a lack of senior Western talent that understands Chinese culture, and a small pool of native Chinese talent able to work well within Western multinational corporations.
To overcome cultural hurdles Western leaders need to have an open mind and be willing to learn about the Chinese mind-set. A basic knowledge of Chinese history and culture is invaluable, and once in China, you need to continue your learning by associating with local Chinese people.
There are a number of key cultural norms and values that Western leaders need to be aware of in their daily business life in China. The most important of these are the concepts of face, building gu?nxì and creating harmony, which are critical for success.
Face-saving has a much deeper meaning in China than in the West. 'Face' is about dignity, respect, and a person's social role. A person can lose face by declining a social or business function on a weak pretext, refusing a present or being too independent. Loss of face is a serious business, and can result in reduced social resources to use in cultivating a connection network, or gu?nxì.
Gu?nxì is much more complex than the Western concept of networking. It is the platform for social and business activities, and consists of connections defined by reciprocity, trust and mutual obligations. In China, personal relationships and trust are paramount.
For the Chinese, communications is about building relationships, while in the West it is about efficient exchange of information and getting things done as quickly as possible. Leaders in China are expected to express themselves much less directly than those in the West, partly because of face saving and preserving harmony. It's not that Chinese are unwilling to share information, but Westerners will have to prompt Chinese counterparts if they want details. Alternatively, it may be best to approach someone on a one-to-one basis, in private.
Power and rank pervade all aspects of Chinese life, including communication. We recommend that managers communicate with their Chinese boss, peers and subordinates in a similar way to how they communicate with their parents, brothers/sisters and children, respectively. This mirrors Confucian values, whereby the family is paramount and the rules of hierarchy and respecting positions of authority are firmly entrenched.
Motivating the Chinese can be quite different from motivating UK employees. In comparison with Western people, you may need to spend more time chatting with the Chinese privately, showing your respect and regularly giving recognition. Zeng Shiqiang, a popular Chinese leadership and management thinker, said that reasonable unfairness is an effective way to motivate Chinese, because unfairness is everywhere. Fairness is an essential clause in the 'psychological contract' in the Western workplace. In China, however, people value 'reasonable' more than 'fair'.
Chinese teamwork requires a strong leader, and building a high performance team is challenging. Although delegation is daily practice for Western managers, in China, the story is very different. The start of a new relationship in China is marked by distrust or, at best, cautious trust. Generally, people tend to accept the authority of the position, rather than the person holding that position. Managers are expected to take full responsibility for all projects, so most Chinese managers do not delegate authority.
Key concerns for Chinese managers are: 'If I delegate my authority to others, will people still respect and listen to me?', or 'Can I trust the person I want to delegate to? Has this person proved that he/she is trustworthy?' On the other hand, the employee delegated to would worry about how to exercise authority in a way that steers a correct path between two unforgivable sins by Chinese standards. The first is failure to fulfil one's duty, and the possibility of losing one's job or position and, secondly, the danger of exceeding one's authority, which is perceived as an even more serious sin.
In Western management models, such as Belbin's, the role of 'leadership' is not necessarily only exercised by the team leader. But in China this role is expected to be played exclusively by the legitimate team leader. Otherwise, people will lose respect for the leader, and accuse the person delegated to of exceeding their authority.
To overcome this dilemma, when Western managers delegate, the legitimate delegated leader must be announced to Chinese team members for them to accept and follow.
Many foreign managers in China still have an ethnocentric approach, where they use the same style and practices that work in their home country. But, failing to develop cultural awareness and adapt leadership style can leave managers open to damaging mistakes, and risks rendering their organisations unsustainable.
Barbara Wang is the China representative and Harold Chee is a client director at Ashridge Business School
Chinese Leadership, published by Palgrave MacMillan, reveals how to be an effective leader in the Chinese market.