Chinese managers do not always adhere to western standards around using objective intelligence to make business decisions. Intuition plays a large role in decision-making within Chinese organizations.
The good, hard data that Western managers like to use to make decision is hard to come by. For example, a company might boast about 20 percent growth, while the actual market demand is growing at 35 percent. They’re losing ground, but do not know it due to the lack of accurate market data.
Senior leaders in U.S. organizations have so much on their plate that they very often can’t stay focused on their China strategy. A market that may have been growing at the rate of 20 percent is unrecognizable within six months to a year. It is easy to lose focus and to rely on assumptions that are no longer valid.
Because China is very closed in terms of information about its macro-economic and political situation, most senior managers don’t have the information they need to make decisions quickly enough. They have to rely on journalism that has very shallow analysis of the facts on the ground and such guesswork is driving the decision making in many large U.S. organizations.
Once organizations become profitable they tend to get excited about sending the money back home. They are too quick to repatriate profits because they do not understand that China requires large investment, due to size alone.
There is the opportunity for substantial growth but not if profits are brought back home too early. Many companies are quick to repatriate profits and they’re also quick to make acquisitions. It is easier to get money for an acquisition than it is to grow organically.
The tenure of employees within an organization tends to be much shorter than in the USA. Employees leave a position very easily for a 10 to 20 percent increase in their income without much consideration about the long-term ramifications to their career.
This makes it very difficult to build a solid foundation for your organization. Retention policies within HR are difficult to implement and they tend to be poorly maintained.
Acquiring local leadership that is respected by and can communicate with the board back home and that has the trust of the senior leadership is a challenge. Few and far between are local leaders who appreciate the complexities of a general management role that includes managing talent development, information technologies, finance, marketing, sales, new product development, etc.
The education system in China tends not to encourage the cross-functional, multidisciplinary training that is necessary to produce leaders with a sufficiently broad skill-set to serve as a senior leader in an international enterprise.