China-based MNCs should give local leaders more power

Local management executives might feel unfulfilled if decision-making process does not include them, which may lead to brain drain among foreign companies operating in China, one recruitment exec warns.
Written by Liau Yun Qing, Contributor

Multinational companies that are headquartered in the West but have regional outposts in China should vest local C-level executives with more decision-making power to ensure their companies stay competitive and prevent the loss of top local talent to Chinese companies, one recruitment executive suggests.

According to Train Luo, managing partner for China at executive search firm CTPartners, even though the local management executives at these MNCs have senior titles, the decision-making process is often made in the U.S. and Europe.

This may result in executives having no sense of fulfillment despite high salaries as they are unable to impact their businesses, Luo said.

Furthermore, the emergence of local companies and startups as alternatives for talented professionals means MNCs are facing a more challenging recruitment landscape, he added. For instance, 5 to 10 years ago, 9 out of 10 senior executives would not have considered joining a Chinese startup.

Today, however, there is a 50-50 chance such executives would consider the opportunity of joining or setting up a local company, he observed.

To back up his point, the managing partner cited a study by the Economist Intelligence Unit, which found that local talent are increasingly turning to Chinese companies for jobs.

It also showed traditional advantages of foreign MNCs such as superior technologies and better brands, are slowly eroding, he noted. Luo attributed this to many reasons, including foreign companies not being able to adapt their business model to the local market as well as state-owned enterprises having more advantages in the market.

"If you add up all of these things, it's not easy [for MNCs] to be successful in China now," he said.

Adopt open, diversified work culture
However, Chinese companies cannot rest on their laurels if they want to win on the global stage, the executive stressed.

He noted that while global Chinese players such as Lenovo and Huawei Technologies are well-known in their respective fields, they still need to elevate their games if they want to become the equivalent of a Hewlett-Packard or Cisco Systems.

To achieve global competitiveness, Chinese firms will not only need to recruit local talent, but also attract global ones as well, Luo urged.

He added that local companies will need to also adjust their corporate culture in order to get the most out of their foreign talents. Currently, overseas workers joining these companies will have to adapt to Chinese culture, and the challenges in acclimatization might lead to a smaller recruitment pool for Chinese firms, he warned.

At some point, Chinese companies will need to transform themselves to be more open and diversify their work culture to mitigate such hiring obstacles, Luo stated.

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