Global Talent Development--Corporate case

According to statistics released by Ministry of Commerce and Bureau of Foreign Exchange, China’s Outward FDI (Foreign Direct Investment) exceeded 50 billion USD in 2008. At the same period, international M&A deals initiated by Chinese domestic enterprises increased from 200 million USD to 20.5 billion USD, equivalent to 50% of the total China’s outward FDI.

Chinese enterprises have never been this enthusiastic about going global like they are now. They were often nagged by questions such as “whether go or not go” or “how do we go”. However, now their confidence seemed unprecedentedly high and “what do we do after stepping out of China” becomes a critical question to be answered.    

Various research shows that the biggest challenges that most Chinese enterprises encounter during their globalization effort is lack of employees with professional domain expertise, multicultural understanding and global vision. High quality human capital and professional team are two fundamentals of success for Chinese enterprises’ globalization strategies.

In a research conducted by McKenzie in 2008, 88% of the Chinese senior manager participated in the research expressed the concern that lacking of genuine multicultural knowledge or management experience professionals hampered their globalization strategy. 93% of them actually think that if Chinese companies can not more effectively and proactively nurture suitable leaders, their globalization goals are unlikely to be achieved.

How to resolve the shortage of international professionals with appropriate skill sets?
Dip into international resource pool could be one of the approaches. This is to allow Chinese professionals to engage in various focused oversea studies and trainings. In addition, Chinese Ministry of Education is also actively reforming its policies to introduce more competitive programs from well-known institutes abroad. This helps domestic companies to equip their local managers with more advanced international skills. As for individual enterprises, they can also broaden their local managers’ view of global market through 3rd party training and increasing interaction with foreign counterparties. This is one of the means to accumulate international human capital.

In this article, we will provide two case studies based on international human capital strategies by ChemChina and LiuGong China, two well known Chinese corporations that are successful in training international management professionals.

In order to become a World Class Multinational Corporation, ChemChina is exploring a new way for its international human capital strategy. Its core is involving competent oversea talents into its trans-national operation, constructing an internal career development platform to attract best talents from around the world and insisting learning through practice.

Oversea talent integration

When describing the fundamentals of his international M&A strategy, Ren Jianxin always like to use the word “fusion”. He thinks after M&A, management team from original oversea counterparties are the best teaches to ChemChina’s local management team. His reasons are, firstly, those oversea senior managers are familiar with international market and underlying rules; secondly, they are professional and have good working ethnics; thirdly, they have rich experience in trans-national operation and multi-cultural management. Hence, local managers must learn to become a good “boss” and a good “student” to their international counterparts, they must also blend themselves into the new international operation and management environment after M&A took place.

Bearing this fundamental in mind, ChemChina created a new M&A model that is suitable for “ants to eat up elephant”. The model has two aspects:

Keep and promote middle and senior management team of the M&A counterparty. ChemChina not only keep the original senior management team, those suitable are further promoted to board of directors or management committee so that they help ChemChina grow further internationally.
Send selective local employees to oversea assignments. This not only acts as a training program, also as a talent fusion between Chinese and international employees and this is an important guarantee for successful multi-country operation and provide a larger resource pool for future M&A actions. For example, Lan Xing, a subsidiary of ChemChina, sent over management and technical staff for its international projects. Through practice and experience accumulation, these staff later became the backbone for Lan Xing and ChemChina’s multinational operation.

Local Chinese talent integration

Firstly, ChemChina assigns oversea staff to its China headquarter to work with local Chinese staff. For example, oversea ChemChina will send one staff to work in Group headquarter in China. His/her work is to establish long-term communication channel between headquarter and ChemChina abroad so that major strategic change can be clearly passed to various ChemChina oversea branches. Meanwhile, he/she is responsible for research ChemChina’s international competitors and provide important competitive information for ChemChina headquarter to make strategic decision.

Secondly, bringing foreign senior management talents to its China. ChemChina is undergoing a project in which it is recruiting senior management talents worldwide to C-Level positions in its China headquarter as well as CEO or COO of its 60 plus subsidiaries. One of the responsibilities for the internationally recruited C-Level personnel is mentorship and coaching, namely within his/her term, the person must nurture suitable follower to his/her position in the future.
Putting theory into practice

Putting local Chinese manager into oversea assignments and bringing international managers to its China headquarter is only part of the overall globalized human capital strategy. To enable overall growth of the company, ChemChina insists on multi-dimensional and multi-layer training and results in continuous supply of competent management resource for ChemChina. All of these will have a positive impact on ChemChina’s future growth and smooth execution of its globalization strategy.

1. Hold training session for manager at different level, the syllabus includes globalization and enterprise IT modernization. In these sessions, ChemChina will continuously invite foreign subject experts in order to meet the needs of its globalization strategy.

2. Initiated a “Five Half-Year” project. This is for newly recruited college graduates with strong theoretical knowledge in ChemChina. The project was launched in 2005 and training period is five years from the day of his/her commencement at ChemChina. The training goes as follows: the trainee works in headquarter for 6 months and spend the rest 6 months in the production line. The cycle repeats itself for 5 years. In 1st year, he/she works as front line operator, 2nd year as vice-monitor, 3rd year as assistant workshop manager, 4th year as vice factory director of subsidiary factory and final year as Vice factory director or assistant of factory director. The “Five Half-Year” project is an innovative approach for staff coaching and mentoring and this is the only training of such type in China.  

Jack Welch, the famous management guru, once said, your most precious thing is not your physical asset, but the people working for you, their ideas in their mind and their exhibited competency and potential. All my work is about people. I can only bet on people. When our human resource pool is depleted, our company will come to an end. His words clearly pointed out the importance of human capital in modern company growth and development.
LiuGong is another example that placing international human capital investment on a strategic level.

LiuGong’s growth is tightly linked to smooth global co-operation and internation financing. LiuGong’s product also relies on its ability of international marketing. Hence not only does LiuGong require advanced technical expertise, it also needs international management decision makers, global marketing experts and servicing team. LiuGong describes its definition for global talents as follows:

1. Management decision maker should equip with leadership capability, competency in manage a culturally diversified team, people management, financial management. He/she should also be familiar with local government policy, laws, legislation, macro-economic environment, destination country’s tax policy. In addition, he/she should also have relatively competent technical knowledge, including understanding of products, production, quality assurance, production process and so on.

2. Operation manager is a person assigned by LiuGong to oversee the operation of its oversea manufacturing facilities. He/she should have multi-cutural communication skill, problem solving skill and capable of innovation to meet local demands. Meanwhile, he/she is also the communication bridge between local business operation and LiuGong China headquarter.

3. Internation sales and marketing professionals are responsible for regional business development and market penetration in a designated country or region. He/she should have excellent cross-culture communication and negotiation skills, must be hard-working and a competent team player. He/she must also be a strong executor and good at problem solving, flexible without compromising individual and company principle. He/she must be familiar with LiuGong’s product and basic knowledge of after-sales service.

4. Technical expert is someone who has deep knowledge of LiuGong’s products, parts, systems and manufacturing technique. He/she is responsible for the technical excellence of LiuGong’s product.

5. International service engineer should have excellent communication skills, good practical and learning capability with onsite problem solving experience. He/she should possess professional knowledge in areas of mechanics, electrical and hydraulics. Since 2004, LiuGong has allied with various further education institutes to establish a serious of enterprise post-doctor work station. This provided a broad platform of growth for advanced research and development staff within the company. In addition, LiuGong also held many technical training, on-job training, part-time education program. All of these gave its employees a multi-level and multi-dimensional training space and hence supplied with a stream of suitable talents for various international positions to meet LiuGong’s globalization strategy.

sourcing from:

1. The McKinesy Quarterly 2008 number 3　Article name: How to address China’s growing talent shortage Author: Kevin Lane and Florian Pollner The McKinesy Quarterly
2. 《北大商业评论》文章：中国化工集团如何培养跨国人才　作者：柯银斌　刘颖悟　康荣平
3. 中国继续工程教育协会　2008年1月 文章：柳工国际化人才培养策略及运作模式　广西柳工集团有限公司　冯国梅 戴群亮