Chinese Desperate to Upgrade Management Skills

[HenryTo]

This is a good article on the fact that Americans still have a very good comparative advantage when it comes to the idea of platform companies. This shortage of good managers shows no sign of abating. Chinese-Americans who are thinking of relocating back to China in the coming years should continue to do well.
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OUTSIDE THE BOX: Chinese Desperate to Upgrade Management Skills , Jeff Neal
Wednesday July 6, 1:30 pm ET

As Chinese companies continue to buy U.S. companies and other companies around the globe, they are coming to the stark realization that they have a huge shortage of executive and managerial talent. The major reason why is that most of these companies are state owned and come from a mindset that the government will take care of everything, which does not translate well when spearheading a capitalistic enterprise.

That's why this latest buying frenzy by Chinese companies also involves purchasing the associated management talent, something they desperately need. According to a study conducted by the Asian Pulse, a commercial intelligence company, China will have a shortage of approximately 70,000 managers over the next decade. This means that many Chinese companies will outsource much of the management duties to the United Sta! tes as well as some European countries.

The outsourcing of management by China is a bit ironic and amusing when you consider the technology outsourcing mania relationship that the United States and China have had over the past few years. Consider the evolution of the Internet infrastructure with cheap online connectivity, which has made it possible to do software development abroad in countries such as India and of course China. What a change! China needs our management talent? In fact, it is absolutely essential if they are to continue with their tremendous economic growth spiral going forward.

However, many management consultants are not surprised that the United States is being sought out for its abundance of executive talent. First, by its very nature America is arguably the most competitive marketplace in the world, so naturally this country would have seasoned and well tested pro managers. In addition, the United States has traditionally had! the best and most effective business schools in the entire world. Add in America's investing and consumer culture that rakes corporations over the coals that do not perform up to expectations, as well as rewarding risk taking, it is easy to see why China has such a great difficulty leading in this type of environment.

Another reason for this sudden demand for management skills is that many homegrown Chinese corporations are eager to go global with their products and brand names. This requires a whole new leadership skill set, which at this time they do not possess. Plus these companies want to go global now, which means they don't want to wait patiently to develop the talent but would rather purchase the executive skills so they can execute their global strategies.

Global management seems to be the issue, which has prompted China to structure and fund academic programs specifically for business leadership skills. For example, there are currently over 200 MBA programs in China compared to less than ten a decade earlier. Chinese ! managers do well in their own countries and how to meet their target market's needs. However, meeting the needs of potential customers in Chicago, Atlanta and Indianapolis are far more difficult and apparently elusive tasks. But look for this just to be another chapter in China's economic emergence. This managerial talent need probably will be filled quickly. The big issue of course down the line is when the Chinese people want fairer pay and workers rights. That will indeed be an historic clash.


Jeff Neal
Senior Writer & Options Strategist