Reposition Strategy

Despite political polemics and a slowdown in growth, the promise of the China market has never been greater. At a recent IMA Asia CEO Forum, a CEO with many years of experience in China remarked,

‘Anybody thinking that it’s too late to be in China needs to understand that in the next 10 years as much GDP will be created as in the past 15. Local, provincial and federal governments continue to welcome MNCs in high priority sectors.’

While convincing global peers of the case for China is seldom straightforward, it can be done. Corporate advocates for China have three global stakeholders they need to convince: the executive team at HQ, the global CEO and the board. Getting their attention on China is a task that requires a strategy all its own.

China CEOs recommended several strategies that have worked to convincingly make the case for greater investment in China:

  • Place China experts on the corporate board of directors.
  • Give board members first-hand experience in China.
  • Provide board members with regular, brief and balanced communications on China market developments.

A China expert on the board can provide balance

Having the voice of China in the board room to provide context, when big decisions are being made, can make all the difference. One IMA member found that,

‘The board is really on the hook for the strategy, they have to sign off on it.  This is where the problem starts: do they have enough wisdom in the room at any given point to really be close enough to the China dynamic?  Not every board has someone representing the view from China.’

Without that voice in the room, decisions are likely to miss the mark.

‘I think the current diversity of boards is not good enough. Boards should reflect the diversity of the markets they serve. Often there is a gap in gender, cultural diversity and cultural fluency on corporate boards. Many boards have a massive blind spot.’

Firsthand experience lends credence to the case

The amount of work it takes to prepare for a board visit to China may seem like a poor use of resources. Yet, there is potential for a sizable boost to the China strategy.

‘When preparing for board meetings that can paralyse an organisation, I advise everyone to view it as an opportunity. There is a need to engender a mindset among board members that things here are fluid. What we discuss today might be very different a month from now.’

The time spent on getting board members comfortable with China will lay the groundwork for future decisions.

‘The board left China with an impression that we have to be faster and more innovative both in China and globally. It was only after the board visit that we convinced them to invest in digital. We had the board visit in March and the decision came in June. Having a board visit pays off.’

Keep China top of mind but keep it real

One corporate board member who was hired for her China expertise found a way to get a digestible portion of China insight on the global agenda.

‘We have a monthly executive summary that includes a meaningful paragraph on China. The summary tracks recent policy changes, trends, and threats that may affect the business model. It forces the CEO and the local team focus and avoid the nitty-gritty. This mechanism keeps the board in the flow of information. Nevertheless, for it to work, there has to be wisdom and rigour in drafting this paragraph.’

While frequent communication is essential, managing expectations is a big part of the dialogue with HQ. The China team needs to strike the right balance and stave off extreme views. Otherwise, they risk swinging between underestimating the China market and overheated expectations that bury the China team.

‘Before, the board was sceptical. Now, everybody’s excited about China. I am concerned about overexcitement. Potentially, there is too much pressure on the business. Without balance, we won’t understand what the local organisation truly needs to retain and recruit the right talent to deliver on the plan, foster an innovative pipeline, and work with other players in the system.’

Click on ‘Deep Read’ at the top of the page to learn more about how companies are making the case for further investment in China.

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