Thinking Globally but Hiring Locally When international businesses first began to aggressively move into China and India, they generally transferred expatriate managers from their home companies to run these new operations. Among other reasons, the firms felt a need to try to export their corporate cultures and work procedures to the emerging markets they were entering; they also felt there was a lack of local managerial talent.
As recently as the mid-1990s, for example, virtually every U.S. company doing business in China filled most of its middle and upper management positions in that country with Americans. And the few positions not held by Americans were often filled with managers groomed in Singapore and Hong Kong, markets where these firms had operated for several years. But in the 1990s things began to change. In China, for instance, many locals sharpened their English Nanguage skills, developed more leadership and decision- making skills, and became increasingly familiar and comfortable with the international business world. As a result, more and more locals are entering the ranks of middle and upper level managers today. It's estimated, for instance, that around 70 percent of foreign firms' top management positions in China are today filled by Chinese managers. This trend is not restricted to China; the same pattern is also occurring in India as well. Nor is this pattern found onty among U.S. firms in China. The German company Siemens, for instance, has Chinese nationals holding seven of its nine regional management positions there. And Ericsson, a Swedish telecommunications giant, currently fills 90 percent of its middle management positions and half of its top management positions in China with local managers. Why are firms moving in this direction? There are actually several reasons. For one thing, hiring local managers is much cheaper The company avoids costly relocation expenses and does not risk expatriate failure. Further, the compensation package for a local Chinese manager is only around 20 percent to 25 percent of that of a comparable manager transferred from a Western country Local managers have a strong understanding of local market conditions, competitive behaviors, and government regulations. In addition, hiring locally can boost employee morale and motivation. The local man- ager has a strong understanding of cultural issues in the workplace and also serves as a symbol of advancement and success for other rising local managers.
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