South-Western - Management  
Executives in China Need Both Autonomy and Fast Access to the Boss
Topic Global Management
Key Words China, autonomy, culture
News Story

China currently has the world's fastest growing economy and every multinational corporation wants to capitalize on the area's business potential. The most successful executives in this region are those that have been given the autonomy they need to react to local culture and the business climate as well as fast access to corporate headquarters for their support.

James Rice, vice president for Tyson Foods and head of its China operations was intrigued when he stumbled across a food vendor's presentation of cumin-spiced lamb on a stick. Rice took the inspiration from the product and was able to create a Tyson recipe for cumin-flavored chicken strips, a product that had an authentically Chinese flavor. The new product received a 90% approval rating in tests and Rice was able to start marketing it immediately. Rice was successful with the quick invention and production of the new product because he had been given the freedom to build the business in whatever way he thought was best. In China's rapid growth economy, the companies that succeed must react quickly to new opportunities.

Executives that are bound by centralized systems and not given freedom to react can have trouble being successful in this rapidly changing environment. Also, cultural concerns are of great importance in China. For example, Chinese employees expect an extra month's pay at the Chinese New Year. If they don't get it, they will look for employment elsewhere. Managers who insist on doing things the "American way" will not succeed.

Autonomy is important, and so is the support of corporate chiefs when it is needed. Executive Jack Gao of Autodesk explained that he needed the support of his company's leaders to present a unified strategy to the Chinese government. This support has helped him to take Autodesk to the top of the dynamic market there. It also helps that his chief executive meets with him several times a year, and stays in close touch with what is happening in the plant, so he doesn't have to spend all his time educating the company staff about doing business in China.

Questions
1.

Imagine that you are given an overseas assignment to increase profits at a company division in China. What are three steps that you should take before taking the assignment that can help you to succeed?

2.

"Guanxi" is a Chinese business term that is loosely translated as "you scratch my back and I'll scratch yours." Do some research of this concept on the Internet. As an American doing business in China, what are some of the ways in which not understanding this business tradition could cause problems?

Source "Executives in China Need Both Autonomy and Fast Access to the Boss," The Wall Street Journal Online, May 10, 2005, p.B1.
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