May 2008 | By Elena Escagedo, Director of Open Enrolment Programs at IE Business School, Executive Education
Give me the name of a high-level Chinese business executive. Canâ??t think of one? And who is the owner of this Asian superpowerâ??s largest business fortune? Donâ??t know that either? Well, neither does anyone else, actually: so whatâ??s going on in Beijing?
China has been growing at double-digit rates for several years now. India is growing somewhat slower but also shows spectacular development. China is currently the fourth largest economy in the world and if the dollar continues to fall, it will quite possibly be the leading economy on the planet in a short period of time. Moreover, if this trend of growth in China and India continues, both economies will represent around 25% of the world GDP by the year 2025.
Although this information is well known, there is one question that needs to be asked about these countries: why are there Indian executives in important executive positions in some 30 companies on the Fortune 500 and yet there are no Chinese executives on the list? Paradigmatic cases include the Pepsico CEO (Indra Nooyi, a woman) and that of Vodafone (Arun Sarin). However, we can go even further: why, according to the Forbes magazine, are entrepreneurs of Indian origin among the ten richest people in the world while there are no Chinese entrepreneurs? The only entrepreneur of Chinese origin in the ranking of the 50 richest people in the world (in tenth place) is Li Ka Shing, with his Cheung Kong Holdings conglomerate, whose flagship is Hutchinson Wampoa, world leader in seaport management. Li Ka Shing was born in Guangdong, China in 1928 but has developed his career in Hong Kong since the 1950s. Meanwhile, Forbes places four Indian entrepreneurs (Lakshmi Mittal, Mukesh Ambani, Anil Ambani and Kushal Pal Singh) in fourth, fifth, sixth and eighth position of the 50 richest people in the world.
Political and economic issues aside, one relevant role in this situation is played by the different talent management styles of the different countries; the different way they create, develop and retain talent. The United States has become leader in many fields because it has known how to generate, attract and retain the best. Its educational system, at all levels and in every area, has generated a society constantly nourished by the best ideas and the most advanced developments and, as a result, its economy has reaped the benefits. We all know that the United States is a country of immigrants and that it is a very open society, but the essence of an unlimited educational system with a highly motivating and entrepreneurial spirit has been a key factor to this situation. However, the almost opposite situation occurs in China. With an ageing population as a result of the only-child policy, China does not have the ability to generate, attract or retain the best. Furthermore, the political system prevents talent from travelling and learning and also prevents the entry of intellectual capital, which has a negative effect on the situation.
IndiaÂ´s situation is much better than ChinaÂ´s. A state of law, a democratic system and English spoken by most of the population give India an entrepreneurial and executive class that is better trained and younger than ChinaÂ´s.
This is probably why the economic structure of both countries is so different. Chinese growth has been more intense in unqualified labour, generating an explosion of small industries dedicated to low-cost manufacture for exports. Indian growth, however, is based on the development of applications and on service where human resources most need qualification.
It is in this environment where executive training plays a fundamental role and where IE Business School plays a small but important role. Our western world immersion programmes for Chinese executives, where we receive more than 50 executives every year, focus on generating global business leaders who contribute to improving their companiesÂ´ competitiveness.
ChinaÂ´s great challenge is to move on from being a low-cost product supplier to having a business fabric made up of companies that play on the global stage: enterprises that develop new products and new processes and carry innovation as a sign of identity. Chinese companies that have played a key role on a global scale (e.g. Lenovo) to date have all been created and/or developed by Chinese entrepreneurs educated in the USA or with working experience in the western world.
This article was published in the monthly IE academic newsletter IE Focus.