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Wisdom and Boldness During the Transition Period

Apr 18-2013   



 

BiMBA hosted the high-level forum "Corporate Leadership Embracing the Future"

By Xiao Feng

During the global economic recession, leaderships of Chinese enterprises and multinational companies based in China are all faced with all kinds of challenges from all aspects. How should Chinese entrepreneurs lead their companies to "turn risks into opportunities" and how should the leaders of multinational companies adequately get their corporate values across to their Chinese business partners and finally become global business leaders? On July 22nd, BiMBA and Business Watch magazine jointly hosted a high-level forum entitled "Corporate Leadership Embracing the Future", which aims to promote observation of and exchange with contemporary business "revolutionaries" through an integrative approach by combining a whole new global perspective with local resources and traditions.

Guests invited to give a speech at the forum included: Professor Lu Feng, Deputy Director of the National School of Development, Peking University; Mr. John Yang, international dean of BiMBA; Mr. Cai Rang, CPC Committee secretary and general manager of China Iron & Steel Research Institute Group; Mr. Liu Shi, president of Pioneer Seed International (China) ; Mr. Zhan Hongyu, president of Tata (China); Mr. Yu Minhong, president and CEO of New Oriental Group; Frank Lin, president and managing partner of Mercer (Greater China) and Mr. Tang Ning, managing director of China Talent Group. The forum was presided over by John Yang, international dean of BiMBA.

Professor Lu Feng, Deputy Director of National School of Development, Peking University, pointed out in his speech that the release of data on macro-economic situation during the second quarter presents people with a question, now that the macro-economic situation takes a V-shaped development trend and as the macro-economic situation changes, macro-economic management policies will shift focus too, and the changes might occur faster than we previously thought.

Professor Lu believes, considering 10 factors such as steel output, gross power generation and GDP etc., V-shape is possible to be a basic premise for economic analysis and assessment. That shows the turning point of China's macro-economic situation comes earlier than we thought, with a rebound momentum stronger than we envisaged and a pace greater than we expected. The risks of economic operations are shifting from one-way risks to two-way ones, which are invariably prone to overspeed and overheat, which is expected to become more pronounced in the latter half of the year. If the economy grows as we understand it, it will soon enter a new state. Professor Lu held that the adjustment of macro-economic management policies with proactive fiscal policy and moderately easy monetary policy may come earlier than we previously expected.

Mr. Cai Rang, CPC Committee secretary and general manager of China Iron & Steel Research Institute Group, noted that China's state-owned enterprises fared fairly well during the financial crisis, and further suggested that in the future, state-owned enterprises should: first, mainly focus on restructuring with the aim of growing larger and stronger; second, finish the establishment of corporate governance structure with the emphasis laid on the improvement of the board of directors; third, undertake to enhance their own capabilities in an effort to measure up to their international competitors; fourth, strengthen self-driven innovations and enhance core competitiveness; and fifth, take precautionary measures to form comprehensive management system beforehand, and ensure the smooth operation of said systems.

Mr. Liu Shi, president of Pioneer Seed International (China), observed that during this financial crisis transnationals, like others, can't ride out unaffected either. What's people's impression of transnationals during the crisis then? Threatened bankruptcy, that of General Motor and Ford; massive layoffs; highly strained capital chain; shrinking market; the plea for governmental bailout, and cutback on employee salaries. He, however, believed that the key to coping with the crisis is to take precautionary measures, and manage to recover sooner than others while addressing the crisis. What we should fear is not the crisis but the fear itself and companies need to reflect rationally and cautiously. Opportunities and risks always go hand in hand. What it takes to tap the opportunities is the wisdom and vision of the leaders.

 Mr. Yu Minhong, president and CEO of New Oriental Group, illustrated his speech topic "Governance reform and leadership restructuring of private enterprises" with his personal experiences. He commented that the rise of China's private enterprises can be mostly attributed to one fact: most of them adopt the family system. There are multiple motivations for them to mobilize their family members: firstly, the cost; secondly, the transparency of Chinese enterprises. And these Chinese family enterprises are all faced with a problem: irregular management practices, which fall into a number of categories, such as corporate accounting and human resources management, just to name two.

Mr. Yu further observed that if a family enterprise aspires to enter a new and higher phase, rules must come first. And the rules to be set must surpass those of others. One great thing New Oriental has done is to lay down effective rules, steered by which New Oriental finally comes to adopt a sophisticated accounting system of the governance structure under the leadership of the board of directors through four years of reform endeavors, which include a HR management system. To grow from a family enterprise into a non-family enterprise is an integral part of Chinese corporate development. And it's a gradual process. Some changes will inevitably occur during it, not necessarily the change of the corporate structure, but that in the mindset of the leaders. Structured management is always more important than the resulting achievements.

Frank Lin, president and managing partner of Mercer (Greater China), also one of BiMBA alumni, shared his views on how Chinese enterprises explore overseas markets. In his opinion, when executing their overseas strategies, the biggest challenge faced by Chinese enterprises, whether state-owned or private, surely lies in their internationalized leadership capabilities. The challenges the leaderships or leadership teams face during their companies' overseas explorations display different characteristics at different phases. The first phase is to set up branch offices in foreign countries. This is actually the initial preparation work for more aggressive overseas explorations. Of course, most companies are already engaged in trade or operational cooperation in China with foreign partners. Actually the main responsibility of those overseas branch offices at that time is to develop new sales channels and collect some of the local resources and provide the parent companies with some useful information. The second phase is to set up operational companies overseas, but there is also a problem during this stage, which is that these companies don't possess the international-caliber talents or management teams needed to manage their overseas operations and staff. So it is well-advised that we move cautiously in this direction and always let rational considerations prevail.

At the forum, guests also discussed on how Chinese enterprises cope with the financial crisis and issues should be noted by business leaders in the future.

Wisdom and Boldness During the Transition Period

Apr 18-2013   



 

BiMBA hosted the high-level forum "Corporate Leadership Embracing the Future"

By Xiao Feng

During the global economic recession, leaderships of Chinese enterprises and multinational companies based in China are all faced with all kinds of challenges from all aspects. How should Chinese entrepreneurs lead their companies to "turn risks into opportunities" and how should the leaders of multinational companies adequately get their corporate values across to their Chinese business partners and finally become global business leaders? On July 22nd, BiMBA and Business Watch magazine jointly hosted a high-level forum entitled "Corporate Leadership Embracing the Future", which aims to promote observation of and exchange with contemporary business "revolutionaries" through an integrative approach by combining a whole new global perspective with local resources and traditions.

Guests invited to give a speech at the forum included: Professor Lu Feng, Deputy Director of the National School of Development, Peking University; Mr. John Yang, international dean of BiMBA; Mr. Cai Rang, CPC Committee secretary and general manager of China Iron & Steel Research Institute Group; Mr. Liu Shi, president of Pioneer Seed International (China) ; Mr. Zhan Hongyu, president of Tata (China); Mr. Yu Minhong, president and CEO of New Oriental Group; Frank Lin, president and managing partner of Mercer (Greater China) and Mr. Tang Ning, managing director of China Talent Group. The forum was presided over by John Yang, international dean of BiMBA.

Professor Lu Feng, Deputy Director of National School of Development, Peking University, pointed out in his speech that the release of data on macro-economic situation during the second quarter presents people with a question, now that the macro-economic situation takes a V-shaped development trend and as the macro-economic situation changes, macro-economic management policies will shift focus too, and the changes might occur faster than we previously thought.

Professor Lu believes, considering 10 factors such as steel output, gross power generation and GDP etc., V-shape is possible to be a basic premise for economic analysis and assessment. That shows the turning point of China's macro-economic situation comes earlier than we thought, with a rebound momentum stronger than we envisaged and a pace greater than we expected. The risks of economic operations are shifting from one-way risks to two-way ones, which are invariably prone to overspeed and overheat, which is expected to become more pronounced in the latter half of the year. If the economy grows as we understand it, it will soon enter a new state. Professor Lu held that the adjustment of macro-economic management policies with proactive fiscal policy and moderately easy monetary policy may come earlier than we previously expected.

Mr. Cai Rang, CPC Committee secretary and general manager of China Iron & Steel Research Institute Group, noted that China's state-owned enterprises fared fairly well during the financial crisis, and further suggested that in the future, state-owned enterprises should: first, mainly focus on restructuring with the aim of growing larger and stronger; second, finish the establishment of corporate governance structure with the emphasis laid on the improvement of the board of directors; third, undertake to enhance their own capabilities in an effort to measure up to their international competitors; fourth, strengthen self-driven innovations and enhance core competitiveness; and fifth, take precautionary measures to form comprehensive management system beforehand, and ensure the smooth operation of said systems.

Mr. Liu Shi, president of Pioneer Seed International (China), observed that during this financial crisis transnationals, like others, can't ride out unaffected either. What's people's impression of transnationals during the crisis then? Threatened bankruptcy, that of General Motor and Ford; massive layoffs; highly strained capital chain; shrinking market; the plea for governmental bailout, and cutback on employee salaries. He, however, believed that the key to coping with the crisis is to take precautionary measures, and manage to recover sooner than others while addressing the crisis. What we should fear is not the crisis but the fear itself and companies need to reflect rationally and cautiously. Opportunities and risks always go hand in hand. What it takes to tap the opportunities is the wisdom and vision of the leaders.

 Mr. Yu Minhong, president and CEO of New Oriental Group, illustrated his speech topic "Governance reform and leadership restructuring of private enterprises" with his personal experiences. He commented that the rise of China's private enterprises can be mostly attributed to one fact: most of them adopt the family system. There are multiple motivations for them to mobilize their family members: firstly, the cost; secondly, the transparency of Chinese enterprises. And these Chinese family enterprises are all faced with a problem: irregular management practices, which fall into a number of categories, such as corporate accounting and human resources management, just to name two.

Mr. Yu further observed that if a family enterprise aspires to enter a new and higher phase, rules must come first. And the rules to be set must surpass those of others. One great thing New Oriental has done is to lay down effective rules, steered by which New Oriental finally comes to adopt a sophisticated accounting system of the governance structure under the leadership of the board of directors through four years of reform endeavors, which include a HR management system. To grow from a family enterprise into a non-family enterprise is an integral part of Chinese corporate development. And it's a gradual process. Some changes will inevitably occur during it, not necessarily the change of the corporate structure, but that in the mindset of the leaders. Structured management is always more important than the resulting achievements.

Frank Lin, president and managing partner of Mercer (Greater China), also one of BiMBA alumni, shared his views on how Chinese enterprises explore overseas markets. In his opinion, when executing their overseas strategies, the biggest challenge faced by Chinese enterprises, whether state-owned or private, surely lies in their internationalized leadership capabilities. The challenges the leaderships or leadership teams face during their companies' overseas explorations display different characteristics at different phases. The first phase is to set up branch offices in foreign countries. This is actually the initial preparation work for more aggressive overseas explorations. Of course, most companies are already engaged in trade or operational cooperation in China with foreign partners. Actually the main responsibility of those overseas branch offices at that time is to develop new sales channels and collect some of the local resources and provide the parent companies with some useful information. The second phase is to set up operational companies overseas, but there is also a problem during this stage, which is that these companies don't possess the international-caliber talents or management teams needed to manage their overseas operations and staff. So it is well-advised that we move cautiously in this direction and always let rational considerations prevail.

At the forum, guests also discussed on how Chinese enterprises cope with the financial crisis and issues should be noted by business leaders in the future.