von Dr. Claus Knoth

Almost half a year ago, in an earlier “Perspective”, I outlined what I see as the three key pre-conditions for long-term success in China. One topic was the strategic development of employees and the necessary competencies. Now, at this point, I want to highlight an additional aspect, which can be of high strategic importance for European companies. Can our companies function without expats, especially in management positions?

Right now, being an expat in China has great advantages – life takes its more or less normal course, work goes on, and nothing stands in the way of sports and restaurant visits. But for expats who want to return from abroad, it’s a different story. Two weeks of quarantine, locked in a mediocre hotel room with sometimes questionable food, puts nerves to the test. Especially, since the regulations can change quickly– then suddenly three or four weeks quarantine can become due.

The situation is even more difficult for new expats. There are currently reports of cases in which expats themselves are offered an entry visa, but not for their family members – of course not acceptable for families. Therefore, the tendency that China is not necessarily one of the most attractive destinations for expats will certainly continue. Especially since the Chinese decision makers obviously are not unhappy about this development.

This leads me to the central question: Can European companies function without expats? The first clear answer is – yes, of course, because there are already examples of this. However, it won’t happen overnight and one crucial condition must be met: mutual trust, the lubricant of any organization, must be in place. Trust develops when we have a good understanding of our vis-à-vis and respond appropriately to their cultural characteristics, thereby creating positive shared experiences. Unfortunately, European companies still have some catching up to do here – far too often, the image of China held by European employees is shaped by stereotypes and prejudices. This is something that should be worked on, and it can be done digitally without much effort. In particular, teams working together internationally should be given the space to get to know each other on a personal level and not just have to get straight into factual issues.

But of course, the Chinese side must also contribute their share to develop mutual trust. On the one hand, many prejudices and stereotypes still exist in China as well. On the other hand, cooperation can only succeed with appropriate transparency. Only when decision-makers in Europe have the feeling that they can adequately assess what is happening in their company in China and that things are done in accordance with their own values and standards, trust will continue to grow. For every European company, therefore, considerations about building an organization that can work without expats, if necessary, should be an integral part of a China strategy. At the same time, I would like to emphasise that for me expats make an extremely important and positive contribution in todays organizations. Nevertheless, companies should take the described risk seriously and be prepared for it.

One short test question for you to end – could you explain why the Opium Wars and the so-called unequal treaties from the 19th century are not just history for your Chinese employees and partners, but of the greatest current importance for world politics? Because such knowledge can be crucial for mutual understanding.

Management Experts St. Gallen (MESG) offers consulting services for complex issues in the field of general management. Our expert Dr. Claus Knoth has implemented a variety of China projects since his studies in Beijing some 30 years ago. He covers the areas of strategy development as well as leadership development. Are you looking for a competent contact person? Do you have specific questions? Contact him at: claus.knoth@mesg.ch