German companies aiming to establish business in China soon realize that the Chinese market is very complex and dynamic and that not only distance but also language and culture seem to be high barriers.
If companies want to keep up with the dynamics and be successful in China, they have to rely on local teams with competent employees and managers and a high degree of personal responsibility: empowered teams.
They must enable the local teams to decide and implement independently and quickly in the interest of the company. And in Germany, it is important to learn how to lead and cooperate remotely and in an intercultural setting and how to build trust in decentralized ways of deciding and working.
After 30 years of growth, China has become the world's second most important economic force. The potential of the Chinese market is not only attractive in itself, it provides additional impetus for many companies for products and services for the world market. In order to tap into this potential, German SMEs should value and consider a multipolar business model. Regardless of the size of the business share, their Chinese branches are to be given sufficient freedom of action in order processing, market processing and innovation activities.
In these challenging time, the focus is on us – the people who are in place in each and every local / global cooperation. Be it in China or anywhere else in the world. One of the main takeaways of the 16 years I have lived and worked in China, is the uttermost importance of keeping your workforce happy. One essential element to make that happen is to make sure your people get their regular meals. Never ever underestimate the importance of that. The other is to believe in them. If you have both in place (regular food distribution channels and a deep persuasion to have the best of the best employees right there with you), you are set-up to master the challenges there are to keep up with the dynamics that make China such a unique business environment. Empowering your people is going to be a major key factor of the success you are going to have – if you don’t underestimate the effort behind it.
Market is dynamic. Especially in China. The dynamics in China cannot be served remotely and needs deep understanding of local culture. Not just to operate the production, quality or delivery. Not just to develop product locally. The market in China is developing new demands, which are one (or two) step(s) ahead from global market. To understand the new market, the new demands and to develop, produce and successfully place such a products it is inevitable to build up local teams with local understanding. Not just team of engineers or team of workers. End to end team, starting by customer and ending by customer. How to build up such a team and how to marry the local team with western headquarter and culture needs special approach. Empowerment and trust are correct terms in this approach. And after successful placement of product on market in China comes an extra bonus. The product will be very likely suitable for global market (soon).
In my career I took over several leadership roles in different companies where I was told that they are running quite well. After some investigations I found lot of potentials. The coaching leadership approach is the best way to solve those issues. It led to:
- let the employees find out their potential by themselves and find ways for improvement
- trigger and anchor their motivation that the changes are sustainable
- let the employees take over more responsibility for decisions but also for their results
This coaching leadership approach also supported and created a change in the company culture. Responsibilities were shared and decisions were no longer made from individuals rather than in just one department, but in the whole company as a team.
Some friends who practicing the same coaching leadership approach as I were, and they are quite successful with this style several times. At the beginning it might take some more effort than so called “clear directives”, but after a short time period the changes become visible and sustainable.
There are some cultural differences between Germany and China. The main pre-condition of the coaching leadership approach is trust. Trust in the skills of each individual person and his or her sincerity of their actions. This trust will grow with every interaction. This is the foundation for the empowerment and at the end the success of the individual and the company, rather than the success of the leader.
COVID-19 does have a very negative short-term impact on most of the B2B business, as enterprises changed focus from business development to keep stability and survival. However, it is also a great opportunity for European SMEs in China to dig over current business model, make possible iterations to adapt the future market which would be changed a lot by this COVID-19. More digitalization to keep the social distance and enhance efficiency, more customer caring to show the social responsibility of the company, more innovative approaches to drive the interest of clients – as a biggest advantage of SMEs is flexibility!