CHAPTER 4

Stepping Up

Leading Others as a Foreigner in China

Dragon Suits are corporate champions in their respective leagues. By the time I interviewed the expat mangers featured in this book, served as their executive coach, or trained their teams, they had overcome countless barriers and hurdles, both physical and mental. By personality, performance, and politics, they had been earmarked for international careers. Unlike most of their colleagues, they had been offered expat jobs. Unlike countless unsung heroes of family and patriotic duties, they had accepted. They had taken farewells, boarded, arrived, unpacked, logged in, rolled up their sleeves, solved problems, hired some, fired others, said goodbye to those who left willingly or otherwise, then passed one milestone after another: launches, fiascos, uncertain contract renewals, births in the family, first days at school, graduations, corporate mergers and restructuring, bothersome new bosses, divorces, illnesses, mid-life crises, triumphs, promotions, and the inevitable melancholy of too much experience, too many triumphs in China’s monotonously changeable environment. Things happen fast in China: a single year packs enough anxiety and achievement for a decade at home. “They know that this is the most competitive labor market in the world,” Attila Hilbert told me. “If you can beat the odds here, you can beat them anywhere.”

Some managers who appear on these pages arrived in China as students, entrepreneurs or junior employees. Fernanda Barth of WEG had quit her previous job to study Chinese in the hope of new career opportunities. I met Chris, the luxury fashion CFO as a consultant to an EU firm that had recently hired him because of his entrepreneurial experience in the country. Some of my interview subjects were proficient in Mandarin when they landed their first management positions, others conversational. But typical Dragon Suits entered the country on expat jobs, sometimes on their first visit to the country or even their first overseas assignment. There were those who brought years, occasionally decades of experience in other locations. In this country, it did not matter that much anyway. All of them had their leadership development clocks reset in China, starting again from mundane issues and gradually building up toward new strategic horizons. China’s special position among possible destinations for ambitious managers, its size, economic volume, and potential, the responsibilities it offered, and the cultural challenges that complicated smooth performance gave them a true taste of genuine global leadership.

Multinationals send their best and brightest to China, and candidates know that. Ironically, that can make adjustment harder, especially for first-time expats. Being right too often can play tricks on one’s mind, and newly appointed China expats often come from previous jobs that had earned them regular praise. They gradually learned to trust their instincts in addressing complex issues, which in turn added to their effectiveness and efficiency (simply put, impact and speed) as problem-solvers. They mastered the legal, logistical, social, and cultural frameworks that surrounded their projects. When they felt stuck, a trusted network of fellow managers and experts helped them get unstuck. Then they relocated to China, and everything changed. The familiar laws, facts, habits, and traditions that once supported their projects ceased to apply in the new environment. Guidance was absent or misleading. Previous mentors and advisors were of little help unless they were current or former Dragon Suits themselves. Business often took place in an unintelligible language under meaningless rules. Pride and politics stood in the way of openly asking for help.

The information vacuum that surrounds new expat managers in unfamiliar cultures can turn trusted instincts into risky guesswork, and downgrade self-confidence to the nervous self-doubt that psychologists call impostor syndrome. Overwhelmed managers maintain an appearance of assurance, while inside, they anxiously second-guess their own decisions. But panic is great news: false confidence does more harm. Faced with uncertainty, overconfident managers can fall victim to another misperception known as confirmation bias: the belief that if they were right before, they must also be right under the new circumstances, whatever their local colleagues, clients, and suppliers say. “Previous international experience is crucially important,” Laurie Underwood, coauthor of China CEO told me. “Managers must approach the new environment with humility, because basically they don’t know what they don’t know. They must accept that there will be aspects of their work and life that they have to adapt to China.” The required adjustments go far beyond familiarity with a different geography, language, etiquette, legal, and financial codes. New expats must expect to make nearly comical slips in aspects of work and life as simple as picking the right clothes for the day, greeting employees and clients, or picking the right chair in a conference room.

Human culture is a symbolic world where the meaning of someone’s actions depends on the respective background of observers. A CEO who cycles to a meeting may impress clients in Amsterdam and intrigue them in New York but embarrass them in Beijing. Western superiors take central seats and lead discussions, while in China and several other Asian nations, real authority figures often prefer to quietly observe from the side or send their representatives instead. Personally engaging team members is a veritable cultural minefield. An Australian CEO I coached was eager to know his team better a few weeks after he arrived in Shanghai, but heavy workloads and language barriers made socializing hard. One evening, as he exited across the mostly vacant open office area, in a cubicle he spotted the lone figure of a sales representative with whom he had already met and chatted in English before. He grabbed the opportunity and invited the rep for a steak dinner and beers in at nearby barbeque restaurant. The next day, rumors started circulating that the salesperson would soon be promoted.

Borrowing the title of a 2007 DreamWorks animation film, at my leadership coaching and workshops, I explain the cultural cluelessness of newly appointed expat executives as the Boss Baby phase. I remind managers to brace for predictably awkward situations at work, and to accept the necessity to revisit basic life skills: walking, talking, eating with unfamiliar utensils, and figuring out furniture, and above all, the intricacies of adult communication, whether conventional or digital. “Initially, I was surprised how much work people do through WeChat,” Briana recalled. “Doing that completely blurs the borderline between professional and personal issues.” Unfamiliar names and faces, strange hierarchies, food, weather patterns, and loyalties: foreigners have to learn fast, and often remind themselves of the difference between China and the mature welfare states where many of them enjoyed a settled existence. “Austria is very conservative, and most people are unwilling to move abroad,” Markus Baumgartner of Miba Group told me. “But I was ready for change, knowing that the new position would involve much more responsibility.”

Theoretically, an upgrade in authority is exactly what attracts ambitious international managers to China. In practice, few measure up to the challenge of the initial months. When multinational firms invest in China, they limit the number of their business locations to a few of the country’s top commercial hubs in order to minimize red tape, logistics, and cost. Consequently, in comparison to someone with the same job title in the UK or Germany, a Managing Director or CEO in China may shoulder 10 times as many people, projects, clients, and suppliers. “The all-consuming nature of leading in China takes an emotional and physical toll on most executives,” the Harvard Business Review already quoted one CEO in 2010. “Here you have three months to accomplish what would take two years in most other places.” Expats with great ambitions in China must develop laser-sharp priorities on the run, the article continued. “If you stop to think, decisions will pile up behind you.”¹ A decade later, Marie experienced a similar pace. “Response time is really fast,” she said. “You have to be able to respond to messages from six in the morning, twenty-four-seven.”

The race is fast, the stakes are high. “In this society, people are constantly pressed for time and money, so checking the boxes is the best strategy,” Briana explained. That is alright with expat managers, whose careers take giant leaps forward as long as they can keep up with China’s sprint-paced Marathons. But as they check their own boxes and shoulder ever greater responsibilities, issues become not only larger in size but more complex in nature and ever more entangled in the PRC’s unique economic, social, and political reality. They cannot be lone champions anymore: they must race entire organizations to finish lines. Understanding local cultures of intimacy and hierarchy is not enough: they must make sure that people perform willingly and efficiently, without undue conflict. Pollution problems balloon into collective health hazards, Internet irritations into data leaks, awkward cultural missteps into costly political fiascos. Successful expat executives in China cannot simply overcome such challenges—they must be energized by them. In return, China’s business hubs promise, and usually deliver, disproportionate financial rewards, visibility and opportunities. Few Dragon Suits I asked wondered whether it was worth the trouble.

Assuming Roles and Responsibilities

Corporate leaders I train or coach often raise a defiant question: Why should China differ from other places? Typical participants of my leadership programs have lived and worked in several countries, or at least traveled often and extensively. Many of them are proficient in multiple foreign languages. The younger they are, the likelier it is that their upbringing and education prepared them to work across multiple countries, continents, and industries. Why would China be exceptionally difficult to understand? Some argue that it is not, and they are not alone. “There is nothing mysterious or terribly difficult about Chinese companies or markets,” the authors of The 1 Hour China Book insist. “In business, there is really nothing new under the sun. Consumers behave pretty much the same everywhere. Competition is pretty much the same everywhere. You just need to ignore the hype and hyperbole and stay focused on the basics.”² If that were true, the outsized attention that global firms dedicate to Chinese consumers, whose per capita purchasing power does not exceed the world average, would be misplaced. So would the fortunes spent on customizing products, from burgers to Bentleys, to Chinese tastes. Huawei would conjure similar global sentiments as IBM, Motorola, or Samsung.

But China is different, and its uniqueness has roots in ancient traditions as well as recent developments. Not everyone takes notice. I meet experts and executives who tell me how grateful they are to be specialists in accounting, law, engineering, chemistry, architecture, information technology, or goose-feather pillows: they can dismiss fuzzy cultural issues and stick to specifics. Eventual disappointment follows when they discover that culture is everywhere. Values and traditions dictate how strict or casual people are with pennies, pounds, and compounds, and what separates carelessness from corruption or capital crime. They explain why laws allow us to enter, sit, stand, talk, work, invest, hire and fire, lead, litigate, congregate, eat, drink, dress, undress, and mate in certain places and not others. They define the features of our vehicles and traffic, food, drink and medications, clothes, homes, offices and towns, software and hardware, and yes, even the size, shape, firmness, and usage of feather pillows. Culture maps demonstrate the possibility of wider or narrower deviations between the cultural mainstreams of select societies. For Europeans and North Americans, collaboration with Singaporeans or Indians is measurably easier than working with Mainland China, regardless of geographical distance.

Most successful foreign managers in China accomplish their results without ever using culture maps: they rely on instinct and experience. Some of them are masters of intuition, the sort that allows fast decisions in highly complex and risky situations. But even such instinctive geniuses of intercultural leadership benefit from backing their insight with comparative data, if for no other reason than to convince others. As they mature with their positions, the authority they accumulate in their organizations makes them appreciate the difference between getting things done and making others perform, including their local team members. Clarity about their own leadership style becomes even more valuable as they find out, as every successful expat manager does, that mediation between headquarters, their own branch, and various other locations is an essential part of the job. In other words, those who want to succeed as expat executives must learn to become cultural translators between various traditions and values, aligning conflicting opinions for the sake of delivering the expected results.

One widely misunderstood nuance of Chinese society that can make or break expat careers is hierarchy. Specifically, the difference between the recent hierarchies exemplified by local state-owned and relatively conventional private firms on one hand, and traditional Chinese leadership roles on another. Foreign managers often tell me about their encounters with what they describe as typical Chinese companies: undisputed bosses surrounded by nearly ceremonial auras, top-down decisions executed by obedient workers, no questions asked. The local firm in question may be a client, supplier, a newly acquired and rebranded entity, or joint venture partner. Expat managers often experience such hierarchical work cultures indirectly, when they hire local managers who continue to work according to a previous code of conduct even in their multinational environment. They do what they are told. They speak when they are asked. When unsure, they stop and wait or follow their best guess of the boss’s intentions.

Expats often try to explain Chinese attitudes to hierarchy with familiar stereotypes of ancient philosophies. But gaps in that reasoning soon become evident. “Strategists who believe that current People’s Republic of China (PRC) strategies can be constructed from reading Sun Zi or Meng Zi are certainly mistaken, just as their Chinese counterparts would be if they thought that US policies are derived from Thucydides or Xenophon,” David Shambaugh wrote in China and the World.³ A century ago, British philosopher Bertrand Russell witnessed a waning Confucian business culture as described in his 1920s book The Problem of China. The best followers were to become leaders and role models based on virtue, self-sacrifice, and stern patronizing toward followers, usually family or clan members. This system hinged on near-unconditional trust within organizations, which is why the Confucian business ideal is still a family firm rooted in a local community. Chinese diasporas in Taiwan, Hong Kong, and South-East Asia maintain this tradition to the present day, researchers explain. “Like the father in a Chinese family, the superior in a company is expected to provide guidance, protection, nurture, and care to the subordinate; like a dutiful son, the subordinate, in return, is normally required to be loyal and deferent to the superior.”⁴

This philosophy survived and thrived for surprisingly long: what we call China today was among the world’s top economies from Confucius’s time until Russell’s. But then the world changed, and China transformed with it. Leaders of the People’s Republic promoted social strife through class struggle and the meritocratic reorganization of authority—all alien to Confucian traditions. Within a century, China imported one ideology after another: revolution, industrialization, modernization, innovation, and globalization. Each one redefined who should be in charge and why: heroes, builders, scientists, visionaries, technocrats. State-owned firms owe their organizational structure, processes, and culture to the former Soviet Union that lent financial aid, experts and the Five-Year Plan system to the nascent People’s Republic in the 1950s. Chinese corporate champions of the reform period like the founders of Huawei and Alibaba modeled their firms on overseas examples, typically American ones. Multinational firms imported their respective national and corporate cultures, and locals judged the worth of each culture by the success of the products or services it produced. From the Internationale to Intel, each paradigm imprinted its own ideals of leadership and hierarchy on China.

Demystifying characteristic Chinese leadership styles is much more than academic hair-splitting. Managers who approach their jobs with misleading expectations overcomplicate the daily tasks of delegating responsibilities, setting goals, evaluating performance, motivating, and resolving conflicts. Recall Henrik König’s dilemma: Neither home-grown German habits nor his rendition of traditional Chinese leadership seemed to work—observation and empathy did. Conflating Confucian versus Communist or capitalist traditions can also lead foreigners to condescending stereotypes and undermine trust with their local teams. It is tempting, for instance, to attribute the Communist Party’s patronizing omnipotence to traditional ideals of hierarchy, or to see President and Party Chief Xi Jinping’s ambitions for life-long rule as a return to an Imperial past. American political scientist Rory Truex’s research on successful Communist Party officials showed how simplistic that assumption is. “They tend to have a personality profile that’s not dissimilar from what I would observe among an average Princeton student where I work,” he explained in a 2022 podcast.⁵

In Chinese people’s minds, social hierarchy and institutional authority are separate forces. Contemporary China can pose one challenge without another. Young Chinese employees often puzzle foreigners with their nationalism and party loyalty without any sign of respect for traditional hierarchies. Middle-aged local employees at large profit-making organizations often adhere to traditional family and communal duties with little enthusiasm for the party. Chinese people of millennia have believed that dynasties come and go, but the rules of civility are eternal. The most pervasive of such underlying beliefs is that the family, a traditional refuge from a perilous outside world, is the only reliable community in human existence, and consequently that any sustainable community, including businesses, must function like a family. In a sense, most Chinese people see the firm as an extension of their household clan. Addressing colleagues as brothers and sisters is not uncommon. Calling female caretakers at the Mainland China branches of global firms Ayi, or auntie, is so widespread that more than one multinational office I saw labeled their resting area Ayi room.

The basic metaphor is easy to grasp. “Especially in places like Nantong, being part of the community is crucial for daily life,” Fernanda Barth described her life in the south-eastern port city. “Even if, or perhaps especially if you are a foreigner, you must ask your colleagues about their children’s health, remember their birthdays and so forth.” Some implications can puzzle foreign managers. “Taking an interest in workers’ families and personal lives may feel like an invasion of privacy to foreigners, but to most Chinese, it’s just part of showing respect and being a good boss,” a Harvard Business Review article explained.⁶ In many countries, this would seem superficial, which often blinds expats to underlying differences. Local colleagues at multinational companies are misleadingly determined, straightforward, competitive, and often earn on par with their counterparts from advanced economies. But scratch the surface over a sincere chat, and half-buried Confucian foundations will reveal themselves through recent layers of individualism. China’s health care and social security systems are improving but still patchy, especially for nonurban, elderly, and chronically ill people. From costly education for kids to medical care for elderly relatives, extended families have clear expectations toward relatives with stable jobs.

“For many Western executives, time spent on soft issues like these is time lost on hard ones such as achieving performance targets and improving productivity,” the Harvard Business Review article observed. Many foreigners chafe under unwanted quasi-parental responsibilities. By nature or culture, others are more comfortable with the arrangement. “As a Hungarian, I grew up in a multi-generation home, but for American and Dutch managers, self-sacrifice is an alien concept,” Attila Hilbert said. “In China, the metaphor of the family is the perfect way to keep people in line and guide them in the same direction. The spirit of the family makes it easier to build or restore trust, to define relationships.” Those with a strong social orientation can even thrive in their new tribe. “Leading a team can be a lot of fun,” Marie said. “There is a higher emotional investment into coaching people, because they tend to know little, partly because they advance in their carriers so fast, but also because China is still an emerging market where the infrastructure of expertise and continuous improvement is not in place yet.”

How Bossy Should a Boss Be?

It may happen resentfully or eagerly, but foreign managers must eventually accept and harness the filial character of professional relations in China. Otherwise, they may find themselves banging their heads against traditions as ancient and solid as the Great Wall. “The way I explain this to Westerners is that while their way is the minimum number of people doing maximum amount of work, the Chinese way is the maximum number of people doing a medium amount of work,” Leigh explained. Foreigners must adjust to this mindset. “Chinese people are constantly comparing themselves to their classmates and friends, and it takes a lot to keep up,” Laurie Underwood explains. “You need some creativity to satisfy them. For instance, global firms do not promote people as fast as local employees would hope, but you can print different titles on the English and Chinese sides of business cards—a kind of semi-promotion for employees with restless ambition.” Expats eventually learn to harness a more collective mindset to delegate tasks, share feedback, and measure performance. Human resources directors discover ways to reward employees for attracting their friends to the firm, for instance. Encouraging them to share vacancies among their WeChat friends works particularly well, Shaun Rein added.

Leadership philosophies are deeply personal. Adjusting them to new circumstances can be emotionally draining. Multinational firms from advanced economies promote flatter hierarchies than what Chinese conventions dictate. Consequently, most new expats experience the pressure to become bossier superiors than they would prefer. “Be careful with mixing friendship and professional interactions,” Judith advised. “Don’t try to treat everyone the same way, like you do at home. If you’re a supervisor, you will stand apart in your Chinese team’s eyes.” Marie agreed: “It is a question of who is the accountable decision maker. The kind of democracy you have in most multinationals can be exhausting to Chinese people, because they have to justify their numbers and decisions to superiors.” Some expats are more comfortable with these expectations than others. Managers with a sufficiently dominant temperament naturally slide into the role, grateful for the obedience they seldom encountered at home. Others accept it as a dubious price for efficiency. “If bosses don’t tell local teams about the ultimate goal, it’s fine as long as things are accomplished quickly,” Briana said.

The value of thorough cultural analysis becomes the clearest when managers with friendly and equitable collaboration styles suddenly find themselves in rigid hierarchies. Many such expats see China’s top-down culture as backwardness, even if they are generally in favor of the country and its people. “My closest colleague on arrival was a Chinese boss with completely outdated ideas,” Henrik König recalled. “He knew little about project details, and spent most of his time calling clients over everyone else’s head. I recall that his glitzy executive office was full of photos with Chinese political leaders, and currently he was busy negotiating the engine size of his chauffeured Audi.” Foreigners who feel uncomfortable working with lofty corporate figureheads are understandably alarmed when they are pressured to become such leaders themselves. “Then, I suddenly became the big boss that others can occasionally approach with questions,” Henrik continued, “but otherwise, nobody talked to me. There was no small talk or shared coffee breaks. As I saw it, basically I was supposed to just sit behind my desk.”

Friction between the local and Western approaches to corporate hierarchy is both more frequent and more intensive in China than most other Asian investment destinations. The reason is the very system of separation between indigenous and foreign economies. Historically, China first attracted industrial firms to its market, then their suppliers and service providers in an increasingly intangible sequence. The most promising sectors of foreign investment, such as automotive, pharmaceuticals, chemicals, construction, and energy, as well as many of the sectors servicing them, including banking and insurance, remained dominated by state-owned firms via Beijing’s infamous Negative List, an elaborate system of restrictions that mandates foreign businesses to operate through joint ventures with state-owned partners even within Special Economic Zones.⁷ Multinationals accept such forced marriages as an inconvenient price to access China’s restricted but lucrative markets. But they do so at the risk of, in think-tank Deloitte’s words, possible governance deadlocks, battles for control, cultural clashes, risk of competition with parent companies, and misalignment of business objectives.⁸ Foreign managers at such entities are often expected not only to accept but also to imitate rigorous and poorly balanced pecking orders.

“At state-owned firms and manufacturing companies in China, you have a very clear system where the top guy is always right,” explained Tony Shi of Benteler. “Bosses ask their people if everything is okay, and their people either tell them that everything is okay or say nothing and solve the problem.” That is the exact opposite of the way leaders, managers, and teams are instructed to collaborate at most multinationals. Typical managers at global automotive, chemical, or pharmaceutical firms are process-orientated technocrats reasonably committed to candid communication, transparent processes, meritocratic promotions, and mutually constructive criticism between organizational units and levels. Leadership manuals at most firms I have advised explicitly encourage managing upward—proactively pointing out shortcomings to superiors and suggesting solutions. For an expat manager with an engineering or science degree, over a decade of experience in Western-style hierarchies and perhaps a recent MBA course that focused on progressive management methods, facing the top-down attitude of Chinese counterparts can be shocking.

Renata’s experience aptly illustrates the disorientating discovery of expectations toward managers and their teams in China. “This is a very hierarchical culture, so I had the impression that they expected to be told before they did anything. It was not a comfortable feeling.” The resulting period of experimentation with the right level of control can be perilous, especially as it usually coincides with heavy workloads and ruthless expectations from higher management. Stress undermines self-awareness and empathy, and can turn assertiveness into aggression. Newcomers may unwillingly re-enact disturbing stereotypes of the clueless foreigner. “One very frequent misunderstanding is the role of yelling and using swear-words in discussions,” Shaun Rein explained. “For American managers, raising their voice and using the f-word is a legitimate way to add emphasis. Steve Jobs, an American hero, was known to swear at someone, then take the same employee out for coffee or a beer. In China, that behavior burns bridges, especially if done in front of others. The foreigner may think he finally managed an honest, stern discussion with an employee, and be shocked to find that the employee quit the next day.”

To avoid such damaging cultural fiascos, adjustment must start with awareness, which is best achieved by trespassing the limits of expat existence and learn from local colleagues, business partners, or acquaintances. “The most valuable lesson for me was doing an executive program at Tsinghua University and meeting local Chinese executives,” Renata recalled. “I realized that they do everything differently. They do not concern themselves with details, only the big picture.” Most foreign managers need not even leave their premises to find useful advice. Their local colleagues or superiors are more than happy to share their insight. “When foreigners ask ‘Do you understand?’, Chinese people usually nod in response,” Kurt Yu, Regional President for the Voith Group, described to me a challenge for which he tries to prepare his expat managers. “Half of the time it means they really understand, but the other half doesn’t, because people are too shy to speak up. Foreigners must candidly probe whether they are really understood. ‘Face’ and personal relationships are important, but the difference between ‘yes’ and ‘no’ is a much more fundamental difference between East and West.”

Advice from local colleagues often makes expats realize that, at least initially, they overemphasized business processes and targets, and neglected trust-building with their teams. They discover that as foreigners, one of their core functions is to bridge respective cultures, including the traditions of the firm’s home country and China, and the multiple corporate cultures involved. But building bridges is easier said than done: advice is either absent or contradictory. A list of must-have qualities for foreign CEOs in China in Laurie Underwood’s 2020 book China CEO II aptly illustrates a frequent dilemma. It consists of humility, cultural sensitivity, respect for face and guanxi (a term for networking that we shall clarify soon), flexibility, firmness, long-term commitment, and language acumen.⁹ In other words, be humble and assertive, implement long-term plans flexibly, in an unfamiliar culture, preferably through recently acquired fluency in Mandarin. For managers who contemplate their first leap in such leadership acrobatics, instructions can sound utterly confusing. “Empower local teams even if they are not used to being empowered,” Laurie Underwood recommended at a 2021 webinar I hosted.¹⁰

Contradictions persist even when expats better understand the Chinese concept of hierarchy and their own place in it. That is because in addition to conflicting national and corporate cultures, foreign managers must also balance between China’s two cultural paradigms: assertiveness on top, diligence and obedience below. Some of their advice is straightforward, in line with the Confucian interpretation of local business culture, and often includes the somewhat patronizing tone of the parental leader. “Never put people in a corner,” fashion CFO Chris cautioned. “Don’t try to bring Chinese people on board the way you do Western teams,” Judith recommended, echoing many Dragon Suits I asked. But much of their guidance reflects the dialectic ambiguity that surrounds them in China. “Don’t try to master your local team,” Markus Baumgartner advised. “Instead, share your experience but make assertive decisions.” And some call attention to the temptations of traversing from one leadership culture to the other. “Be patient and humble,” Fernanda Barth recommended. “Local teams can at times make you believe that bosses are superhuman beings. Do not believe that.”

Leading across cultures is a bit like playing badminton in windy weather. Leaders must use their best powers of observation to assess the environment, keep their goal in sight but often reach it in roundabout ways. “When it comes to leadership, I am completely different person after a few years in China,” Renata admitted. “I do things I never did before. I invite my team for tea in my home. We eat out together and I pick up the bill.” That change of perspective might feel superficial at first, but expats soon realize that the resulting new habits improve both their business performance and personal life. It is only then that foreign managers realize how soft and hard issues reinforce one another, and the value of time invested in intimacy and care. Then, and only then, The 1 Hour China Book’s claim rings true, because once we know them well enough, people are people everywhere. At that point, expat leaders can look beyond cultures and master the basics. “Over time, I learned to delegate little by little, breaking everything into smaller tasks,” Renata continued. “This helped me delegate more. Before I was micromanaging. Now I learned to let them do their job.”

Networks and Kinships

“Let’s get a drink,” says a Chinese character in Kyle Hegarty’s entrepreneurial memoire The Accidental Business Nomad. “We can do that guanxi you Westerners always talk about.” The Mandarin word guanxi, literally connection or relationship, is a darling of cultural guidebooks and a celebrity with its own private library: there are over 200 English-language books with the word in their title. As they experience the first benefits of gradually becoming more intimate with their local teams and business networks, foreign managers in China often congratulate themselves for mastering the subtle art of guanxi themselves. But while trusted business networks are important everywhere, and indeed more so in China than in most major economies, guanxi is also a frequently misunderstood and misinterpreted cultural phenomenon. As expats develop an ever more profound understanding of the local business culture, they learn two essential lessons. The first is that a foreigner cannot willingly infiltrate a traditional trust-based society. The other is that keeping foreigners at arm’s length while granting them an illusion of cultural immersion is perhaps the most ingenuous feature of Chinese society.

What Chinese people label as guanxi is in fact an extended family network that gradually includes newly added clan members such as classmates and colleagues. This arrangement is necessary in a society with ancient traditions and an unreliable social security system. “Let’s say I am ill and need to see a doctor,” Leigh explained. “Appointments in China are messy and waiting times are long, so I will try to circumvent the normal process. I will call friends and family to see if someone in my circles, or in their respective circles, knows a doctor who can give me the inside track. I will do the same when I need a good lawyer, or basically anything else.” As they delegate practical issues to their local teams, foreign managers soon become entangled in similar networks, and consequently start experiencing China as a place where nothing is sure but everything is possible. Whether that sounds like heaven or hell depends on personal temperament, the magnitude of responsibility, and available resources.

“Imagine that a number of firms are bidding for a BMW project, but the procurement people in charge are hardly listening because they already know who the winner is,” Leigh continued. “They have someone in mind: a number of people went to school together, and one of them became the marketing director of BMW. He will then tell the others: ‘I have million dollars to spend on marketing.’” Faced with such commonplace situations in China, foreign executives face the intimidating obligation to balance the need for fast decisions with both legal and ethical risks. Chinese clocks tick fast, and conventional advice about successful leadership in China is fraught with the usual contradictions: plan carefully and be flexible, control and collaborate, move fast, and avoid mistakes. Newly appointed expats often feel tempted to make compromises on transparency or compliance, perhaps hoping to finally master the Confucian game of guanxi as promised to them in their introductory readings. They should not learn to play it too well. Cautionary tales are countless, the best-known probably being the nearly 300 million-dollar fine levied on JP Morgan China in 2016 for hiring Communist Party princelings in return for favorable contracts.¹¹

Expats can only develop a working knowledge of Chinese-style social networking through experiencing its good, bad, and bizarre sides. Natural extroverts usually welcome social shortcuts and quick fixes. “A lot of what’s really critical comes in a very offline, indirect discussion,” six-year China resident consultant Kimberly Kirkendall told a 2021 podcast. “It’s not while sitting in a conference room that you’ll hear what’s wrong. It’s more sitting over lunch, or drinks or while talking about something else.”¹² Task-focused introverts often resent such informality, and even seasoned expats struggle to disentangle the intricate exchange of information and resources in Chinese professional networks, seemingly for the sole purpose of trading favors. “For instance, we discovered that brand new Maserati engines we shipped to China had been run for a significant mileage by the time they reached through customs,” Leigh recalled. “The same happened at Ducati. We also found that Chinese managers working for these firms were swapping their vehicles with friends who worked for other brands. Why they needed such a scam is a mystery: anyone can buy a Maserati car or Ducati motorbike and test the engine if they want to.”

Confusing shady horse-trading with Confucian collectivism ignores a century of dramatic cultural changes. Mao’s early Communist rule severed the very roots of social traditions. Families were forcibly separated and relocated to distant parts of the country. Young people were encouraged to refute old superstitions like ancestor worship, conventional holidays, traditional Chinese medicine, martial arts, and local dialects—glues that had bound local communities together. The infamous one-child policy broke the dynastic lineages that families had revered for millennia. The party tried to harness Chinese people’s deep-seated collectivism toward revolutionary ideals, but the economic failures of the People’s Republic soon necessitated a reversal. “Propaganda messages from the early 1960s from figures like Lei Feng to ‘serve the people’ and give no regard to the self were replaced by a set of new, more permissive strictures which seemed to be totally opposed to what had been stated before, like ‘getting rich is glorious,’ a common 1980s slogan,” historian Kerry Brown wrote in China’s Dream, only to “openly and unapologetically return to an era which had existed before 1949 of building personal links, creating business associations, and constructing a world beyond the state.”¹³

A time traveler from Confucius’s era would doubtlessly fear for his life in the streets of today’s China, but once safely indoors, he would recognize the familiar patterns that psychologists call in-groups and out-groups. Nearly unconditional trust within restricted social circles of interest and suspicion between them still defines the nation’s business relations. Instead of a filial bloodline traced back over generations, modern Chinese people’s loyalties rest mainly with the place of their birth or that of their parents, educational institutions, the family’s stance in political loyalties and the party hierarchy. This persistent cultural feature explains behaviors that have puzzled foreigners for decades: mysterious hiring decisions, unexpected conspiracies, extreme displays of self-sacrifice, and the collective departure of entire teams when one member is fired. It also guides relations between local and foreign managers at multinationals. Expats can read about guanxi until their thumbs bleed, but ultimately, they must accept that unlike their local colleagues and newcomers of Mainland ancestry, they watch local loyalty circles from the outside.

Most expats and their ancestors were born in neither this or that Chinese province to grant them identities rooted in the cunning diligence of Zhejiang, the proud frontier spirit of Sichuan, the imperial vanity of Beijing, or the southern curiosity of Guangdong. Their parents were not Qing-dynasty literati stripped of their wealth and status, Republican-era warlords or capitalists, exploited serfs, heroes of the Long March, resentful Cultural Revolution veterans, or red aristocrats knighted by the Communist Party. Most are not graduates of Bei Da, Jiao Da, or any other esteemed state university, or indeed know which institutions these Mandarin acronyms signify. “When you lead Chinese people, you must accept that they are a community with intricate relations with each other,” said Leigh, whose Mainland ancestry and birth allows some authority over the matter. “There are regional and generational differences, but ultimately they believe that they are all connected together, as the proverb goes, like rivers and lakes. And who are you? You are an expat with a large salary package.”

Consequently, most foreigners who claim to have mastered the Chinese art of guanxi actually engage in Western-style networking—transactional favors for mutual benefit, typically with fellow foreigners, local colleagues, and business contacts. When I ask them about acquaintances beyond that, housekeepers feature prominently. Ironically, guanxi among expats can still yield the expected results. The general manager of a European manufacturing firm in Beijing or Suzhou is most likely to find a new client, supplier, or fellow single-malt whisky collector at a foreign chamber of commerce, English-language fitness class, or an international school’s parent summit. An expat family’s health care, insurance, investment, travel, or catering needs are best served by China’s parallel economy of expat clinics, overseas banks, insurers, wealth managers, and providers of English-language services to clients with foreign passports and preferences. Some separations are spontaneous: weekend branches and outdoor swimming pools typically cater to foreign tastes. Others are deliberate: most places of worship in the PRC admit local or foreign nationals separately for political reasons.

Knitting and Fitting the Right Network

Although they may fall short of the elusive guanxi of an amateur Oriental-ist’s daydreams, a solid local network is essential for expat managers after all. Chinese people tend to think of management in terms of managing whom rather than managing what. Personal loyalties play an outsized role in the rise and fall of projects, teams, and entire firms. Their headquarters may entrust expat appointees with titles, budgets, and mandates, but they are in no position to delegate to them the crucial resource of personal relations. A brand-new start in an exotic country is cheerful news in many respects, but in the Boss Baby phase, expats are pressured to create the network without which nothing gets done in China. “In previous jobs, work usually caught up with me eventually,” Briana explained the back-story to her dozens of personal meetings at the beginning of her tenure. “But this time I was on a special assignment, my salary and expenses came off the US payroll, and local stakeholders did not know what to expect from me.” Foreign managers must roll up their sleeves, but also remember that today’s networking is not as daunting as it would be if they had to infiltrate the genuine local trust circles of Bertrand Russell’s time.

The bad news is that expat managers often feel abandoned until they establish their local networks. The lucky few arrive in communities of seasoned international bosses, colleagues, and business partners. But as multinational firms proudly localize their management in Mainland China, assigning formerly expat positions to native candidates, the remaining foreigners may find themselves surrounded by local colleagues who have little idea about the challenges of relocation, and foreign superiors and peers stationed abroad. “Places like Singapore are still considered developmental examples for China,” Marie explained. “For that reason, a lot of regional headquarters are located there. Often, there is an isolated General Manager in the PRC who doesn’t receive enough support.” Keeping in mind the limited familiarity and data shortage over the workings of the PRC at global headquarters, the success or failure of entire strategies may hinge on how fast and confidently foreign managers can surround themselves with trusted allies and advisors. What can seasoned expats suggest to newcomers?

The first secret to successful business networking in China seems to be the ability to notice and accept the limitations inherent in a foreign manager’s outsider status. “Especially when you meet authorities, at home you may have the impression that you are the most important person in the room,” Renata told me. “But in China, it’s not like that. This means I take my seat, act respectfully and often choose not to say what is on my mind.” Foreigners should also bear in mind that while their local counterparts navigate the intricacies of a single business culture that they know as their own, expats must comply with frequently conflicting local and international practices, be they legal or ethical. Having to comply with both the legal requirements of their firm’s domicile, typically more mature than Chinese law, and toughening local regulations, foreign managers must avoid the creative tactics of local counterparts. At the time of writing, for instance, government scrutiny over gifting red envelopes of cash to purchasing or tax officials created an upsurge in digital gift cards and coupons, purchased anonymously and practically impossible to track.

The good news to tip the balance away from such challenges is that Chinese-style networking is neither art nor science, but an easily improvable skillset of managing time and basic resources. Most acts of guanxi turn out to be small and intangible concessions to business partners. The Janus-faced business cards mentioned by Laurie Underwood are a great entry-level example: title matters a lot to Chinese employees. Henrik König shared a similar story with higher stakes. “According to my contract, I reported directly to the German Headquarters rather than to the Chinese boss,” he explained. “The local boss prepared an organizational chart that featured me underneath him. I asked him to check my contract, even though I knew it was quite unfair: his superior should have told him that somebody would arrive from Germany and not report to him. In a few weeks, he made a new chart where I was beside him, only a couple of millimeters away. You could see how important the arrangement was for him. It took some time, but before long I was working with him in the same way I would with my German colleagues, communicating very frankly about everything including the mistakes I made.”

Experienced expats agree that a bit of empathy and effort can untangle highly sensitive situations. At times, the secret is the medium rather than the message: finance executive and academic Joel Gallo advised in a 2021 podcast to contact investors on social media instead of conventional ways like e-mail or telephone. “It’s a bit cheesy,” he admitted, “but cheesy or not, you must do it.”¹⁴ At others, timing is key. The European General Manager of a global electronics brand told me how he had confronted his Chinese supplier after discovering that the local firm infringed some of their valuable intellectual property. He intended his visit as a friendly warning before his headquarters would proceed to sue. “Sue us by all means,” the supplier’s Director said in an unexpectedly calm tone. “But could you do it in two months? You will win the lawsuit, but by that time the stolen patent will have been credited by the local government towards our innovation target.” Thanks to China’s inconsistent regulations and widespread pragmatism, the surface of successful collaboration between local and foreign managers is almost invariably propped up by exchanges that never see the light of day.

The fireside stories of seasoned Dragon Suits prove that the ability to deal with ambiguity is an essential ingredient to management success in China. Selected for their outstanding performance in more predictable and compliant markets, many managers arrive in China to put things in order and align local operations with global standards and practices. After a few years in the country, some of them sound as obscure as the market they are supposed to explain. “Don’t contradict people directly,” Markus Baumgartner said. “Don’t say that something is ‘wrong’. Try to be subtle.” The problem is that by definition, subtlety lacks explicit guidelines, and clarity is essential while expat managers work with their Chinese colleagues. When probed on how they developed the ability to approach complex management issues with the appropriate amount of tact, most experienced Dragon Suits respond along the lines of Angelo Puglisi’s answer: “Trial and error.” That gracefully simple approach, however, complicates the selection of expat leaders: what guarantees that candidates with the required technical abilities, qualifications, and track record can produce the appropriate gut-level response to inevitable contradictions?

Foreign managers who face such tough choices replay a centuries-old dilemma: whether to impose proven methods onto unfamiliar communities, or encourage the organic emergence of locally digestible hybrid practices. Sixteenth-century Jesuit Matteo Ricci cleverly customized Catholic dogma to Confucian tastes for Chinese coverts, and duly got in trouble with his European superiors. Today’s foreign executives are expected to make comparable choices faster, with higher stakes and considerably less local knowledge than previous generations. From 1800 until today, the value of global trade increased over 2,000 times,¹⁵ and the global movement of goods created parallel currents of money and people. But while a 100 years ago, candidates for China-based jobs had months to prepare at home, and weeks of perfecting their language skills at monotonous sea voyages, many of today’s expats tidy up their desks in one continent and settle into a new office thousands of miles away within a week or two. It is this mobility that makes it crucial for global firms to predict well in advance who will flourish and who will flop under the multifaceted pressures of living and working in China.

Intercultural assessment systems enable human resources professionals to spot the secrets of successful expats and appoint people with similar capabilities to comparable jobs—two equally important sides of a highly valuable coin. One such secret we often identify with my clients is an approximate balance between confrontational and conflict-avoiding tendencies, pictured, respectively, on the left and right side of DISC charts and Erin Meyer’s culture map. European and North American countries typically appear on the relatively confrontational left side of Meyer’s charts, while China and most East Asian countries rooted in Confucian traditions are on the nonconfrontational right.¹⁶ Managers with balanced DISC profiles, due either to personality, upbringing, or experience, instinctively bridge gaps between Western values and their applications in Asian cultures like China. Unsurprisingly, several executives featured in this book show such balance. Briana, Angelo Puglisi, Attila Hilbert, and others are natives to countries with straightforward cultures (the United States, Italy, and Hungary) but personally prefer to handle sensitive issues diplomatically—a sign of the required balance between determination and empathy.

Theoretically, the most effective approach for multinational firms would be to screen management candidates for the necessary behavioral traits and select those who best suit specific countries and assignments. In practice, cultural compatibility remains the kind of low-priority requisite that creative corporate lingo often labels as a nice-to-have as opposed to the must-haves’. The reason is not a lack of expertise or available tools, but understandable fears regarding the introduction of additional, culture-related screening criteria for candidates. Decision makers typically pick from a limited pool of applicants that gets ever thinner with higher leadership positions. For them, the immediate pain of having to dismiss otherwise eligible candidates for cultural mismatches is much stronger than the promise of better long-term performance. Equally importantly, behavioral criteria like a balanced attitude to confrontation can seem to directly conflict with core job requirements. “Trial and error” is an unwelcome phrase at clinical trials, warehouse management, or the drafting of multimillion-dollar contracts. Do human resources professionals have no other option but to expose the most professional candidate to the inevitable culture shock and hope for the best?

Fortunately, cultural adaptation does not equal cultural imitation: managers who represent different temperaments simply orient themselves to China’s socially dependent business culture in different ways. A naturally affable character makes initial trust-building smoother. Managers with a balanced natural temperament toward confrontation, third culture kids, and expats with decades of experience in diverse cultural environments gracefully combine straightforward and evasive attitudes. Managers with a direct and practical work style may be mystified by indirect communication and the ability to balance corporate, expat, and local viewpoints, but they can develop the motivation to learn them as a second language when they see their utility in complex situations. “Those who know how Chinese management culture works can get rid of a weak employee without firing him,” Shaun Rein said. “All you have to do is publicly point out that he is doing a bad job. You can rest assured that he will quit soon.” Renata’s experience reveals the bright side of socially engaged leadership in China. “This country completely changed the way I relate to others. At the beginning, my team may have hated me. Now they ask me not to leave. Best of all,” she added, “I have a Godson in China now.”

The Politics of Leading Businesses in China

There is too little and too much of everything in human life. The Flow theory of legendary psychologist Michael Csikszentmihalyi famously demonstrated how anything can turn from blessing to curse if it far exceeds or falls below desirable levels: food, drink, work, rest, fun, sex, company, solitude, distraction, focus, freedom, and even money. Moreover, Csikszentmihalyi showed that the ideal sweet spots are highly subjective: one person’s heaven is another one’s hell. Unsurprisingly, the same applies to cultural adaptation. In a challenging environment like China, unfamiliar weather, pollution, crowds, or strange food can inspire self-inflicted isolation in one expat and enthusiastic cultural immersion in another. Wobbly Internet connection with the outside world makes some people turn their bedrooms into hacker’s dungeons, while others discipline themselves to live with China’s indigenous half-Internet. At bars, house parties, and conventions in major Chinese cities, animated expats advocate the benefits of going local. Think of the above-quoted praise of forced cyberdetox or Markus Baumgartner’s preference for living away from foreigners. A successful executive told me how she resented foreigners shopping for European designer brands in China instead of buying Three Guns, her preferred local fashion chain.

But I have yet to meet the expatriate who enjoys one characteristic challenge of doing business in China: the pervasive presence of politics. From broad strategic goals to minute details, the Soviet-inspired system in the People’s Republic manifests itself in goals, rules, instructions, and restrictions in all aspects of establishing, populating, running, and developing corporations. Contrary to the expectations of many strategic planners a decade or longer ago, political interference in business has intensified in recent years. “For international companies looking to do business in China, the rules were once simple,” the New York Times wrote in 2019. “Don’t talk about the 3 T’s: Tibet, Taiwan and the Tiananmen Square crackdown. No longer. Fast-changing geopolitical tensions, growing nationalism and the rise of social media in China have made it increasingly difficult for multinationals to navigate commerce in the Communist country.”¹⁷ Nevertheless, while Beijing’s resurging ideological commitment heightened walls and toughened rules, the volume and profitability of foreign enterprise in China kept growing. Dragon Suits simply learned to manage political unpredictability like other risks associated with enterprising in the world’s largest market.

Executives in the PRC must expect sudden blows from any direction, despite careful compliance with local laws. Some sweep across the entire nation. Beijing’s drastic bans on importing and recycling scrap material in 2019 suddenly placed foreign firms under scrutiny ahead of Chinese competitors. The Swissotel chain was the first to pay fines in Shanghai for violating new standards: they were no worse than local hotels, but their higher transparency standards helped local governments meet compulsory punishment quotas.¹⁸ Entertainment and gaming businesses repeatedly become collateral casualties to Socialist morality campaigns.¹⁹ In 2021, falling birth rates revealed by the previous year’s national census inspired a clampdown on evening and weekend classes. Wall Street English, probably the country’s most popular foreign-language school chain with headquarters in Italy, went down in weeks along with many private training firms.²⁰ Other disruptions are more limited in geographic and ideological scope, like a sudden push for a more patriotic hospitality industry in Shanghai around 2012. Restaurants and bars were forced to change names, menus, and marketing material that included French Concession, the remnant of a century-old administrative label popular among locals and expats alike.²¹ Sly swaps for former French Concession to avoid fines fooled censors only briefly.

The chaotic currents of China’s politically inspired regulations puzzle newly appointed foreign managers in China. But those who stay vigilant and build basic expat networks can learn to accept and navigate them. They discover that as the old adage suggests, the only constant they can expect is change itself. In fact, a capricious regulatory environment surrounded the latest generation of foreign businesses in China from their inception. Knowingly or not, the trial and error philosophy of experienced expats imitates a similar approach from the PRC’s paramount leaders. Deng Xiaoping’s instructions for cadres to seek solutions from the facts (shi shi qiu shi) is so deeply ingrained in Communist political culture that it serves as the title of the party’s internal policy bulletin: Qiu Shi.²² Over two decades of reform and opening can be understood as a gargantuan experiment with Chinese characteristics, prematurely launching one initiative after another, then adjusting regulations as practical experience either confirmed or contradicted initial expectations. The outcome is a climate of alternating trends and countertrends that expat managers ignore at their own peril.

The core idea of reform and opening was to attract foreign enterprise into China’s newly created Special Economic Zones. But a carefully crafted negative list excluded non-PRC investment in dozens of sectors that included defense, energy, telecom and Internet services, publishing, infrastructure, and key financial services, and restricted investment in many more, including banking, automotive, pharmaceuticals, and chemicals. Over time, a shortening list coincided with stricter regulations on the movement of people, money, and information as Beijing introduced new controls on visas, incoming and outgoing investment, and the Internet. Successive generations of foreign managers try and fail to explain new regulations with China’s criminal code, data security needs, or economic aspirations. But once they learn to view them through political lenses, perplexing contradictions suddenly resolve themselves. Take, for instance, the salad bowl of items that users who connect their Tencent Alipay and Stripe payment applications must consent to avoid: “fetal gender determination, virtual private network tools (VPNs), crowd funding, religious websites, publications or accessories, gold investment, satellite antennas, human organs, surrogacy services, real estate or charitable organizations.”²³

Foreign managers who understand the dialectics of tradition versus modernity, Confucian harmony versus Communist control in contemporary China can navigate an otherwise confusing environment. “From caveman to spaceman,” Leigh explained, “the rules in China have always been made by a distant elite, and normal people could only get things done by violating them.” Various levels of authority tactically switch sides between elevated elites and the self-asserting masses, the ideological core of all Leninist systems. Take laxity toward contractual obligations, which China-business manuals either abhor or celebrate as characteristically Confucian. It simultaneously benefited Chinese firms and undermined their dignity abroad. Until 2018, China ranked around 80th in the World Bank’s annual Ease of Doing Business Index, near Oman and Panama. Ruthlessly effective government measures catapulted the PRC to 31st position by 2020, and its enforcing contracts subscore to an illustrious fifth in the world.²⁴ Unfortunately, the campaign itself had cut corners, triggering allegations of unfair influence to “push the data in a certain direction to accommodate geopolitical considerations.”²⁵ The following year, the World Bank discontinued the index.²⁶

The experience of preparing the necessary permits for relocation, landing in the country, settling in, getting to work, and establishing trusted professional and personal relationships often convinces new expats that going with China’s rapid flow is the secret to success. In the short run of initial months, the formula seems clear: powerful local bureaucrats set all-encompassing goals, businesses mobilize resources, and the workforce delivers. The siren song of history’s biggest economic boom keeps everyone in sync. Further down the road, as we already saw, expats discover the dangers of blindly goose-stepping with the mainstream and sacrificing physical and mental health, social life, and even long-term career prospects. Over time, foreigners must learn to self-manage in China’s hectic environment, keeping and even setting the pace with a firm hand on the off switch when necessary. “The ability to make tough decisions,” Laurie Underwood said, “is one of the key qualities for foreign executives in China.”

The Politics of Coffee, Shirts, and Drop-Down Lists

While flexibility is one necessary quality for expat executives, another one is knowing when to stop being flexible. The country’s vast, rapid, and politically perilous business environment narrows the room for errors and magnifies their consequences. The hierarchical leadership philosophy that characterizes China, combined with scarce institutional support, means that expat managers must maintain a high level of authority over all aspects of business. They must drive their busload of people (teams, customers, and investors) at top speed through a rough and shifting terrain. At times, they are blindfolded due to China’s secretive political system, but they must bear all consequences. “Few executives have had formal training in dealing with government, and approaches picked up in the U.S. or Europe don’t translate well to China,” a 2010 Harvard Business Review article explained. “Successful CEOs ensure alignment between their strategies and the Chinese government’s goals by deciphering the state’s priorities and gaining insight into how the bureaucratic machinery works. Lining pockets, moreover, can be perilous, as recent settlements of bribery charges by companies like Lucent, Siemens, and Daimler underscore.”²⁷

Basic familiarity with local governance is necessary for any expat assignment’s success, but China’s political setting is more pervasive, more hazardous, and more complex than in most major markets. “If you decide to move into China with a new idea,” Amway Executive Vice President Eva Cheng said in a 2010 interview, “you must fully convince the government why what you propose is good for the nation, the economy, and the Chinese people. For the Chinese government, social stability overrides economic considerations. Politics come before economics.”²⁸ Cultural commentator Zhu Dake hit viewers of the documentary China: Power and Prosperity with the unvarnished version of the same message: “All successful people must be on the same side as the government. If you’re not on the same side, they will make you unsuccessful.”²⁹ But how should foreign managers know where the government stands? For most countries, a handful of corporate lawyers, often in headquarters, turn new laws and regulations into unsophisticated white papers that businesspeople can apply in a prompt and straightforward way. There are many reasons why that approach is unwise in China.

The Communist Party governs the PRC through a combination of transparent legislation and elusive decrees, declarations, memos, and announcements from various levels of governance that are practically impossible to comprehend without some understanding of the country’s Leninist-style state apparatus. Authorities often make new rules indefinitely retroactive. Few of them ever appear in foreign languages, and thanks to the thorough demarcations of the Great Firewall, even Mandarin speakers outside of China may struggle to find them. The lack of reliable information is not an excuse, however. From a single bank transfer through hiring to managing supply chains, politics rears its unwelcome head at multinational offices on a daily basis. Beyond heightened risks associated with every decision, this also means added pressure and workload for already overburdened managers. “Despite the opening of the economy to foreign companies over the past three decades, more than half the CEOs I spoke with spend 20% to 50% of their time coping with policy issues and dealing with the authorities in China,” reads the quoted Harvard Business Review article.

Learning to deal with politically muddled issues starts with the most basic clerical tasks. Managers must circumvent demarcations between state-run and private firms, local and foreign businesses, and Chinese territories more or less hospitable to overseas practices. “It’s not uncommon for a lot of accounts to be processed through Hong Kong,” Rachel told me. “They process expenses to Hong Kong, then courier documents over there, which adds two weeks to a normal deadline. Therefore, high level officials are involved in mundane decisions: CFOs discuss the way the office gets coffee.” The arrival of advanced information technology in China freed foreign firms from most surface mail, but Internet restrictions forced them onto digital detours via non-PRC servers. Human resources management is even more sensitive, because the employee welfare, inclusion, and human rights standards of global firms often clash with murky interpretations of changeable local laws. Attila Hilbert described how multinational companies vacillated between their nondiscrimination policies and obligations to report violators of China’s one-child, later two-child policies. They often chose the former at the risk of small fines, he added.

China presents foreign executives with seemingly impossible choices, but Dragon Suits have proved to be fast learners. True to Leigh’s advice on conflicting strata of authority and interest, barriers erected by one zealous government bureau can often be circumnavigated with the help of other officials pressured for economic growth. Factories locked down in polluted cities can quietly reopen when air quality indices drop below critical levels. The prospect of a multinational firm bringing competitive technology, investment, and labor to a certain province can turn local mayors and Party Secretaries into advocates for foreign business. Of course, that adds endless hours to the workload of expat executives, their local managers, Chambers of Commerce, and Consulates. “You need to maintain a very close contact with the government so they know you well, to speed up approval processes,” Laurie Underwood quotes Airbus China President Guy McLeod in China CEO. “Whatever we are doing, there are a number of ministries that you need to lobby.”³⁰ That, Rachel added to our interview, also requires a direct hotline to global decision makers. “I think you need to have somebody in China, who is high-ranking enough to report to the CEO of the company. I can think of one Pharma company that has an EVP to bring all these issues to the CEO.”

Most China-based expat executives are corporate athletes with an appetite for disciplined self-improvement. They raise at dawn to read expert books or learn Mandarin, take policy podcasts with breakfast and organize their working days around carefully prioritized tasks and meetings. They train themselves to mind their team members, customers, suppliers, and their families, to tolerate and respect local conventions. They can work long hours, outsource marriages and kids, socialize over unfamiliar dishes and booze. Nevertheless, despite all effort, control over their China business can still slip through their fingers. However many laws they learn and concessions they make, authorities have more surprises in store. European companies were “navigating in the dark,” The European Union Chamber of Commerce in China concluded in 2021. “While some of that may be due to increasingly competitive local players, the bulk of the challenges facing European companies in China are the result of regulatory issues and the political economy established by China’s state-planners.”³¹ Nearly half of the survey’s respondent firms reported lost business opportunities due to shady regulations.

In China’s ambiguous regulatory environment, foreign managers must be prepared to find Beijing’s target on their firm’s back despite their best efforts, and bear the consequences. The question is not whether they will make mistakes—it is how frequent and how severe those errors will be. China’s political climate expects all authority figures, including corporate leaders, to bandwagon the ideological mainstream, “an act known to all Chinese as ‘biaotai,’ literally to ‘express an attitude’ or ‘declare one’s position,’” David Shambaugh explained in China and the World. “The problem is that it expects foreigners to also biaotai. Yet, most foreigners do not understand the propaganda slogans, much less wish to mindlessly parrot them back.”³² VPN connections and English-speaking colleagues keep most expats blissfully ignorant of the subtle ideological nuances that locals master out of sheer self-preservation. Even if local employees alarmed management to the ways corporations can inadvertently insult the brittle national pride of Chinese authorities, it is unlikely that expats would take their warnings seriously. And yet, a poorly made online commercial, shirt design, or even dropdown menu repeatedly crashed multimillion-dollar businesses in China.

In retrospect, some fiascos were more predictable than others. German camera maker Leica should have anticipated irritation from Mainland Chinese buyer of its camera-phone lenses Huawei over the iconic Tank Man of the 1989 Tiananmen Square uprising featured in a 2019 commercial. The word Leica and its Chinese equivalent was wiped from China’s top microblogging website Sina Weibo, the Financial Times found.³³ American clothing conglomerate The GAP should have looked twice the previous year, before decorating millions of tee-shirts with China’s map without Taiwan.³⁴ Pictures of the unfortunate item damaged GAP’s already fragile local business beyond repair. The same year saw party mouthpiece People’s Daily call German car maker Daimler “enemy of the people” after it quoted the Dalai Lama on Instagram.³⁵ Government officials still drove Mercedes and Maybach cars to work, as they did Audis after that firm was chastised for decorating its annual meeting with an also Taiwan-less map in 2017. In 2021–2022, several sports and fast-fashion brands, including Nike, Adidas and H&M, exposed themselves to sanctions when they refused to purchase cotton suspected of involving forced labor in the northern Xinjiang region.³⁶

Other mistakes were hard to avoid. A 2018 Dolce & Gabbana (D&G) commercial that featured a Chinese model struggle to eat Italian food with chopsticks, arguably in poor taste but intended as apolitical, invited an invisible hand other than market forces. D&G products vanished from online stores overnight, causing the firm to cancel most promotions in the country.³⁷ Some claimed that the fiasco exposed cultural ignorance, but the violent national backlash even surprised the video’s Chinese model herself.³⁸ In a similarly unforeseen act the same year, censors unceremoniously blocked the Marriott hotel group’s website for a week because an online form listed Tibet and Taiwan as countries.³⁹ Simultaneously and for the same reason, a number of American airlines received warnings to “follow Chinese law.”⁴⁰ Sometimes, authorities display bizarre stretches of imagination. In 2021, Sony was fined a million yuan for releasing its latest camera on a date that coincided with a Japanese attack on China 84 years before.⁴¹ The 2022 Disney film Doctor Strange was removed from Mainland circulation because in one action scene, a news kiosk that flashed across the screen stacked copies of a newspaper banned in the PRC—evidently a detail that superhero fans would notice.⁴²

Masters of Apology

Finally, foreign business in China can become helpless collateral damage to geopolitical showdowns. Ask Honda, Carrefour, or almost any South Korean multinational. Honda repeatedly fell victim to Beijing’s outbursts against Japan’s wartime crimes. In 2005, near my Shanghai apartment, anti-Japan rioters damaged vehicles bearing Japanese brands, while police stood by. Frightened Chinese owners hurriedly decorated their locally made Hondas and Toyotas with patriotic “I love China” stickers. Angry mobs gathered outside Carrefour stores in several cities in 2008 to protest the behavior of pro-Tibet activists along the Beijing Olympic torch relay’s Paris leg.⁴³ The list continues: Swedish businesses suffered sanctions after jailed activist Liu Xiaobo received the 2010 Nobel Peace Prize, Australian food importers when Canberra insisted to investigate the origins of the COVID-19 pandemic in 2020. For foreign executives, the game is no fun: the rules are elusive and changeable, winning has no reward, and losing can be fatal. Starting 2019, state-controlled media repeatedly raised the prospect of an unreliable entities list, naming specific firms.⁴⁴

Nothing illustrates the helplessness of multinationals in China better than the fate of South Korean businesses in 2017. Seoul’s decision to accommodate American defense systems known as Terminal High Altitude Area Defense or THAAD, cast their China operations into an accelerating vortex of threatening public opinion and plummeting sales. State-run publication Global Times demanded that “South Korea must face bitter pill over THAAD.”⁴⁵ In an article subsequently removed from the Internet, state media quoted an online retail influencer with millions of followers who “did not know what THAAD was, but after reading more online, she felt it was a serious threat, telling the Global Times that she thinks South Korea’s actions are a serious provocation.” Her epiphany, the article continued, came “after Dai Xu, air force colonel and military commentator, called for netizens to treat online ideological debates as a serious ‘war’ and be especially aware of foreign infiltration.”⁴⁶ Boycotts of Korean products coincided with inspections against Korean Airlines, cosmetics maker Lotte Group, and others. Businesses in Jeju Island in South Korea lost most of their clientele as Chinese package tours were summarily halted.⁴⁷ “A tourist outflow that has become a political tool in itself,” David Shambaugh commented.⁴⁸

“China has carefully designed retaliation against South Korea so that it does not violate international laws,” Reuters quoted an Ewha Law School professor.⁴⁹ There was little that the sanctioned firms could do to avoid the ire of the political establishment and popular outrage it created: the sanctions had nothing to do with how the firms behaved. Even state-controlled media admitted that much. “Lotte outlet stores and even a multi-billion-dollar real estate project began receiving inspections from local fire safety departments, several being forced to shut—including the building site—after the authorities said they found ‘safety hazards,’” the Global Times gleamed with no intended irony. “This was applauded by many on the Internet, who read it as a sign of local governments taking action against the firm in subtle ways.”⁵⁰ The subtlety was questionable: Beijing banned Korean Airlines flights, grounded tourists, and imposed sanctions that caused Samsung, Hyundai, KIA, LG, and other South Korean firms in China over eight billion U.S. dollars of loss according to the Korea Development Bank’s calculations.⁵¹

As tact disappeared from the Chinese government’s tactics, expat executives put their skills of cultural adaptation to good use. “You can be a great chess player, but they will beat you at Go (Chinese checkers), where the objective is to occupy territory and thus suffocate the opponent,” came Attila Hilbert’s enthusiastic explanation. “The larger you are, the bigger your gravity, and gravity is unavoidable. Belt-and-Road is about Go, Confucius Institutes, Chinese diasporas and Chinatowns in the world are also about Go.” Dragon Suits accepted the challenge mainly because for their businesses, the suffocation metaphor could easily become literal. A 2022 British Chamber China paper showed that 40 percent of the polled firms considered the PRC their top investment destination, and another one-fifth as their second.⁵² For them, an unpredictable China presented existential risk. The harsher the country’s political climate became, the more sophisticated responses from global and China-based executives had to become.

Stonewalling worked at first. “I categorically deny the allegations made against us on these blogs about the support that we would have given to this or that political or religious cause,” LVMH Chief Executive Bernard Arnault told journalists as attacks against Carrefour and other French firms unfolded before the 2008 Olympics.⁵³ The luxury firm managed to avoid sanctions. Publicly firing employees who broke no law but became associated with assumed lapses in socialist morality became a corporate tactic borrowed from China’s own playbook. Marriott promised to fire employees who clicked like on social media posts related to Tibet even outside of the PRC.⁵⁴ Cathay Pacific Airways did fire executives and pilots who were suspected sympathizers of the prodemocracy movement in Hong Kong.⁵⁵ But in political systems that use public shaming and vocal loyalty as control mechanisms, actions never speak as loud as words. Mercedes-Benz learned this lesson the hard way after it quoted the Dalai Lama in one of the firm’s motivational posts on Instagram, an unavailable medium in Mainland China. Even after the counterrevolutionary quote had been removed by its editors, government paper People’s Daily declared the car maker “an enemy of the Chinese people.”⁵⁶

It was after a series of similar incidents that international executives armed themselves with a blunt tactical weapon of the one-party system: the regretful apology. “Even though we deleted the related information as soon as possible, we know this has hurt the feelings of people of this country,” Mercedes-Benz declared in response to the People’s Daily tirades. To be fair, they merely followed the flow, and learned from the best. The tone had been set in early 2018 by Zhang Yiming, CEO of Toutiao, confessing after some of the platform’s content got blocked that the firm “placed excessive emphasis on the role of technology, and we have not acknowledged that technology must be led by the Socialist core value system.”⁵⁷ In successive years, as multinational firms suffered from shaming campaigns and sanctions, foreign chief executives worked themselves into various states of frantic penitence to salvage their Mainland businesses. The tone of self-shaming varied from stonewalling to remorse, its delivery from perfunctory to groveling, and in most cases sufficient to appease authorities.

Marriott and other firms whose country lists were tainted by Taiwan issued simple apologies: employee dismissals spoke for themselves. GAP took the blame and thanked their persecutors: “We are grateful to customers, media, employees and government regulators for their attention and support. In the future, we are committed to a more rigorous review to prevent similar mistakes from happening again.”⁵⁸ Leica rejected tank man: “Leica Camera AG must therefore distance itself from the content shown in the video and regrets any misunderstandings or false conclusions that may have been drawn.”⁵⁹ Luxury fashion house Versace humiliatingly lined up with GAP to issue apologies for shirts that featured Taiwan as a country, followed by Coach and Zara for one assumed insult to the nation after another.⁶⁰ By late 2018, foreign executives had become masters of forced apologies, but no effort rivaled the imploring video of D&G after the spaghetti-splattered commercial. True to their creative reputation, founders Domenico Dolce and Stefano Gabbana confessed to “have thought long and hard about our mistakes” and “begged for forgiveness.” Poor lighting, nearby vacant chairs to underscore their well-deserved exclusion, and the befitting wooden body language were brilliantly tailored for their intended audience.⁶¹

Going With the Flow, Turning With the Tide

Dragon Suits are the kind of managers whose eyes light up at yet another neck-breaking political swirl, logistical crisis, or nationwide overhaul. They acknowledge a bold move by the government the way tennis players admire an undefendable curved ball. “The best and the worst thing about China is that it changes every eighteen months,” technology analyst Dan Wang said in a 2021 podcast.⁶² Since their adoption from the Soviet Union, Five-Year Plans served as blueprints not only for the nation’s economy, but for all things large and small including its geography and demography. State planners appointed Shanghai, a coastal city with little space to spare, as the country’s automotive center and Shenzhen, a new development without universities at the time, the headquarter of its high-technology industry. The chief challenge of that approach is that today’s world changes faster than Beijing’s five-year cycles, so plans, laws, and infrastructure either lag behind recent developments or leap forward to meet anticipated future needs. Foreign businesses must make sure that strategies minimize volatility while maximizing opportunity.

Multinational managers must align not only with legislation but also with erratic state aspirations often labeled the China dream. Laws are drafted, passed, announced, and then enforced (or not) according to their immediate utility. Different provinces implement new (or not so new) regulations according to their distance from Beijing, local interests, and the power of their party and government leaders. A 2011 law regulating the contribution of foreign employees to the PRC’s social security system was fully enforced in Beijing by 2022, on a voluntary basis in Shanghai and in various ways elsewhere.⁶³ Foreign firms and individuals are informally exempt from a long list of local regulations, which, however, hang over their heads like proverbial suspended swords: restrictions on movement, family planning, self-expression, and Internet use, among others. “Authorities have tried to reassure companies they won’t be affected, but if the rules in the China Telecom letter are enforced, they could hamper activity ranging from gathering information for business deals to employees working on business trips,” CNBC commented the state Internet provider’s January 2017 memo on possible VPN bans.⁶⁴

A great illustration is Made in China 2025, a blueprint to facilitate the dominance of domestic firms in ten key technological sectors, including information technology, processors, new energy vehicles, aerospace, robots, and medical devices.⁶⁵ Initiated in 2015 through hundreds of convoluted projects and campaigns, it far exceeded the political insight and expertise of multinational executives.⁶⁶ If superficial observers initially missed its dramatic implications, they were soon illuminated by announcements of Beijing’s intentions. Shortly after the policy’s launch, the government revealed efforts to develop a domestic operating system to replace commercial products like Microsoft Windows, Android, and Apple’s OS at public institutions.⁶⁷ But Made in China 2025 clearly conflicted with China’s market access commitments to the World Trade Organization. “This program in state-driven tech-industrial policy has already caused considerable controversy around the world (particularly the United States and EU)—which, as a result, has caused the Chinese government to stop referring to the program in public (although it no doubt continues),” David Shambaugh wrote in China and the World.⁶⁸

Whether local firms gained market share from multinationals in key technological industries due to top-down government intervention or simply due to superior solutions for China is passionately debated. What seems certain is that the Made in China 2025 scare nudged foreign executives toward higher value-added strategies and better intellectual property protection. That seems to be the secret to surviving and thriving in China’s unpredictably cyclical economy. State authorities control entire industries they are unable to sufficiently micromanage, leading to recurring rotations of planning and improvisation. If foreign firms approach them as they do storms and floods, their businesses can weather through them well. Take the example of the luxury retail industry under President Xi Jinping’s countercorruption campaign. Draconian measures to discipline an entire economy of government graft ended practices previously considered fundamental to doing business the Chinese way. But life went on after the storm, foreign businesses adapted and regained their optimism about China as their core market.

Not long ago, the West recognized corruption as essential to Chinese business. “While often in violation of Chinese law, gift giving is widespread,” Kiss, Bow, or Shake Hands advised before it recommended gifting expensive pens and liquors, stamps (“stamp collecting is popular in China”) and cigarette lighters.⁶⁹ I recall early-2000s conferences where foreign corporate lawyers and executives explained that suspicion toward written contracts, and gifts as trust-building measures, represented the holistic philosophies of Confucianism, Taoism, or Buddhism, to be tolerated in the name of cultural empathy. But stamps seldom did the trick: government and party officials were at the forefront of China’s luxury retail revolution, and they did not come cheap. Connections between party and luxury ran so deep that Premier Wen Jiabao’s wife was one of the country’s top diamond traders.⁷⁰ China was known as a notorious avoider of international reporting obligations of high-value luxury items.⁷¹ But Xi Jinping assumed Presidency in 2012 on a strong anticorruption agenda, and the party was over. Officials were imposed limits on their cars, watches, and even the permissible number of meal courses: four dishes and one soup.⁷²

“For business, the new President’s anti-corruption measures were a disaster,” Chris, the luxury fashion CFO, recalled. “Many of us felt that some discipline was long overdue, but we were shocked to see eighty percent of our Mainland, Hong Kong and Macau sales vanish overnight.” His firm was not alone: the campaign hit markets for watches, jewelry, home decoration, electronics, cars, motorcycles and yachts, art, and liquor. Scotch imports nearly halved, “with total direct exports to the People’s Republic slumping from £71 million in 2012 to £41m in 2015.”⁷³ The official China dream did not include Rolexes and Bentleys anymore. A decade later, a similar campaign targeted the riches of China’s information technology entrepreneurs, levying heavy fines on Alibaba Group in the name of wealth redistribution.⁷⁴ Virtual luxuries like multiplayer games and online tutoring had defined the rise of China’s new middle class. “But Xi will want Chinese to live in the physical world to make babies, make steel, and make semiconductors,” technology commentator Dan Wang wrote in 2021.⁷⁵ Yet the same year, the EU Chamber China’s Business Confidence Survey featured retail and IT among the most optimistic sectors in China, with over half of the polled firms reporting growing revenues.⁷⁶ How did multinationals manage to steer the headwinds?

Inside Tracks and Winnable Battles

What is the secret of foreign executives who manage to free their business of the chokeholds of politics and often state-sanctioned local competition, and find new directions in the Chinese market? Apparently, it is once again a balance between flexibility and resilience, what author David Clive Price called bamboo strong.⁷⁷ They learn to accept the turbulent winds of Chinese politics as their operating environment, methodically mitigating it like any other risk. Meanwhile, they realize that due to their very lack of assimilation in that environment, multinationals can turn their insular character (islands of global business in a uniquely local market) into competitive advantage. The first is key to surviving in China. The second, to thriving. Starting with survival skills, as one should, already in 2011 Laurie Underwood recommended that foreign firms in China “pick winnable battles.”⁷⁸ At the time, the most popular examples for unwinnable battles were price wars with local competitors and dominance in market segments like white goods. But recent years erected much tougher walls that foreign executives should not try to siege.

The involvement of the Communist Party in business has been one delayed but not forgotten condition of foreign firms operating in China. Local state-owned and larger private firms have dual management structures with corporate and party bosses making sure that both cash and Communism are covered on both strategic and operational levels. Foreign-invested firms other than joint ventures with state-owned partners were largely exempt from direct party control. But the Xi Jinping administration renewed demands for party involvement in the private sector, not only in strategic but also in hiring, human resources, and disciplinary decisions.⁷⁹ Amidst debates about the likelihood and consequences of extending obligations to all foreign firms, one thing was sure: nobody would ask the firms themselves. “Companies should be alert to pressures to form party organizations in their China subsidiaries,” one business publication warned in 2018, “but also aware of the legal framework and best practices that may limit the impact of such organizations on governance and management.”⁸⁰ As a harbinger of bigger changes to come, in summer 2022, HSBC became the first foreign bank to install a Chinese Communist Party committee.⁸¹

But while foreign executives must carefully steer their firms to comply with local laws and follow political currents, they can benefit from the fact that multinationals attract smart Chinese customers, suppliers, and workforce. Responding to political smearing campaigns, many young shoppers publicly boycotted Adidas sneakers and H&M shirts. Government officials proved more reluctant to swap their Mercedes, BMW, and Audi office vehicles for Red Flag, Geely, or Haval models. In market segments where such values count, Western brands still stand for quality and prestige. Contemplating their winnable battles, foreign executives know that they cannot win price wars, beat state-backed competitors, or avoid campaigns like Made in China 2025 and party infiltration of private firms. But Dragon Suits I asked were confident about the advantage of multinationals in quality, from raw materials through management processes to end product, after-sales service, brand recognition, and more. Perhaps most importantly from a leadership perspective, however, multinationals attract some of the nation’s top talent.

Ever since they reappeared in China, multinationals stayed ahead of local rivals in terms of safety, compliance, transparency, sustainability, inclusion, and other corporate social responsibility criteria. Benefits went beyond the intangible. While in 2020 foreign firms employed about 7 percent of the country’s workforce, they provided a fifth of national VAT revenues, a quarter of gross output value, and 40 percent of trade value, EU Chamber China President and BASF China Chief Representative Joerg Wuttke told me in 2022. Multinationals are also ahead of local firms and foreign-invested small and medium-sized enterprises (SMEs) in compliance with Beijing’s ambitions to reach net-zero carbon emissions by 2060.⁸² For ambitious Chinese people, such headway adds to previously mentioned advantages like the chance to interact with expats, use foreign languages, and travel internationally. Over time, the technological GAP closes fast between foreign and top local firms, multinationals compare poorly with local star employers in terms of salaries and promotion speed, and backing a local employer can earn the job-switcher approval in China’s intensifying political climate. But cash, titles, and patriotism were never the big attraction of foreign firms anyway. It was work culture.

Despite China’s impressive progress in making and following consistent rules, pressure and unpredictability remain features, not bugs. “While in the United States, the government would require years of testing and develop reams of regulations, in China the government would encourage companies to forge ahead,” economist Elizabeth C. Economy commented. “If there were a few accidents, that was okay. China would come out ahead.”⁸³ Early expats recall shocking first-hand experiences. “More than once, we had to rush someone injured by boiling steel to a hospital in our private cars because we were unable to get an ambulance,” Markus Baumgartner of Miba Group remembers the early 2000s. “When we arrived, doctors refused to touch him unless we paid for the treatment in cash first.” Such ruthlessness is a remnant of China’s Communist Revolutionary spirit. Though cashless burn victims may not be tossed out of hospitals anymore, teeth-clenching ideals characterize firms associated with the state. The wolf spirit of Huawei, founded by former People’s Liberation Army engineers, promotes “extreme resilience in the face of failure, a strong tolerance for self-sacrifice, and a sharp predator instinct,” The One Hour China Book quoted. “During Libya’s civil war in 2012, Huawei was the only international company that did not pull its employees from the country.”⁸⁴

Multinationals attract motivated Chinese workforce by offering alternatives to the forced-march culture of local firms. “Chinese people like working for foreigners,” Fernanda Barth of WEG told me. “Once you earn their trust, they will consult you on a wide range of professional and personal issues.” That trust, most expats tell me, suddenly strengthens when local employees realize that foreign bosses expect mutual attention, honesty, and commitment rather than the hierarchical tipped balance of local firms. “Chinese bosses tend to give orders,” Angelo Puglisi explained. “Western ones typically expect trust if they give it first, and that style works pretty well with local employees.” Applying such leadership values in practice can be challenging. An automotive CEO explained to me the importance of being upfront with local management candidates about the slow promotion policies at his firm. But like all constructive cultures, trust-based leadership becomes contagious over time. “At the beginning, I was trying to always be a little bit dominating,” University of Zürich researcher Yuan Qin quotes a Chinese executive at an international firm. “I found it’s not working at all, and also maybe that’s not the best way to lead a company.”⁸⁵

Expatriate executives often insist on a culture of engagement out of personal or institutional commitment without any evidence whether, and why, it would work in China. But considerate corporate cultures resonate well with local employees for many reasons. The authors of China CEO explain how training and further education like Executive MBA courses cater to the most profound ambitions of Chinese families.⁸⁶ Bronwyn Bowery-Ireland agrees. “Most foreign managers don’t realize how fast Chinese people learn, and how eager they are to learn. For them, education is the path to freedom.” In a vast country with a low level of international mobility, multinationals also provide portals of global openness for the nation’s globetrotting minority. Returnees, including foreign-born Chinese and locals returning after many years of international work or studies, are generally considered vital for the inflow of international ideas, expertise, network, and even investment. But on return, they often experience a “reverse culture shock,” Joel Gallo of NYU Shanghai explained in a 2021 podcast. “Multinational companies can help them re-adjust.”⁸⁷

In terms of providing equal opportunities regardless of gender, sexual orientation, and ethnicity, leadership practices at multinationals may offer glimpses into China’s future. Human resource managers at foreign firms are obligated to introduce global ethical practices at PRC branches and, thanks to overall trends in the profession, are more often women than men. The resulting focus on gender as a leadership issue contrasts sharply with China’s reality. Mao Zedong’s claim that “women hold up half the sky” is often presented as an accomplishment—in fact, it is an unfulfilled ambition. The latest, 2012 Women’s Economic Opportunity Index by The Economist Intelligence Unit ranked China along Russia and Venezuela.⁸⁸ A 2021 poll by fintech firm N26 placed it 75th among a 100 countries, between Azerbaijan and Botswana. Recent improvements in education and business are in sharp contrast with its political leadership which is, in Little Red Podcast host Louisa Lim’s words, “row after row of identical men.”⁸⁹

Meanwhile, successes are often overshadowed by mounting challenges. Gender equality campaigns long clashed, both in the party’s eyes and in people’s heads, with the PRC’s family planning policies and the virtual lack of female representation among top political leaders. Recent party propaganda to restore population growth by encouraging women to be child-bearers, and People’s Liberation Army campaigns to “fight femininity among men,” among others by censoring the online presence of allegedly girlish-looking male stars, made matters worse. China is one society where demands for equal opportunity poke at serious taboos. “The public of every low-income or lower-middle-income society included in the Values Surveys—without a single exception—places relatively strong emphasis on Pro-fertility norms,” wrote World Values Survey founder Ronald F. Inglehart. “These norms encourage women to cede leadership roles to men and devote themselves to bearing and raising children.”⁹⁰ Those who care see opportunity. “International companies seem to be more advanced in gender equality, but this is because they’ve been doing it for years and because this is a requirement for their local markets,” Sup-China wrote in 2021 “They have become a point of reference and step by step even local businesses have to adopt the same policies.”⁹¹

During the decades of China’s reform and opening, designated development areas, and foreign firms within were islands where imported ideals could take root: capitalism, consumerism, diversity and inclusion, performance-based pay, caring for individual well-being and motivation, design, fashion, luxury, feminism, fun, and the freedom to challenge authority. This parallel universe attracted talented Chinese people who were tired of both Confucian and Communist ideologies, not the least with whacky creativity: vividly decorated offices, casual Fridays, team-building, in-house chat apps, Christmas and Halloween parties where foreign bosses mingled, as Chinese friends told me, like normal people. But below the playful surface loomed serious issues. Global firms exist for profit: those hand-painted murals, yoga classes and townhall meetings are carefully calibrated productivity tools. As China’s markets matured, it also seemed that separation was bad for business. If they wanted to meet increasing demand, win over local competitors, and attract the best people, multinationals had to adapt. The surest way to achieve that, expat executives already told me in the early 2000s, was a new generation of local mangers to eventually take over Chinese operations from foreigners.

 

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⁴ C.-C. Chen, and Y.-T. Lee. 2008. Leadership and Management in China: Philosophies, Theories, and Practices (Cambridge: Cambridge University Press), p. 171.

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