Lessons from Scandinavia
After many years of following the fortunes and failures of foreign companies in Asia, there is one region of the world that stands out to me for their consistent success: Skandinavia. It’s hard to argue that the likes of Ikea, Nokia, Maersk, Kone, Lego, Bang & Olufsen, Volvo and Equinor are over-achievers throughout the world, but it’s their success in Asia that stands out, not just for their creativity, innovation and design, but for their ‘no ego’ approach to managing their local operations and culture.
In a recent interview with Week in China, the CEO of Finnish elevator giant KONE, Henrik Ehrnrooth, was asked for the key factors that have made KONE such a successful company in China: “you need to have very localised management teams. Clearly we have some expats but the business is led and managed throughout the country by strong local Chinese leaders. You get a consistency and longevity with this approach that is different to when you have expats coming in and out. Yes, you bring in expats for their specific knowledge and experience, but it’s the local team that delivers. We’ve spent a lot of time and effort developing local teams and we think it also demonstrates a long-term commitment to the country. We are here to stay, with local people and as a local part of society”.
Whilst this approach seems obvious, it’s amazing how many foreign companies fail to trust the locals to run their local businesses and rely on expatriates to represent “Head Office culture” in the local market, a recipe for disaster and a somewhat arrogant approach, particularly in Asia.
The message is clear. If you want to do business in Asia, rely on Asians to run your Asian business and, if you have a chance, hire Asians in your Head Office as well. By doing this, not only will you have access to staff who are well educated, intelligent and hard-working, but you will be grooming future leaders in your organisation who:
- speak Asian languages
- understand Asian culture and the way business gets done
- have access to family and business networks in Asia who will help them (and you) on the ground