The march of Asian businesses moving into new and profitable global markets will not stop at any point in the near future. Rapidly scaling up from being the emerging market of the past decades, Asia is now the powerhouse of the global economy. In the 2017 Fortune Global 500 list, 197 are Asian – making it the continent with the highest concentration of companies, beating North America (145) and Europe (143), for the first time.
The USA continues to be the largest individual country on the list with 132 firms, however China is not far behind with 109, and Japan is third, with 51. In total, the 500 companies generate $27.7 trillion in revenues, $1.5 trillion in profits and employ 67 million people. The top 5 account for 350 of the total companies on the list – and $20.7 trillion of the total revenue (74%), highlighting the concentration of top grossing companies in the US and China.
The global battle for talent
The Fortune list highlights the step-changes that are happening in the global economy – regions previously undervalued in terms of revenue generation and profitability are now rising to the top. It also highlights a business specific problem – that of talent and how to attract it, retain it, and then set it loose on growing companies.
It used to be that the best in global talent would end up in a US or European company – due to their relative size and worldwide reach, they were the most obvious places for driven, highly skilled and ambitious C-suiters. Now the picture is much more opaque. As Franck Johnson, Director at Page Executive Asia, explains, “In general Asian companies are investing heavily in building strong internal teams, looking globally for talent, utilising candidate referrals, building up strong ERP – in short, they are aligning themselves more with universal trends.
“This presents challenges for all sides of the recruitment dice – hiring into Europe for Asian companies and vice versa, alongside competition for hiring visionary HR and talent teams in-house. It comes down to culture in many cases, insofar as understanding the culture of Asia and Asian companies compared to European ones, and being sensitive to that,” Johnson concludes.
From being the emerging market, where companies needed to import best practice, they are now in many cases the market leaders.
Ben Wainwright, Associate Director at Page Executive Asia
This idea of cultural sensitivity feeds into hiring practices, in that boards should understand their own culture – in terms of business and locality – to ensure a good fit for any new C-level. In this respect, we can boil it down to a few specifics, such as the use of language in management discussions – especially if they involve cross continental teams.
Using non-hierarchal decision making processes also helps to cross the culture divide, as does the introduction of more flexibility in the workplace in terms of hours. This, alongside locating the C-suite in multiple locations, removes the idea of a centralised HQ, and promotes true cross border working.
Leadership with local sensitivity
As Ben Wainwright, Associate Director at Page Executive Asia, explains, “The whole landscape has changed in Asia over the past five to 10 years – previously we would have seen American, European and British as the predominant hiring companies, now it is mainland Chinese (in Hong Kong specifically) companies such as investment banks, insurance houses, online retailers and so on.
“It comes down to a question of fit – in terms of language, with Mandarin a prerequisite now, and also culture, as companies want their leadership to deeply understand the country they are trading in. From being the emerging market, where companies needed to import best practice, they are now in many cases the market leaders, exporting back their best practice. This has been further developed by the return to native countries of people who have been educated in the West, bringing back knowledge and unleashing it on the Asian economy.”
Local business, local leadership
Key ideas that flows through this reorganisation of the recruitment market in Asia and Europe are that of localisation – and learning from the mistakes of the past. Previously it would have been normal to install C-level hires that understand the company, and its home country. Now that is seen as short sighted, and lacking sensitivity to local markets – which may well prove to be bigger revenue and profit generators for the parent company.
Another key factor in these hiring decisions is trust, insomuch as it is always a concern when hiring essential staff – especially those who will work at distance from the company’s base. This factor makes this central theme of cultural fit even more vital – the idea that better communication does give better results, and this comes from deep understanding of the locality and its people, and their norms.
Steve Parkes, Director at Page Executive explains that, “nuance is vital. It helps C-suite understand and differentiate between cultures. For example, many European companies would have had an ‘inverse’ split in their C-level in Asia compared to US ones – 70% European/30% local – in the search for language skills looking back to Europe – ignoring the local market. We don’t see Asian companies making the same mistake in Europe.
“What we do see though, is a dearth of talent that has the requisite language skills, meaning the associated costs of hiring rise –placing even more pressure on making the right hire to avoid costly mistakes,” Parkes concludes.
Looking to hire your next C-suite in Europe? Or Asia? Contact a Page Executive consultant today and start your next people journey.