In charge, Asia-style

What does it take to be an effective leader in Asia? Alexandra Harney reports on the region's corporate culture and discovers why its CEOs may end up having the edge over their Western counterparts

Chinese internet pioneer Jack Ma, founder of online marketplace Alibaba.com, likes to describe his path to success as 'like a blind man riding on the back of a blind tiger'. Such frankness would be unusual from a Western executive, but in today's rapidly changing China, it could well describe the experience of many of the country's top corporate leaders.

Because economic reforms that opened China to the world only began in 1978, many of the chief executives of multinational companies in China were, until recently, ethnic Chinese from Hong Kong or Taiwan. By comparison, mainland Chinese, who had been working in a planned economy since 1949, had relatively little relevant experience.

Only in the last five years, argues one chief executive, has the first generation of mainland Chinese CEOs emerged. 'With half a century of interruption, this is a place without a continuous history of CEOs,' says Wang Jian Shuo, the 30-year-old head of Kijiji, a subsidiary of eBay in China.

Although many Asian countries boast more continuous histories of corporate leadership than China, the country illustrates the unique challenges of management in this dynamic and diverse region.

In developing economies such as China and India, senior executives face the challenge of adjusting to quickly changing regulatory and market circumstances. In established Asian economies such as South Korea and Japan, strong local business cultures inform management styles. And in mature markets structured along Western lines such as Hong Kong and Singapore, the demands on chief executives are similar to those in the US and Europe.

Certain themes, however, cross national boundaries. In many companies, particularly in Hong Kong and mainland China, the chief executive is revered as a visionary. Often the founders of their company, these leaders have an aura of invincibility, and even invisibility: they are heard but rarely seen.

Ren Zhengfei, President of Chinese telecommunications equipment maker Huawei, appears in public only infrequently and eschews speech-making. Writer Anthony B Chan dubbed Li Ka-shing, founder of ports-to-retail conglomerate Hutchison Whampoa, 'Hong Kong's elusive billionaire'. Despite his low profile, Li is revered in Hong Kong and otherwise known as 'Superman' and 'Mr Money'.

Ross O'Brien, Hong Kong-based director of corporate networks at the Economist Intelligence Unit, makes no specific comment on these executives, but says celebrated leaders are often 'a logical point for focusing attention' and that they 'can create momentum very quickly in an organisation'.

He argues that 'a lot of the stuff coming out of the West is about leaders having to be inspiring, having to lead through setting a tone and a culture and actively voicing their priorities. This is something Asian leaders do quite a lot of.' But O'Brien adds that excessive focus on a single executive 'tends to get people to work to please the interests of one individual, rather than the team. It can create inefficiencies in strategic planning.'

The concentration of power in the hands of one person could slow decision-making within a company if all plans need the chief executive's stamp of approval. Equally, if a leader is so powerful that he/she is considered above criticism from his/her colleagues, valuable voices could be silenced. Another potential consequence of the cult of personality is that the company may not fare well when its visionary leader moves on.

Confucian values of family and obligations also play a role in Asian leadership, say academics and executives. Wang says that leaders in China take a more personal approach to their businesses than in the West because of the importance of interpersonal ties. 'In the States, people say, "It's nothing personal, it's just business". But here, we like to say, “It's nothing business, it's just personal”,' he says.

Interpersonal skills matter both inside and outside the company. Another Chinese CEO, who asked not to be named, says that to be a good corporate leader in China, one must first be a good drinker. The personal relationships that form the basis of many business partnerships in China are often formed over dinner. 'If you can drink a lot and aren't afraid of getting drunk, people figure, okay, you're honest,' he says.

Trust is particularly important in countries where law enforcement is uneven, such as China. One Chinese internet entrepreneur and former management consultant says that good leadership in China demands flexibility, because 'nothing is black and white in China. Everything's grey. You have to be comfortable with ambiguity.'

Many Chinese senior executives mention the ambiguity of tax payments in a country where tax evasion is common. They talk about the importance of keeping regulators and public utilities happy, even if it means taking them to dinner. Sometimes, good leadership in China means making sure the lights stay on in the office.

In Asia, as elsewhere, keeping employees happy is the cornerstone of good management. For many corporate leaders, this is still a struggle. In some cases, managers have clambered to the top of the corporate ladder without acquiring the skills necessary to deal with their colleagues.

'The sense that Indian people have about their senior leaders is that they don't have the same amount of EQ' or emotional intelligence, as intellectual capability, says Michael Jenkins, the Singapore-based managing director of the Center for Creative Leadership's Asian operations. The Center for Creative Leadership is a not-for-profit organisation that conducts research and training of leaders. 'There may be a propensity to be extremely directive in terms of their leadership style.'

This style may well reflect a strong faith in hierarchy and a belief among some senior executives in Asia that young employees need to be trained from scratch, rather than empowered with significant responsibilities early on. Japanese companies refer to this as the 'blank canvas' approach: traditionally, some groups have preferred to hire fresh graduates in order to shape these employees' thinking and behaviour in the workplace.

This also appears to apply to some Indian companies. 'There's an expectation among a lot of junior Indian people that they will be told what to do,' says Jenkins.

Ironically, some of the most influential executives in more developed markets such as Japan in the last several years have not been locals. Carlos Ghosn, the Brazilian-born French national, has been widely credited with turning around Nissan Motor Company in the early 2000s. Sony, the consumer electronics group, has tapped British executive Howard Stringer as its chairman and chief executive. Some analysts say these executives were brought in to make the tough decisions Japanese executives could not.

In the future, observers say, Asian chief executives are unlikely to manage their companies in precisely the same way as their Western counterparts. Confucian values could give Asian managers an edge by helping them work more closely with their colleagues than executives in the West.

In a recent study of some 700 executives from North America, Europe and Asia, the Center for Creative Leadership asked whether leaders were becoming more competitive or collaborative. While executives from all three regions reported a move towards consensus-building, the trend was particularly pronounced in Asia.

Says Jenkins: 'It may have to do with the cultural background. But the power of harmony, the generation of convivial relationships could be contributing to the notion that collaborative work is the way to go.' If so, Western companies might be turning to Asian CEOs for leadership advice in years to come.

Alexandra Harney is the author of the forthcoming book, The China Price: The True Cost of Chinese Competitive Advantage (Penguin, March 2008).