Asia's Endangered Species: The Expat

[Lite Beer]

Asia's Endangered Species: The Expat

By LESLIE KWOH

Forget expats. Western companies doing business in Asia are now looking to locals to fill the most important jobs in the region.

Behind the switch, experts say, are several factors, including a leveled playing field in which Western companies must approach newly empowered Asian companies and consumers as equals and clients—not just manufacturing partners.

Siemens AG

More Western firms are filling their executive positions in Asia with locals. Mei-Wei Cheng is a China-born Cornell graduate who heads Siemens's Chinese operations.

Companies now want executives who can secure deals with local businesses and governments without the aid of a translator, and who understand that sitting through a three-hour dinner banquet is often a key part of the negotiating process in Asia, experts say.

In fact, three out of four senior executives hired in Asia by multinationals were Asian natives already living in the region, according to a Spencer Stuart analysis of 1,500 placements made from 2005 to 2010. Just 6% were noncitizens from outside of Asia.

"It's a strategic necessity to be integrated in the culture. Otherwise, the time to learn all of it takes forever," said Arie Y. Lewin, a professor of strategy and international business at Duke University's Fuqua School of Business. He adds that locals may better navigate a business culture where copycats and competitors often play by different rules.

What's more, a failed expatriate hire can be a costly mistake and slow a firm's progress in the region, said Phil Johnston, a managing director at recruiter Spencer Stuart.

To help companies fill Asia-based executive roles, at least two search firms—Spencer Stuart and Korn/Ferry International—say they have begun classifying executives in four broad categories: Asia natives steeped in local culture but educated in the U.S. or Europe; the foreigner who has lived or worked in Asia for a long time; a person of Asian descent who was born or raised in a Western country but has had little exposure to Asia; and the local Asian executive who has no Western experience.

For companies seeking local expertise, both firms said the first category is by far the most sought-after. But Mr. Johnston said those candidates are difficult to find and retain, and they can command salaries of $750,000 to $1 million—on par with, and sometimes more than, their expat counterparts.

Campbell Soup Company

Campbell Soup last week hired Daniel Saw, born in Asia, as its president of Asia operations.

German conglomerate Siemens AG in 2010 hired Mei-Wei Cheng, a China-born Cornell University graduate, to head its Chinese operations—a role previously held by European executives.

While Siemens's European executives had made inroads with Chinese consumers—building sales in the region to nearly one-tenth of global revenue—the firm realized it needed someone who could quickly tap local business partners.

After an extensive search, Siemens hired Mr. Cheng, formerly CEO at the Chinese subsidiaries of Ford Motor Co. and General Electric Co. GE

The decision to hire locally seems to have paid off for Siemens: In his first 18 months on the job, Mr. Cheng forged two wind-power joint ventures with Shanghai Electric Group Co.

Mr. Cheng communicates easily with local officials, a major advantage when it comes to selling energy technology to individual cities, says Brigitte Ederer, head of human resources for Siemens and a member of the company's managing board. Many local officials don't speak English.

Bob Damon, president of recruiter Korn/Ferry International's North American operations, said the current talent pool for executive roles is so limited that most top Asian executives simply rotate from one Western company to another, as Mr. Cheng did.

Other companies are adding to the demand by creating new positions in Asia.

Campbell Soup Co. CPB last week announced the appointment of Daniel Saw as its first-ever president of Asia operations, while Canadian conglomerate Bombardier Inc. BBD.B.T hired Albert Li to fill a new role overseeing its aerospace business in China. Both executives were born in Asia and have worked as regional managers for Western multinationals.

Meanwhile, younger Chinese professionals are positioning themselves to meet the need for executive talent in the years to come. Nearly four in 10 American M.B.A. programs say China was their fastest-growing source of foreign applicants last year, according to the Graduate Management Admission Council, which administers the Graduate Management Admission Test.

Foreigners with no Asia experience, on the other hand, need not apply, recruiters said. Spencer Stuart's Mr. Johnston said he occasionally receives inquiries from Western middle managers, proclaiming that they are finally ready to make a career move to the region. He advises them that "there is nothing about their experience that is interesting or relevant to Asia."

In hubs like Singapore and Hong Kong, expats receive as much as $200,000 a year in subsidies for housing, transportation and private schooling, Mr. Johnston said. Payments to offset taxes for these benefits add up to another $100,000. Altogether, a bad match can cost a company as much as $1 million, after figuring in relocation costs, he said.

Monster Worldwide Inc. Chief Executive Sal Iannuzzi said the company has been hiring locally for several years, in part because he found deploying expatriates cost too much. "It takes them six months to figure out how to take a ferry, they're there for 12 months, and then they spend the next six months figuring out how to get home," he said.

Associated Press

Job seekers line up outside a job fair venue in Hefei, in central China's Anhui province.

Like some other companies, Monster now tracks its own workers to ensure a pipeline of talent.

The online job-search company's current head of China operations, Edward Lo, a former fraternity brother of Mr. Iannuzzi, understands the local scene, is well connected in China and knows how to recruit, Mr. Iannuzzi said.

Among Mr. Lo's duties: finding his own successor before he retires.

Starwood Hotels & Resorts Worldwide Inc. based in White Plains, N.Y., also develops its own leaders for Asia, plucking people who have come up through the company ranks. For example, the head of Asia Pacific started in the 1970s on the finance team in Hong Kong, and the head of the Middle East region was a hotel manager who worked his way up.

Having grown up in their markets, managers understand customer needs, said Starwood CEO Frits van Paasschen. Regional heads in China, for instance, know that when dealing with land owners or developers, deals are less "transactional," and more "trust-based," he said. They also know that Chinese travelers—who now comprise the majority of hotel guests in the region—feel more at home when they're supplied with tea kettles, slippers and chopsticks, he added.

For fast-food company Yum Brands Inc. CEO David Novak calls his Asia-bred regional head and executive team "our single biggest competitive advantage." China has become the company's biggest earnings driver, comprising more than 40% of operating profit.

Thanks to Yum's China leaders, Mr. Novak says, KFC in China began serving rice porridge and soy milk for breakfast, and Pizza Hut now offers an afternoon tea menu—both of which have been big hits among local customers.

—Melissa Korn contributed to this article.

-- 2012-04-01 -- Wall Street Journal.com --

[KarenBravo]

The oil industry for years has been trying to replace expats with local hires and to some extent, they have succeeded with the non-skilled and semi-skilled jobs, but, there are many, many specialist positions well down the ladder from executives that they just can't fill with locals.

These positions all have one thing in common; experience.

You can only get experience on the job, you can't learn these skills at school.

[Jerrytheyoung]

And at the same time some Countries like Malaysia and Burma are setting a red carpet for sklilled and knowledgeable expats. But it is true that the current policy of Thailand is only attracting gangsters and mafiosi. However in their domain they are also skilled, thais want to learn from them?

[KarenBravo]

Wouldn't call it xenophobic.

Replacing expats makes sense both economically and politically.

[Crushdepth]

Wouldn't call it xenophobic.

Replacing expats makes sense both economically and politically.

Depends on the job. Some countries have a very different work ethic and attitude to issues such as precision, maintenance and safety. You can't change it with a bit of training.

[KarenBravo]

Depends on the job. Some countries have a very different work ethic and attitude to issues such as precision, maintenance and safety. You can't change it with a bit of training.

Yes you can, it's already happened within companies like Petronas and Shell.

Rigorous training and adherence to procedures is now within the corporate culture.

If you, as a local worker don't embrace it, you end up with no job.

[craigt3365]

My neighbor manages a very large factory here. He said the top 3 layers use to be all expats. It's now down to 2 layers and they are trying to get it to just the top boss. Big changes over the past 10 years according to him.

[geriatrickid]

Accurate article. I have been trying for eons to get a transfer to Singapore. The position is "easily" filled by a local. Perhaps, not as experienced or skilled as me, but I know the personnel are qualified and good at what they do. I can't complain as it is a fair policy, and cost effective too. In Asia, the locals want to deal with a local not a foreigner. The acceptance of foreigners in these positions has been on the wane for some years and is much different than the Australian, EU and Canadian openness. (I left out the USA as the acceptance of "forrinners" makes Thailand's position seem welcoming.)

The article is focusing on skilled expat labour. The expat beer bar operators/pimps hair dresser/massage/laundry investors need never worry because their positions are safe. As long as they continue to mary Thailand's undesirables and to piss their money away on such foolish ventures, they will always be welcome.

[jayboy]

My neighbor manages a very large factory here. He said the top 3 layers use to be all expats. It's now down to 2 layers and they are trying to get it to just the top boss. Big changes over the past 10 years according to him.

Exactly.However my experience this has been a developing process for nearly twenty years, with a possible exception being the Japanese investment community where several layers of expatriate management can still be found.The old style expatriate package I enjoyed thirty years ago has all but disappeared save for a few very highly placed individuals.

[Orac]

'Duke University's Fuqua School of Business'

I thought this was an April fool prank that I was not getting having read this.

[MEL1]

'Duke University's Fuqua School of Business'

I thought this was an April fool prank that I was not getting having read this.

Me too!

-mel.

[kerryk]

'Duke University's Fuqua School of Business'

I thought this was an April fool prank that I was not getting having read this.

Me too!

-mel.

You guys missed it. If you look closely at Mei-Wei Cheng' tie you can see the little Siemens on it.

[nurofiend]

Accurate article. I have been trying for eons to get a transfer to Singapore. The position is "easily" filled by a local. Perhaps, not as experienced or skilled as me, but I know the personnel are qualified and good at what they do. I can't complain as it is a fair policy, and cost effective too. In Asia, the locals want to deal with a local not a foreigner. The acceptance of foreigners in these positions has been on the wane for some years and is much different than the Australian, EU and Canadian openness. (I left out the USA as the acceptance of "forrinners" makes Thailand's position seem welcoming.)

The article is focusing on skilled expat labour. The expat beer bar operators/pimps hair dresser/massage/laundry investors need never worry because their positions are safe. As long as they continue to mary Thailand's undesirables and to piss their money away on such foolish ventures, they will always be welcome.

what line of work are you in, if you don't mind me asking?

[GentlemanJim]

I don't believe this is news at all. !00% guaranteed this is commissioned editorial paid for by Spencer Stuart and Korn/Ferry International. It is so obvious I cannot understand why it has been put in News.

[kerryk]

I don't believe this is news at all. !00% guaranteed this is commissioned editorial paid for by Spencer Stuart and Korn/Ferry International. It is so obvious I cannot understand why it has been put in News.

I read the article first in the Wall Street Journal.

http://online.wsj.com/article/SB10001424052702304177104577305780300265926.html

You mean they conned them too?

[Gone]

When they say "Asia" they are 90% correct. Most Asian countries can speak English fairly good where Thailand falls WAY behind in that. Most asian countries I have worked in I can communicate in English with the Engineers, office staff right down to Reception and even some cleaners where in Thailand I could only communicate with 50% of the Engineers in English and any staff below them could speak or understand NO English at all.

I know in the Oil/Gas & Petrol-Chemical industry we are being under-bid by Indians and Philipinos these days so they don't hire us because we want to much money however in the end they end up paying us to come in and clean up the mess that the Indians and Philipinos made. They would have been better off just paying us for our experience in the first place.

In 2015 when ASEAN is in place Thailand doesn't stand a chance because of their lack of the English language. Sad but true.

[kerryk]

When they say "Asia" they are 90% correct. Most Asian countries can speak English fairly good where Thailand falls WAY behind in that. Most asian countries I have worked in I can communicate in English with the Engineers, office staff right down to Reception and even some cleaners where in Thailand I could only communicate with 50% of the Engineers in English and any staff below them could speak or understand NO English at all.

I know in the Oil/Gas & Petrol-Chemical industry we are being under-bid by Indians and Philipinos these days so they don't hire us because we want to much money however in the end they end up paying us to come in and clean up the mess that the Indians and Philipinos made. They would have been better off just paying us for our experience in the first place.

In 2015 when ASEAN is in place Thailand doesn't stand a chance because of their lack of the English language. Sad but true.

The people that are building the hotels in Pattaya know this.

[4evermaat]

i think a major takeaway point is that companies are attempting to be more profitable by using local talent to fill upper management/skilled jobs when possible.

the internet and globalization has helped to break down barriers, but culture integration like most things is an art that can only be mastered by practice. Expats looking solely for an excuse for a visa may be in for a disappointment. you actually have to produce for your sponsors. the question is, is there enough talent to go around. and can the company keep the talent they find.

"2nd best time to plant a tree is today." Sent from TV android app.

[ExpatOilWorker]

Depends on the job. Some countries have a very different work ethic and attitude to issues such as precision, maintenance and safety. You can't change it with a bit of training.

Yes you can, it's already happened within companies like Petronas and Shell.

Rigorous training and adherence to procedures is now within the corporate culture.

If you, as a local worker don't embrace it, you end up with no job.

You are spot on with Shell and Petronas. I was offshore for a platform shutdown and out of 680 personnel offshore I was the only farang. Petronas is 99.99% nationals with only the HSE manager and a few others as expats.

Onshore there are a few more white collar expats, but they locals are also moving up the ladder and surely have the talent to do so.

[TAWP]

Wouldn't call it xenophobic.

Replacing expats makes sense both economically and politically.

It makes sense, *if* the foreigners was put here via relocation-packages.

I would say that around half of the foreigners at the three top layers in our office is re-located, the other half is hired locally.

But what is also noticeable is that the positions was open for both Thai and foreigners (we even have Bangladeshi etc co-workers due to this) and accept those that are qualified.

It just is very-very hard to find staff that is senior, but easy to get a lot that is [experience/skill-wise] junior.

[Nathan@Thaistocks]

Happy April Fool's Day!

Posted with Thaivisa App http://apps.thaivisa.com

[MEL1]

Happy April Fool's Day!

Posted with Thaivisa App http://apps.thaivisa.com

Happy days

Edited April 1, 2012 by MEL1

[Geekfreaklover]

Happy April Fool's Day!

Posted with Thaivisa App http://apps.thaivisa.com

Happy days

Hmmmm.

[impulse]

From the article:

After an extensive search, Siemens hired Mr. Cheng, formerly CEO at the Chinese subsidiaries of Ford Motor Co. and General Electric Co. GE

Current CEO of Ford in China is David Schoch

Source: http://media.ford.co...rticle_id=35308

Current CEO of GE in China is Mark Norbom

Source: http://www.ge.com/news/chinanews/

Apparently they figured out that having a local isn't the cat's meow. Wonder how long it will take Siemens....

Edited April 1, 2012 by impulse

[nocturn]

it is inevitable.

[ratcatcher]

Accurate article. I have been trying for eons to get a transfer to Singapore. The position is "easily" filled by a local. Perhaps, not as experienced or skilled as me, but I know the personnel are qualified and good at what they do. I can't complain as it is a fair policy, and cost effective too. In Asia, the locals want to deal with a local not a foreigner. The acceptance of foreigners in these positions has been on the wane for some years and is much different than the Australian, EU and Canadian openness. (I left out the USA as the acceptance of "forrinners" makes Thailand's position seem welcoming.)

The article is focusing on skilled expat labour. The expat beer bar operators/pimps hair dresser/massage/laundry investors need never worry because their positions are safe. As long as they continue to mary Thailand's undesirables and to piss their money away on such foolish ventures, they will always be welcome.

"As long as they continue to mary Thailand's undesirables "

What an amazing sweeping statement.

[Felt 35]

Happy April Fool's Day!

Posted with Thaivisa App http://apps.thaivisa.com

Exactly

[KeyserSoze01]

Depends on the job. Some countries have a very different work ethic and attitude to issues such as precision, maintenance and safety. You can't change it with a bit of training.

Yes you can, it's already happened within companies like Petronas and Shell.

Rigorous training and adherence to procedures is now within the corporate culture.

If you, as a local worker don't embrace it, you end up with no job.

You are spot on with Shell and Petronas. I was offshore for a platform shutdown and out of 680 personnel offshore I was the only farang. Petronas is 99.99% nationals with only the HSE manager and a few others as expats.

Onshore there are a few more white collar expats, but they locals are also moving up the ladder and surely have the talent to do so.

Many countries require a certain percentage of onboard personnel to be local citizens. I have seen jobs run in some areas of the world where the only "farang" onboard was the toolpusher, rig manager and company man.

[hellodolly]

it is inevitable.

Agreed

It will take time but eventually the locals will stat to pay more attention to the over all business they are in and will want to graduate to a higher position and thereby inspire others.

Like one previous poster said it has taken ten years but now there is only two top line positions where as three years ago there was three.

The driving need to learn English in schools rather than other subjects such as math science history social studies will in the end deprive the students of every day living skills. It will turnout millions of students who have no need for English and really haven't learned it any how. Those who are inspired will find a way to learn it.

[animatic]

My neighbor manages a very large factory here. He said the top 3 layers use to be all expats. It's now down to 2 layers and they are trying to get it to just the top boss. Big changes over the past 10 years according to him.

A good brillo pad will scrub those last few layers right away.