 Be it the regulatory landscape or the sheer size of the economy, or just a general change in political dynamics, China clearly runs on a different playbook. If you factor it all in, China is one of the world's most dynamic and complex places to do business. As we head through post-recovery of COVID, I wanted to gather insights from our consultants in our China offices to uncover the current dynamics and leaderships needed to steer foreign companies towards success in China. How long? I'd like to ask you, what kind of major hurdles are you seeing on the ground for foreign companies in terms of doing business in China today? Many multinational companies have an added caution because of the global political environment reality. So when it comes to major investment decisions, that process seems to start taking longer. So that is certainly one observation. But on the other hand, we cannot ignore the sheer size of the Chinese economy, then it will become further a powerhouse for the world economy. And this market size is huge. So that's two factors putting together, you know, will still be very attractive to any multinational companies. And Grace, coming out of post-COVID and how quickly China's recovered, what are the challenges for foreign companies that want to access China's consumer market? Yeah, I think there's complicity and ambiguity based upon the observation that we have on the ground. So it seems that all the multinational companies of the consumer-faced industries, they are reviewing and evaluating the role of the China market to play in their overall global strategy. And during such kind of exercise of re-evaluation, some are deciding whether it makes more sense for them to further invest in China in a way that be more aggressive. Some they are considering whether it would be making more sense for them to divest of their China arm to give the China more space and autonomy to grow in the market. So we are observing those kind of different range of activities and it's definitely interesting for us to keep on watching. Ed, in the technology space, we've seen a lot of noise in the macroeconomic environment. Yeah, China and technology are growing both at a rapid pace. What do you see the main challenges for overseas listed companies that want us to be active in the technology space in China? The major challenge is there is a heightened sensitivity and awareness for the Chinese entities to exert control over both technology and the data assets, which has never been there before. So you will start to hear the word stranglehold much more than before. So today, I would say companies on both sides are much more conscious about taking control and taking protection of the proprietary technology as well as data assets. So this is something affecting every decision on the business front. I think technology was one of the areas in previous years where we saw a lot of talent flow between China and overseas markets. A lot of early stage Chinese went overseas to learn technology and then came back and then a lot of US companies and foreign companies tried new technology in China. How do you see the changes affect that flow of talent? The flow of talent has slowed down. There is much more restriction both from the immigration, from political and from psychological aspects. Aside from the practical restrictions issued by government, the talents on both sides are much more conscious about the impact on their own career and sometimes even from a national security perspective. So this has slowed down the talent flow both sides tremendously. So both sides will probably need to look internally more to spend more on developing talent rather than just trying to attract talent externally? Definitely that is a general trend and in the meantime there will be areas where China is still looking to US or EU for talents. So they just need to come up with much more creative solutions. For example, setting up overseas labs or entities instead of bringing people back. Heilong, in the industrial space China is very clear in terms of setting up its industrial goals every five years, ten years. When you look at what they've been saying about the next round of plans around their industrial foundations and supply chains and building of those supply chains, what are the implications for foreign companies in those sectors? There will be increased competition. Local Chinese companies including the SOEs over the years have become much more competitive and more technologically advanced. That is number one. Number two, there is a positive side of that compared with other smaller economies. China would offer a more complete supply chain which is vital for any industrial economies. On the one hand there will be growing competition but on the other hand do not underestimate the attractiveness of the Chinese market. By that I mean the better complete supply chain that is available locally which is a huge competitive advantage. When we talk about competitive advantage in the consumer market race, China has a huge competitive advantage especially even during Covid, just the size and scope of population, large cities, the average spend. What have you seen in terms of how that has affected how foreign companies who want to still sell in China in terms of their talent and the people they hire to help them access and develop those markets better? I probably would like to take one step back before I answer this question in the view of the consumer-fated companies because what we have observed particularly in a post-Covid 19 there is what we call co-occurrence of those the consumption upgrading and also people might start shifting from like expensive means good quality to like value for money. That actually creates a lot of implications to how those international companies need to conquer both the market share and the mind share in a way that look at for example the sophistication of the consumers in this market and also in terms of that shifting to experience-oriented and service-oriented consumption. So that is number one. Number two is regarding to the technology and also those kind of effort to capture in the China market allowing those lower entry barrier of those consumer-fated startups to build the business model that was the high quality offering but with low price. That has a huge competitive advantage and then if you look up to those getting more matured platform native digital players they actually allow those kind of consolidated bargaining power among consumers and to penetrate further into those geographic areas in the past is so challenging for those multinational companies to penetrate into and so in that regard I think it's for multinational companies to play and win further the market it's very important to reconsider saying where they're invested to be played and also how they are able to position themselves strong in those kind of new categories and new opportunities of growth and that make them to bring those talent leadership that is required for such kind of challenges and opportunities as well. I think in the consumer market we've seen a lot of the foreign multinational have come to China and initially at least very much relied on brand power and sort of the brand sells itself to a certain extent but we're seeing China's developing its own tastes its own styles its own levels of sophistication so presumably the outcome of that then is that for multinational to continue to be more successful is to understand how to adapt to the local market which then leads to the question of local talent I think in technology we see that a lot Ed already technology used to be led by the overseas markets now it's being led very much by China how is that shift playing out in terms of talent in technology? So in terms of talents the sequence of interest in the past always started to from the sales and marketing fronts so China is first and foremost a market for most of the technology company from the west and gradually the emphasis is focusing on more manufacturing logistics and later on to more core technology R&D so that trend will continue we are seeing companies and moving in waves for example the first to come are the largest the Fortune 500 of the world's later on the Russell 2000 of the world's and even start to see startups coming to China they are all following this flow so this pattern will still continue because of the implication from COVID especially the political and geopolitical angle you start to see some interesting nuances in the diversification of talents especially in the area of compliance and the risk and control we are actually started to experience a lot of demanded requests actually from both sides of hiring talents either you can take a different shape and form but it all deals with the domestic or the indigenous legal environment for example the Chinese tech companies are trying to hire talents who are familiar with the legal environment to the risk management aspect in the US and vice versa and how long when we look in the industrial space where companies are involved in long-term projects heavy capital expenditure often still working in a joint venture type model how do you see finding talent and who is still willing to go in these so much longer more traditional forms of industry compared with the consumer industry and especially the tech technical industry I think the industrial world is much more dependent on capital investment and then the manufacturing and the sales process after that so in comparison the rhythm tends to be somewhat smaller slower and you know the decision process takes a little longer is not as dynamic as the IT industry but it is indeed stable when it comes to people given the current political and geopolitical reality business leaders need to make decisions still in such an environment now coming to China you need these talents you need these local senior executives who can not only see the challenge here in China for their own company but also can find solutions it's not enough just to see the the challenges because back in the headquarters the people see exactly the same they see a lot of challenges and and ambiguities they need you to propose solutions but then when you have a solution in mind the next challenge is that you need to be able to persuade the the executives in the headquarters to accept your solution and so effective communication has become very very critical at last number one number two you know the understanding of the local markets the local culture the local economy as well as a deep insight in how the western multinational companies work and the internal headquarters decision-making process and that is also a very critical factor so we see that the the 60s 70s generation there's two generations of people call them the highways typically and they have worked in multinational companies overseas and then they were sent back to China so they also gathered plenty of insight in the Chinese economy and the market so you can see the trend is that they started taking increasingly a more important role in multinational company operations here I think we we talk about it a lot as a firm you know the balance when we're assessing individuals and organizations between the need for a technical skill set and an actual cultural fit and it's always a balance between the two certain jobs you actually have to absolutely have a technical competency to do and it doesn't matter how nice a person you are and how well you fit in if you can't do the job the job doesn't get done versus those roles where the technical competency might not be as important because there are those who can do it but what's important is being able to get the message across about why a particular action or a particular step needs to be taken and and I feel that in China there's a lot of tension between those two sort of balances in the work we do these days and and Ed in the in the tech space I know this is really really prevalent and as you said now people needing to understand the compliance risks the legal risks as much as the technology you know it's not just enough that you know how to write a program or how you collect the data but then it's how you want to use the data you need to understand how to explain to someone maybe in a different country 10 000 miles away that has totally different data privacy laws definitely so the critical successful factor for a senior leader for any MNC in China it used to be more drive for results David in your word getting stunned and also in communication but today on top of this the ability to really think on your feet at taking what I coined as an outsider in approach in terms of setting strategy I become even more important compared with before previously you can be a top-notch country head if you can do a great job in terms of implementing the corporate strategies and getting the results but these days this is no longer possible because as the grace mentioned the the outside environment has changed so much I mean what happened during and after COVID-19 is nothing less than tectonic plate changes yeah indeed conversation I'm having with the senior executives and they are actually saying more and more that in the past when track records experience plays the most important role now it's actually urging them as a leader to pick you know to enhance improved learning agility because new things new modern new concepts ideas definitely occur more frequently and urging them to be able to pick and take those kind of new concepts and new models and put that into their business operation and be able to scale those kind of innovation so such kind of competency is really critical to them I spend a lot of my time in the industrial sector talking to companies about people and it's interesting people to a certain extent are less worried about what people did in the past and more focused on what they can do in the future indeed but you know and how long in industrial you and I work closely on many things when no one knows what the future looks like then no one's done it right so how do we how do we help companies especially overseas companies in China bridge that gap we talk about the big data digitization the cloud computing AI and all this technology has enabled all these changes and it potentially has a huge impact on the future of traditional industries so be it with or without COVID I think this is the new reality and certain industries like consumer retail logistics you know they have adapted to this environment very well the technologies have already brought a huge fundamental changes and making the whole thing much more effective but when it comes to some of the traditional industries typically the oil and gas the chemicals the mining industry and many others as well actually I think people are still sort of exploring we see this coming we see it both as a threat and as an opportunity and if we don't do anything someone else may get there and unseat us so there is a great deal amount of anxiety and willingness to invest but I think overall the reality is many industries companies are still sort of exploring this and some may end up paying the study fees rather than having the the fundamental results that they giving them a quantum leap for the future that's just the reality you know coming to China is the same thing and I would tend to think that the local Chinese companies are very often more flexible and willing to take that approach let's try and see now it for multinational companies especially if you're listed on the stock market never forget that you have a lot of pressure from the investment arena as well so any decisions you make may have a consequence so I think that what indeed extends the decision making process for many multinational companies I'm glad you brought up the listed company investors pressure scenario it was one of the things that we've seen a lot of in the last 18 months globally and also within Asia Pacific and I'd love to get your views on is the impact of both ESG initiatives and also DNI and how do we see DNI playing out or ESG in the tech space in China well they definitely play a role I mean ESG interestingly is not only something the western companies are championing but it was also being propelled and put up by the Chinese government's initiatives so this is very much in everyday conversation but that said when we are coming into the actual situation of leadership succession or leadership replacement we are still seeing in terms of top of agenda in terms of strategy setting finding sustainable growth opportunities dealing with changes on a broader plan rather than specifically for DNI or ESG at the moment but I do want to circle back David and just edit a few more comments regarding the earlier conversation passing comment regarding the learning agility or in other words growth mindset while Hilo is absolutely right there are many companies still taking a look and see attitude toward people with learning agility but less of kind of track record I'm also seeing some of the largest international companies who is willing to actually take a plunge into this in some of our recent assignments with company with a multi-billion dollar business in China I mean these country head positions used to go to people with 25 or 30 years of experience but they actually are willing to take a leap of faith to give those positions to people with less than 20 years of experience but who demonstrate much higher what our client called a growth mindset in the learning agility I think we definitely would see that more in the tech space I think in the industrial space where the nature of the business is especially in some of the areas working in energy utilities those areas the reality is however much they want to transform themselves they also need experience of running those businesses because they're so critical Grace I know DNI in the consumer spaces front and center for a lot of multinationals but how do you see DNI in China in particular and how large multinationals might look at those issues so our observation is that even talking about DNI is more correlated with strategy for example we look at all those latest placement of those net executive director or this advisors to those global consumer companies you know the surface you look at is there are more kind of female drawing that board but if you dig deeper into the ratio behind it's actually closely correlated to their strategy they want to capture the opportunities that occur with those younger generation director-consumer I think that's really interesting because one of the things that people forget about diversity or get lost is actually age and it's one of the challenges in Asia we see that from an age perspective if your average board director is in their 60s well then you're looking at someone who's been working for 40 years there will just be fewer female candidates but if you're willing to as Ed said in the tech space for example look at people who've got less experience then at that group of people who've only got maybe 15 or 20 years of experience then it's much more balanced from a gender perspective so one of the things we talk a lot about with clients is about think of the box from an age perspective and you'll get much more diversity but how long I know in industrial it's a little bit more slow moving but the ESG side is very rapidly advancing in industrial indeed indeed David I think in the searches that we conduct we do have an increasing number of such assignments traditional manufacturing industrial businesses increasingly look for talents in this space I would say apart from governance you know when they look for talents especially in the Chinese market especially in the technical area that Ed is in I think you know unquestionable integrity and compliance has becoming increasingly important and it has been a challenge for multinational companies here in China anyway over the last 20 years or so one final question to each of you so Ed what's the one thing that you really learned over the last 18 months that you think would be really important for clients to understand so my one lesson or one advice to the multinational company who are contemplating to do business better in China is being very upfront and transparent about the complicity that the company is facing and also demonstrate this openness to taking an outsiding approach to really send a feeling out understanding the situation underground in China in terms of formulating strategies and driving plans so this transparency this upfrontness will be the single largest sector that attracting talents Grace in the consumer sector what would be the one takeaway lesson you've learned that you've seen from your clients that you would share with with other clients yeah I think so remain alternatives and stay focused in the meantime bold enough to make trade-off option decision how long in the industrial space or what's the one key thing that you would like to pass on to clients the advice is before you come to China before you expand further in China seeing all the challenges ask yourself what do you bring to the China it's a product it's the capital you know the technology or what and then on that basis how do you want to play joint ventures by yourself you know these are all the options and then you really need somebody who's an expert playing that bridging role between the west and the east they know the local nuances very very well they have all the insights and the necessary knowledge for how the decisions are made here but then on the other hand they can be very very effective back in the headquarters so finding that somebody is a total order and that's what we are here to do to help thank you everyone thank you very much for your insights and look forward to seeing you all soon