The Struggle of Chinese Parent Company's managing US subsidiaries and teams

It's a thankless job. I was talking to an old friend, born in China, and then spent his college and first ten years of his career in the U.S. Then he moved back to China in senior management roles for U.S. companies for ten years. And moved back to the U.S. five years ago to work for Chinese owned companies here. We were talking about the Chinese owner's heavy handed management, how there was constant turnover on the executive team (both from China and native U.S. managers), the performance issues that were downplayed or glossed over by employees. It sounds so familiar.

We had a project recently for a Chinese parent company's U.S. subsidiary. They had failed two audits (by a CPA firm sent from China) and if they failed the third one they could be shut down. With a combination of business technical understanding (how companies account for investment capital, depreciation, etc) and cultural understanding (the U.S. would write off small amounts, the Chinese auditors felt they were being too loose) we were able to help the company pass the audit.

It's a tough position, mediating the different expectations of the Chinese parent owners, the U.S. managers, Chinese colleagues, and all the community stake holders. You open the paper today and see articles about more and more Chinese owned businesses in the U.S. - Fuyao Chemical, Haier, Golden Dragon and how they are struggling to adjust to operating a business in the U.S. They have high turnover (both Chinese and US management), union issues, compliance issues, etc.

In many ways this mirrors the situation when U.S. companies go to China. If they send U.S. managers to China they struggle to adjust to the different style of business transactions (fapiao, local government involvement, HR laws) and culture (yes means "I heard you"). The U.S. companies then tries to hire local managers, but the U.S. parent company doesn't always trust them (cultural misunderstandings, they don't believe how complicated Chinese regulations can be) and the manager can struggle to get direction from the U.S. company.

In all of these situations, both the U.S. and / or Chinese managers feel like they are mediating between two different business systems (taxes, customs, office procedures) and cultural norms (making a commitment, being respectful).   Different business and communication norms that collide in a workplace without understanding, create an environment that erodes trust. Without trust and understanding we can't transact business. I hear this even more from Chinese teams, they feel their American colleagues don't trust them. How we demonstrate trust is so very different.

So what to do? Years ago I taught a class in Orlando for the sourcing team of "the most famous place on earth." The class explained why and how Americans and Chinese work and process information so differently. Since then I have taught it at my clients offices, to thousands of people, in the US and in China. It's not about cultural norms, we go deeper than that into underlying behaviour. If I could explain it here in a few paragraphs I would, but its more complicated than I can address in one article.

Suffice it to say, there are reasons. Logical, legitimate reasons people in different countries do business differently. China's economy and business environment is growing and evolving daily. But it will never (and I mean never) mirror the one in the U.S. Nor should it.  It's not about how industrialized they are, or what the status of their legal system is, or their government. 

We process differently, just ask a Chinese manager who came here to university, worked for an American company for 10 years and is now back in China. They will struggle. As did I, after I returned to the U.S. after having gone to school in China, started my career in China (being mentored by an all Chinese team) and then came back to the U.S. and thought "what the h*#@?" What are these people thinking? I had to learn business all over again, the American way. Our experiences wire us. Different experiences wire us differently.