“Made” to “invented” in China the shift in executive mentality

Alibaba, Huawei and Tencent are 3 Chinese companies that have a strong presence in the Global market. As much as they still rely on their powerful manufacturing force, these companies are different from the rest by leaning towards being more innovative. Therefore, executives need to learn how to lead these companies, this change means headhunters also need to adapt their search for a new type of executive.

From 1980 to 2014, there was an intense increase of 8.7% on China GDP. At the time, the increase was in fact built on its abundant cheap labor and technology introduced from other countries. “Made in China” is a term gradually known to the world during these years which represents good quality and a cheap price. More and more companies came to China to work with local companies, build their own branches, representative offices and plants.

CEOs in China therefore were sourced by executive search based on their abilities to organise their work force being quick and efficient, almost robot like. Head hunters were looking more for executives who were skilled in optimising these benefits for companies, candidates who were able to see things very logically and strictly. Yet, as China shifts to a different economic strategy, executive search must shift with it.

As the years progressed, even if “Made in China” is still very present, there has been a change. China wanted to start opting towards becoming more than just an impressive work force, knowing that they would still have this spectacular work ethic, what better than to have labour work on their own creations and not only those of the rest of the world. China Firm Registry Database provided statistics that showed that in 1995 there were over 4.5 million firms with 71% of these being privately owned, yet, in 2014 there were over 18 million firms with 94% privately owned. These numbers show the rise of not only the number of firms but also the rise of private companies. The rise of privately owned companies leaves more flexibility for innovation as well for executive search who can therefore look for CEOs who differ from state owned companies. During the same dates, there was a rise in granted patents from 45 thousand in 1995 to over 1 million in 2014.

We have therefore maintained that Chinese businesses have shown the ability to innovate more in response to competitive wage markets and global prospects. Headhunters must recognise China’s prospects for a successful shift to a more innovation-based growth model given the data on Chinese patents, both from a number and quality viewpoint. Especially from a tech stand point, China has begun creating not just making, innovating not just building. Executive search must move and adapt in unison with the market and the changes to the economy, if an economy’s mentality shifts, executives must change with it in order to guide their team. Yet, this is orchestrated by headhunters, who must evaluate the market, recognise impending change and choose the right person to lead a company to success in an ever evolving environment.

Executive search is not only to find a candidate who fits the job description. Headhunters need to deeply analyse executives’ profiles, follow their career development , evaluate organisational alignment, important as China moves from “made in China” to “invented in China”. Zavala Civitas offers these services as well as CEO and board advisory, talent mapping and a deep understanding of China’s market and its rapid evolution.

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