A maturing market needs new players

By Chen Yingqun (China Daily) Updated: 2015-09-14 10:54

Charles-Edouard Bouee CEOof Roland Berger Strategy Consultants

"It is a longer process than people think, because you have to transform the employees, the mindset, you have to open up to new shareholders," he said. "What we see is a clear view from the government that SOEs should be reformed and transformed."

He said people think that because China is growing faster than Europe did, China should do everything faster than everyone else. But when it comes to companies with 50,000 or 60,000 employees, it takes time.

"I think there are a lot of things happening behind closed doors that don't make noise," he said.

The government has to be careful with SOE transformation because much of it involves public services, and it is hard to keep up the level of quality and maintain stable prices during such a big transition.

The changes, he says, can be difficult, such as transforming the company's culture from people having lifetime employment to performance-based jobs.

Chinese firms' management models have also been changing. He said different models have been used, including the European model and the military-style model. The US model, accompanied by a business code and consulting firms, has had influence all over the world, including China. But with China's development, it is logical it would contribute new management ideas.

"It is something emerging in China, which is driven by three things: A very strong rule of government, very strong entrepreneurship spirit and energy from the people in China, and very strong history and culture. These are the three things that are creating a new management model," he said.

"It is a very different world, in terms of technology, in terms of thinking, in terms of leadership, in terms of the second generation and third generation of people."

Bouee said, in 2009, China's management level was like a teenager, and "now it is getting closer to a grown-up, but not yet mature".

Bouee said China's management model is completely different because of the nature of China's civilization. "When it is mature, we should see the combination of a bit of what we see in Europe and the US. It will have a very strong connection with the government, because the country has been like this for 4,000 years and you cannot do business without interacting with government, which is different in some other countries. It will have much more innovation than today, and I think it will keep the ability to be very technical," he said.

Management talent has increased dramatically in China in the past few years. Because of the innovation frenzy, many talented young entrepreneurs would rather start their own companies than work for established firms. The management skills of the new Chinese generation aren't as available as they otherwise would be to large companies or consulting firms.

In the case of Roland Berger, 70 percent of its clients in China are Chinese companies, and more than 95 percent of its employees are local. Bouee said the challenges Chinese companies are facing include the need to be better organized to save costs while continuing to grow fast, as well as brand-building and brand recognition.