CEO Loneliness: the Case of China – ll

A side-effect of China’s unprecedented growth has been to illuminate a seldom discussed cost of leadership — CEO loneliness. Part 2 in a 3-part series from James Ng in Shanghai.

Part Two: How About CEOs Based in China?

In yesterday’s post, we looked at how loneliness can be a common – and harmful – problem for CEOs and owners.  In China, there is added pressure.

A recent Cornerstone CCC Survey bears out the hunch that China-based CEOs carry additional burdens as compared to their counterparts in other countries. The survey revealed that 54% of the CEOs surveyed reported feeling the experience of loneliness most of the time.

Expatriate CEOs experience much higher sentiments of isolation: 71% reported feeling loneliness most of the time. On top of having the “standard pressures” of being a CEO, these individuals have to face the additional pressures imposed by leading their company in a rapidly-developing economy.

  • The Conference Board has forecast that China’s GDP contribution to the world, in PPP terms, will reach 23% by 2025, far ahead of the 18% generated by the US and Europe individually. One can image the growing pressure to deliver at this level exerted by corporate head offices on their CEOs in China, even as the maturing Chinese economy raises challenges related to increasing labor costs, environmental issues and shortages of talent.
  • Despite China’s growing importance, corporate leaders or even key board members often have little substantial hands-on experience in running businesses successfully in China.  Reporting to the corporate office on the complex situation in China can be enormously challenging and exhaustive.
  • China is a large, complex continent regarding geography, ethnic diversity and income disparity.  The GDP per capita of coastal provinces like Guangzhou and Jiangsu exceed USD$15,000, five times more than Gansu, Guizhou and Yunnan provinces at USD$3,000. Flying from Shanghai to Urumqi takes 5 hours, double the time it takes from Shanghai to Tokyo or Seoul.  There are 65 cities in China with a population over one million!  Copy-and-paste solutions from head office ranging from meeting customer needs to dealing with local governments will not work in such a diverse market.
  • It was only in 1978 that China turned from centralized planning to a market economy, with the emphasis on low-cost manufacturing, cheap exports and generic products. Despite enormous advances in management and technology knowhow, the country is still striving to reach the level of sophistication, from innovation to management, which in mature economies has evolved over a much longer period.
  • Local corporations, producing on a scale significantly greater than their foreign competitors and now moving up the value chain, are taking on foreign brands directly in the China market. Haier and Media for instance, are far ahead of Electrolux and Whirlpool in market position while Wahaha and Master Kong are much larger than Procter & Gamble and Unilever.  Almost all the world’s largest companies are here, creating more intense competition than in other countries.
  • As the country is undergoing rapid transformation, it is not surprising that fast policy changes have caught many foreign companies by surprise. Newspapers regularly publish stories linking multinational companies to issues ranging from food safety to anti-trust violations.

This gives an idea of the intense pressures faced by CEOs, especially those leading multinational companies.
(Tomorrow: The way out for China’s CEOs)

(Did you miss the first article ?)

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