China Specialists and Generalists – Global Competitors Need Both

New China Hands will coordinate the efforts of China specialists and generalists.

Professionals in non-finance businesses don’t often look to Wall St. banks for management tips or productivity advice. Financial houses have always been considered outside the mainstream community of industries, but since 2007 they are usually presented as great examples of how NOT to run a business. When it comes to managing China information flows and products, however, Wall St has some important lessons to teach Main St.

I spent the 90s working at the NY offices of European investment banks that covered Asia. Our clients were US banks, hedge funds and institutional investors – and our products were equities and financial instruments issued by private firms and governments in Asia. The typical sales arm of an investment bank is divided into professional units often referred to as “desks”. There were the generalists (the Asia Desk) and then specialty markets – such as the China Desk, the Singapore Desk, the Korea Desk, etc. Because finance is primarily an information business, we would get daily briefings about current conditions, market-moving news and product updates in all the countries that mattered to us. Most of these briefings came in the form of a morning call from the heads of research in offices throughout Asia. Each call was as short as humanly possible – often only 2 or 3 minutes. As the China specialist, I was responsible for keeping the generalists abreast of important developments in Greater China and distilling down our firms’ proprietary research reports into a few quick bullet points. A good morning briefing had to include three types of information:

  1. Big-picture issues that would impact on all markets. Currency, trade regulations and government issues were high on everyone’s agenda.
  2. Major products (such as an IPO or a hot stock) that everyone’s clients would be interested in buying.
  3. Ongoing maintenance issues, such as macro-economic indicators, trade statistics and significant trends.

We all understood two things about these briefings – they had to be quick, and they had to be comprehensive. One of the main skills of a banker (or any information professional) is the ability to discern trends and filter useful information from the daily flood of headlines, reports and media noise. The only thing worse than wasting salesman’s time was sending him out with incomplete information.

The result was that all relevant personnel had three levels of information. First, he knew the “house view” – the company policy about where the economy was headed and what our outlook was on various indicators and expected product performance. Next, everyone knew what was happening in China that might relate to his business, products and clients. No one was going to be blindsided by a development that the competition was already talking about. And finally, everyone on the team knew when they should mobilize specialists and get them involved.

The daily briefings were quick – we covered the world, Asia, half a dozen specialty markets in less than 20 minutes, every day. Once the morning meeting was over, we hit the phones and started calling clients. Generalists talked to fund managers, traders and other generalists, while the specialists talked to other specialists or generalists with a special interest in the countries we covered.

Good information is powerful – the wrong information is fatal

When China was exclusively a manufacturing or sourcing center, senior managers were justified in taking a 10,000 mile high view. It was the province of the operations and manufacturing people. Finance might get involved if there was a problem or a new investment was being considered.

Now, however, China is strategic. It’s about sales and supply chain. MNCs and global operations can’t afford to be caught off-guard or have a China problem derail their overall strategies. Recently American and European managers have been getting so frustrated with China that they are looking for any excuse to wash their hands of the entire place – but you can’t turn your back on the world’s second largest economy just because it’s inconvenient (or infuriating). The fact that China is so difficult to manage makes it more important to secure good data flows – not less. When China was primarily an OEM center, it was ok to spend six months re-writing business plans or letting local staff drive the strategy. Now, however, senior management needs to be involved on a daily basis.

China knowledge is a competitive advantage

The role of the New China Hand is to move information – both up and down the chain of command, and east and west throughout the organization. For better or worse, we are all China hands now – you can’t ignore an important commercial center just because it’s difficult. Good companies will embrace the need to develop efficient China information flows, because it will give them a real competitive advantage over those that are behind the curve. And sharp managers will see that the ability to manage the culture/communication gap between China and the West will give them a boost up the career ladder – at their present firm, or their new one.

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