Over the past several years Chinese construction companies have broadened their reach, aggressively pursuing projects in the West and Middle East. Unfortunately, several of these projects have run amok, falling prey to the ignorance of local regulations, insensitivity to culture, and importation of foreign workers. Notable examples are a section of highway in Poland and several projects in Saudi Arabia.
China Overseas Engineering Group (COVEC), a division of the China Railway Engineering Corp (CREC), underbid European contractors on a 30 mile segment of highway the Polish government had hoped to complete before the European Championship soccer matches in early June 2012. They didn’t underbid by just a little, but by about half. European contractors cried foul but were overruled. Work began and COVEC hired some local contractors and imported Chinese workers at low labor rates. Then the process began to bog down due to shoddy workmanship, inadequate review of specifications, and inexperience. Cash flow slowed and material costs began to rise. The result was unpaid workers and the dismissal of COVEC after they demanded an additional $320M to complete the project.
Several Chinese companies have departed from the Saudi Arabian market when their construction quality could not meet local quality standards. When asked to meet those standards they requested price hikes that would put the cost in the same ballpark as those from experienced, high quality US and European companies. The Saudis opted to go with the proven contractors instead.
In a similar fashion, when you are leading your team into new geographic markets it is important to immerse yourself into the fabric of the local culture. Remember that you will be viewed as an outsider and possibly a threat to local jobs. Hire native individuals for local management and listen to their opinions.
One way to build rapport is to keep in mind the simple fact that everywhere in the world people all want the same thing. I have worked in almost 20 countries and experienced a set of universal values—everyone wants safety and security, a modicum of shelter, safe and adequate food supplies, sufficient healthcare, jobs, and education for their children. While one could argue the items on this list, the concept is nevertheless solid. Building your discussions and strategy around these universal elements will go a long way toward productive integration with the locals.
As you become closer to the people and culture in this new region, whether providing a service or product, or manufacturing in the area, observe and analyze the effect you and your organization will have on the people. Is there a possibility that you might affect the culture? If so, expect a backlash from a segment of the population and prepare in advance to handle it with great sensitivity and be proactive whenever possible.
Lastly, ensure you meet all local laws and regulations. Hire knowledgeable contractors to assist in planning for and navigating through the labyrinth of legal barriers.
Following these simple guidelines can mean the difference between success and failure in a new geographic region. Just remember the word “respect.” Respect all people, all the time wherever you are and they are likely to respect you back.
- Understand and embrace local customs
- Remain sensitive to the ramifications of you and your company’s presence and actions
- Investigate pertinent regulations and laws
Keywords: leadership, culture, strategy