So far in this blog, I’ve both hailed the possibility of better leaders emerging in China and railed against Chinese government repression.

Now I hope to connect those dots. Namely, up-and-coming business leaders at multinationals in China have the power to reshape China’s social and political landscape in positive ways.

Even as those 20-, 30- and 40-somethings charge ahead with their companies and their careers, they possess—or are gaining—the intelligence, creativity and clout to improve more than just China’s business climate.

I don’t deny that that business climate alone has been good for the Chinese people. The international trade that has accompanied China’s capitalist push over the past quarter-century has led to tangible new freedoms for millions of Chinese.

And I realize China may not ever look exactly like the Western democracies—which have plenty of warts themselves. Maybe free speech and other individual rights I cherish will never be as strong in the more collective Chinese culture as they are in the United States.

Even so, there’s room for business leaders at multinationals to do more to temper the most disturbing aspects of China. These include continued factory worker exploitation, as documented late last year by BusinessWeek. And the jailing of journalists. And the mistreatment of Tibet, as highlighted in a recent Rolling Stone exposé.

That February 8 piece is replete with sickening accounts of torture by Chinese authorities and of the gradual erosion of Tibetan culture. It hit me even harder as I looked at one of the accompanying photos: an image of an Adidas shop in Llasa. As readers of my earlier blog items may know, Adidas HR executive Angel Yu has stood out for me as a prime example of a new generation of Chinese leaders who are working to combine the best of the East and the West—and who eventually may be prepared to tackle tricky global problems as never before.

I don’t know what Angel Yu thinks of the Chinese occupation of Tibet, or exactly how she can influence her country’s actions there. But it strikes me that she and other rising leaders in the business community can, over the long run, make a significant difference there and elsewhere. Perhaps in Tibet, for instance, Adidas can go out of its way to give opportunities to locals when it comes to hiring and distributing franchises. That could help counteract what appears to be a conscious Chinese policy to flood Tibet with non-Tibetans.

One other piece of the puzzle merits mentioning. Young Chinese business leaders are coming into their own just as the country as a whole is broadening its horizons globally. A recent Time magazine story on China cited a 2006 survey showing that 87 percent of Chinese respondents thought their country should take a greater role in world affairs. Most Chinese, the survey found, believed China's global influence would match that of the U.S. within a decade.

If the 21st century is going to be, to a large extent, "The Chinese Century," the kind of China that becomes a stronger world power matters immensely. Will it continue what appears to be its current agenda of cozying up to bad-behaving states with natural resources, such as Sudan, without pushing for reforms? Could it instead offer lessons on capitalist development combined with workers’ rights, as well as how to shift from authoritarianism to greater political openness?

I’m not alone in calling for China business leaders and their companies to embrace a kind of social responsibility. In fact, I found in my reporting that the concept of corporate social responsibility has been gathering steam in China. One company that views leadership development in a social context is computer maker Hewlett-Packard. Arthur Wei, general manager of China Hewlett Packard for Northern China, proudly told me that his firm sees itself as an "executive academy." That is, HP aims to groom effective leaders not just for itself, but for other organizations in China.

HP wants to "grow with China" by contributing developed talent to the country, Wei says. "That’s the return to the society that we’re doing business with."

That return is potentially powerful. At its best, HP’s corporate culture has a strong egalitarian streak, prizes integrity and, despite the recent boardroom spying flap, respects the individual.

I hope HP graduates many fine China leaders from its "academy." And that they and other Chinese leaders now coming of age remake the country to bring out its best and jettison its worst. China needs them to do that. The whole world does.


 

Don’t call China a lean, mean economic machine.

Employers in China are facing challenges on the compensation front, according to two new studies. Both dovetail with reporting I did in China earlier this year.

On Tuesday, March 13, consulting firm Watson Wyatt said Chinese workers are far less satisfied with their pay and benefit packages than workers in the rest of Asia Pacific and in the United States. According to Watson Wyatt's study of 180 companies and 60,000 employees in China, only 28 percent of mainland Chinese workers rate their compensation and benefits favorably, compared with 38 percent in Asia Pacific as a whole and 47 percent in the United States.

Faulty communication is part of the problem, according to Watson Wyatt. "[W]hile Chinese workers cite communication as a main driver of job satisfaction, many don't know how performance is measured or receive a consistent message from their company on the link between high performance and an individual's pay," the report said.

Watson Wyatt’s findings are consistent with what I learned about HR departments in China. Although progress has been made during the past decade, the HR field in China is in some respects far from Western standards. That’s partly a function of history. Traditional Chinese enterprises have not had much in the way of market forces to push them to develop sophisticated compensation or performance management skills.

On Monday, March 12, consulting firm Hay Group announced forecasts of real base salary increases for administrative, professional and senior management in 2007 for 50 countries worldwide, based on employers' projections once inflation has been considered. Hay Group said China tops the table for each of the three job categories, with a predicted a 7.9 percent increase for administrative workers, 7.8 percent for professionals and 8.9 percent for senior management.

By comparison, each of those types of workers in the United States will get real base salary increases of 1.4 percent, according to the report.

"The wealth created by rapid, focused economic development is resulting in a pay boom for Chinese and Indian workers, who will enjoy some of the largest real pay increases worldwide in 2007," Hern Yin Goh, director of Hay Group Reward Information Services in Shanghai, said in a statement.

Hay Group’s research is in keeping with the steep pay gains for leaders I heard about in China. Helen Tantau, senior partner with executive search firm Korn/Ferry International in Shanghai, told me local Chinese leaders with good track records can expect salary increases in the 10 percent to 20 percent range.

At the root of big salary gains for execs in China is a dearth of managers there prepared to do business in an international setting, combined with strong demand for such expertise amid the country’s fast economic growth.

Even as executive pay goes up in China, Chinese workers’ satisfaction with compensation is falling, according to the Watson Wyatt report. It says that in 2005-06, 21 percent of Chinese workers gave their total compensation package (pay, bonus and incentives) a favorable rating, compared with 27 percent in 2003-04.
 

Beijing boasts a modern light-rail train, the latest in electronic gadgets and luxurious hotels and restaurants. And yet some aspects of the city seem straight out of the 1800s. While driving with a friend to a section of town with high-end housing, we passed a shepherd and a flock of sheep. Late-model cars share the road with people pedaling carts. At one point I watched a mule or donkey slowly pull a cart across a wide street.

At prestigious Peking University, buying a long-distance calling card on a chilly January day meant standing in an unheated room. Similarly, the restroom of a campus restaurant was in an unheated foyer. And that made visiting it an unpleasant prospect on a day when the temperature was below freezing.

It will be interesting to see the extent to which these contrasts persist as Beijing, and China as a whole, continues to boom. Will the entire society push forward into the 21st century? Will part of it remain frozen—literally—in the past?
 

Executives today have it good: a big salary, palatial home, good schools for the kids, world-class restaurants and a wide range of entertainment options.

That kind of luxury life isn’t just available in Los Angeles, Paris and Tokyo, though. Beijing and Shanghai have emerged as cities that offer top expatriate managers a cushy, cosmopolitan existence.

Yes, there’s the serious problem of air pollution and some missing creature comforts. For example, at a Starbucks near one high-end housing enclave in Beijing, the bathroom isn’t in the store. You have to walk outside to an unheated facility.

But that Starbucks will give you your gourmet coffee fix. And a few doors down is one of the Jenny Lou’s markets in town, where you can buy cheese and bread, wine from all over the world, and liquors as fancy as Johnny Walker Blue Label Scotch whisky.

Private schools in Beijing and Shanghai cater to expatriate families. There are a multitude of high-end restaurants. The Beijing Golf Club—one of a number of courses in Beijing and Shanghai—boasts of its view of the Great Wall.

You can catch classical and jazz concerts, even some rock ’n’ roll. Eric Clapton recently played Shanghai.

The quality of life is such that expatriates’ pay in China is coming under scrutiny. Like many expats, U.S. executives in China typically make more than their counterparts at home, thanks to a number of factors. These include reimbursements for children’s school tuition and "hardship pay" for living in a difficult place.

Like the hardships of golf, jazz and premium whisky?

"Companies are becoming smarter about how they manage expats in China," says Eric Fiedler, consulting firm Hewitt's regional director for the Asia-Pacific region. "Shanghai is really no longer a hardship posting."

Severe pollution. Extreme economic inequality. Religious strife.

"As its leadership capacity increases, it will be able to choose a path that is different from some of the paths other nations have chosen," Woodland says. "One of the things that is really truly remarkable about the Chinese is their ability to deal with complexity."

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China is at once a repressive regime and one of the most permissive places I’ve experienced.

There’s something twisted about the way China’s government seems to care little about children possibly tumbling to their deaths, but plenty about fingers tapping out words on a keyboard.

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Edward Tai is quick to smile.

That ought to make some Motorola employees smile.

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Trying to make sense of China’s street traffic, I think I found a window into its business culture.

During my trip in January, I took plenty of cabs around Beijing and Shanghai. Initially, traffic in China struck me as chaotic to the point of being life-threatening. Left-hand turners peel out in front of oncoming traffic as soon as the light turns green. Cars and bikes make right-hand turns into traffic without waiting for a clear opening. Vehicles change lanes not only frequently, but often without using turn signals.

Ultimately, I realized that a governing principle here was something akin to an organic sense of flow. For example, left-hand turns actually work pretty efficiently. As the turners cut across the street, oncoming cars inch forward until they make it impossible for any more would-be left-hand turners to proceed. And vehicles hardly ever get stuck in the middle of onrushing traffic.

That has something to do with another factor I came to understand: There is a lot of communication among drivers and pedestrians, even if it isn’t the kind I’m used to in the United States. Frequent, brief toots of the horn. Flashes of the headlights. Simple eye contact.

A third principle behind what seemed to be traffic madness is a constant openness to opportunities. Drivers keep trying out different lanes, or making up new ones.

It eventually struck me that a Chinese driver coming to the United States would find our road system confusing. Why so much dead time at traffic lights when no one moves? Why stick with one lane so long and be so formal about switching when you could be missing out on a better route?

My traffic lessons were repeated in my attempts to interview business leaders in China. Would-be sources seemed unwilling to set appointments in advance of my trip, and advised me instead to "call me when you get here."

Once meeting times were established, they often were changed. A Chinese executive I was eager to meet changed our appointment twice before we finally managed to sit down. Another executive’s assistant sent a message that indicated the extent of the uncertainty that I was finding all around me. Even as she reconfirmed the appointment, she was telling me it might have to change: "We have fixed the appointment with you at 2:00-3:00pm on Jan. 23rd. However, as per the current schedule, we might need to change the time."

Why all the fluidity in business appointments? Janet Carmosky, CEO of consulting firm China Prospects, prepared me for it by describing Chinese business culture as one centered on a constant search for better options.

"The Chinese live to maximize opportunity," says Carmosky, who spent nearly 20 years working in China. "We in America place a very high value on committing and seeing something through."

Carmosky’s observation, it seems to me, explains, in part, the ethical concerns that arise in the country, such as graft and intellectual property theft.

It also explains why my appointments kept changing. I suspect company leaders and consultants were constantly judging whether I—and the exposure they could get in Workforce Management--was the best they could do on a given day.

That may be putting it too harshly. People I met with were invariably generous with their time. The executive that "bumped" me twice ultimately spent over an hour with me and responded to numerous follow-up e-mails.

What’s more, sources in China consistently communicated about when meetings were canceled and offered to reschedule. And they did so politely.

The civility gets to something I came to value in China. Even when you understand a bit about the culture, the intertwining traffic and canceled meetings can be maddening. But a saving grace about people in Beijing and Shanghai is they are much more patient than their counterparts in San Francisco and New York. Just as I never had an interview go sour over scheduling conflicts, I never once saw road rage in China.

That’s something I wish China could export.

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The story of leadership in China came alive for me as I stood in Angel Yu’s office, some 300 feet above the streets of Shanghai.

Up to that point in a three-week reporting trip in China, I’d learned that the country lacks enough homegrown managers to satisfy all the demand at multinational firms doing business in the fast-growing Chinese economy. I’d also discovered that the resulting hasty promotions of young Chinese leaders amount to a risk for companies, the country at large and even the rest of the world.

But these matters can be largely impersonal, abstract. Angel Yu helped me see how much the topic of China’s leaders is about individual people who’ve often made courageous choices, collectively achieved dramatic results and who are trying to create a new leadership style—one that may be particularly well suited for the 21st century.

Yu, 42, is vice president for human resources and administration at clothing firm Adidas for the Greater China region. In January, I interviewed her and the president of Adidas for Greater China, Sandrine Zerbib, about how the company handles leadership challenges in the country. My findings from that discussion and talks with some 30 other company officials and consultants will be published next week in a Workforce Management special report.

After the hourlong interview in an Adidas conference room, Yu walked me to her office to give me a report naming the company as one of the top employers in the Shanghai region. Yu’s office on the 32nd floor of a Shanghai high rise has a sweeping view of the bustling, still under-construction city.

It—and Yu’s possession of it—became all the more stunning to me as she described her career history. The daughter of Shanghai-area factory workers, Yu attended college and worked as a teacher in the early 1980s. This was back when the Chinese economy was still largely run through central planning, and individual choices were limited. Fed up with the restrictions governing her job, she quit and headed to Shenzhen, then China's free-market outpost. By doing so, she gave up the security of the "iron rice bowl"—guaranteed employment—in hopes for a better life. "I took a risk," she says.

It has paid off. Yu worked for four years at direct-marketing company Amway, and has been an Adidas HR manager since 1999. She now has responsibilities for mainland China, Hong Kong and Taiwan. She’s even playing a leading role in worldwide HR initiatives at Adidas, Zerbib says.

If Yu were haughty, it would be easy to see why. She has reached a powerful position, and once a week a headhunter tries to lure her away to another job. Instead, she is gracious, warm and soft-spoken.

Her story parallels what’s happened in China. Beginning in the late 1970s, the country essentially placed a big bet on free-market reforms. That gamble has largely succeeded, in the form of rapid economic growth and newfound prosperity. Problems still plague the country, ranging from human rights abuses to the immature manager dilemma I found in my reporting.

But at least on the latter front, executives and other officials in China seem aware of the issue and are determined to tackle it. And as they do, there is growing talk about blending the best of the East and the West when it comes to leadership. There’s even an argument that the Chinese capacity for handling complexity could be a key strength as the entire world grapples with tricky issues such as economic inequality and climate change.

Angel Yu may be an example of a new generation of Chinese leaders prepared for an ever-more integrated globe. She’s clearly comfortable with Western management principles. But she also says many Chinese values are worth preserving in a business setting, including loyalty and the importance of personal relationships.

Can Yu and her peers pull it off? Can they solve the many leadership problems facing the country? I can’t say for sure. But I will be following her story, and China’s, closely.

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