Strategies – Why China’s Xiaomi and Huawei recruit foreign executives

Two distinctly different strategies

Recent recruitment of foreign executives, managers and directors by Chinese companies illustrate two distinctly different business strategies. The first is the hiring of FELOs (foreign executives in local organisations). The second is the appointment of foreign executives in countries outside of China.

Recruitment of FELOs

Recent examples for the first strategy include Xiaomi’s hiring of former Google Android Vice President Hugo Barra. This represents a typical Type 1 FELO appointment (see typology here), as Barra had served in product management and as product spokesperson for Google’s Android product line. Most Type 1 FELOs are hired for functional roles to help globalise local organisations. They frequently “don’t speak the local language and many have never worked in Korea or China” (Korn/Ferry Institute, 2009). However, as they are exposed to heightened scrutiny, local perceptions about their income levels can be a source of resentment (see award-winning academic journal article here and video with some short media interviews here).

Polycentric recruitment of foreign executives

In contrast, Chinese companies also appoint foreign executives that do NOT join operations at headquarters. Thus, these individuals are not classified as FELOs but represent a polycentric hiring strategy. The objectives of this second strategy are typically quite different. Examples include telecom equipment manufacturer Huawei, accused by the US of being a national security threat. The US and Australia suspect the company of being linked to the People’s Liberation Army of China, and Australia’s spy agency ASIO allegedly initiated Huawei’s exclusion from the country’s national broadband project. Huawei tries to dispel such suspicions despite the absence of publicly available evidence. This includes the recruitment of retired rear admiral and fleet commander of the Australian navy, John Lord, as director and chairman on its local Australian board. To further enhance the clout of its local board from both sides of the Australian political spectrum, Huawei has also appointed former foreign minister Alexander Downer and John Brumby, a former State Treasurer and Premier. Presumably, one of the tasks for Lord is to convince the Australian community and his former colleagues in the national security establishment that Huawei is not a security threat. For Britain and internationally, a very similar task falls to former chief information officer of the British government, John Suffolk, another foreign Huawei appointment.

It is interesting to note that both strategies can be illustrated with examples from the high-tech telecommunications industry. See further reading here.

Advertisements