Developing Asian Leader

Many Western companies believe they will gain competitive advantage by

developing senior Asian leaders due to decreased staffing costs and better navigation

of local culture compared to that of expatriates. That said, significant challenges exist

for developing local talent, such as a lack of formal extensive education, Western

management skills, and language skills.

Advantages of Developing Asian Leaders

􀂃 Trend: Developing talent locally—According to a Deloitte Touche Tomatsu study

(n=680), local employees will significantly outweigh expatriate talent in senior

management positions in China in the coming years. Leaders at multinational firms

expect expatriates to only hold 26% of senior positions that they currently hold.

Therefore, to compete with other companies in the future, companies should invest now

in developing their local leaders.

􀂃 Expatriates are expensive—The primary driver behind localization of the senior

leadership in China is cost savings. Costs of expatriates include housing assistance,

relocation costs, hardship payments, compensation, traditional benefits (e.g., healthcare,

retirement savings), and non-traditional benefits (e.g., providing for children’s education,

commuter assistance). Local Chinese salaries are significantly less than foreign

expatriates’ salaries, and companies generally do not offer local Chinese as many

benefits.

􀂃 Local managers navigate Asian culture better—A 2004 study (n=139) and research

from the Business Leadership Forum, a sister program of the Corporate Leadership

Council, reveal that transnational corporations realize significant advantages by

localizing management expatriate positions, such as the following:

• Access to the strong personal relationships and political connections that dominate the

business environment

• Avoidance of the cultural and family adjustment problems experienced by expatriates and their

families that often negatively affect performance, adaptability, and motivation

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