Quotes of the Day
The Asian executive suite is infamous for being clubby, insular and resistant to outsiders, especially foreigners. But urgent commercial realities can alter the most ingrained management mind-set. There's been a recent series of surprising changes at the top of well-known regional companies. It's too soon to call it a trend, but there appears to be greater willingness to shake up corporate habits by bringing in outsiders, at least among a handful of companies that compete in fast-moving global markets.
Two recent high-profile examples: Chinese computer giant Lenovo three months ago announced that American Stephen Ward, a senior vice president at IBM, would become its new CEO as part of its acquisition of IBM's PC-manufacturing business. When the deal is complete, Ward, a 26-year IBM veteran, will run Lenovo from his headquarters outside New York City, far from Lenovo's home base in Beijing. In September, Acer, Taiwan's best-known computer maker, tapped Italian Gianfranco Lanci to be its president. Lanci earned the post after spearheading a major turnaround of Acer's business in Western Europe, where Acer notebook PCs became the No. 1 best seller last year.
Asian companies will likely take on more outsiders as CEOs and directors in coming years as they strive to improve management and compete on a global scale. But the process will be painfully slow. Many major Asian firms are controlled by families or a single dominant shareholder, patriarchs who feel little pressure from minority shareholders to bring in fresh blood, no matter how badly the company may be performing. Sony is an exception—its directors and senior executives hold just 0.12% of the stock, which is widely traded in Tokyo and New York.
Even at companies with top-notch outside managers, maintaining the bloodline remains paramount. At Hong Kong's Hutchison Whampoa, tycoon Li Ka-shing has been among Asia's most adept at attracting external professional managers, but ultimately, observers believe he'll eventually pass on the chairmanship to his eldest son, Victor. "There's a history of trying to keep things in the family," says shareholder-rights activist David Webb in Hong Kong.
Indeed, when foreign managers have been named to run Asian companies in the past, it's typically been due to a foreign takeover. That was the case in Japan when Renault bought a stake in Nissan Motor and brought in Carlos Ghosn to turn around the troubled automaker. Ghosn's now fabled success is no guarantee that all outsiders are miracle workers, of course, nor does it mean that Asian management is too stodgy and inward-looking to compete globally. Toyota Motor, perhaps Asia's best-run company, has achieved phenomenal international success with homegrown talent.
Still, it seems inevitable that Asia's best companies will follow in the footsteps of Citibank and Coca-Cola, firms famous for tapping their worldwide operations for the best managerial talent. Economic reforms in places like South Korea and Taiwan in recent years have pushed Asian bosses to accept more outside influence by giving shareholders more rights and dismantling restrictions on foreign investment. Change will not come overnight. At the annual shareholders meeting of oil company SK Corp. in Seoul on March 11, some shareholders, led by Sovereign Asset Management, failed to oust chairman Chey Tae Won from the board, even though he was convicted in 2003 of accounting and securities fraud. Sovereign CEO James Fitter called the decision "a missed opportunity for shareholders to place the most competent and ethical leadership" at SK. That opportunity is likely to come again.
- Michael Schuman | Hong Kong
- Opening the Door to Strangers