Cost of ethnocentric leadership in China
Although the cost of ethnocentric leadership in Sino-Western
enterprises in China is not captured by the accounting process, it is
a drag on Sino-Western and Sino-Japanese enterprise profits. This is
the cost of failed true cultural bonding (Graen and Graen, 2007 ).
Those companies which can match the successes in combining tradi-
tional Chinese values with Japanese and Western ways of doing
business will likely be the survivors in the China market in the coming
shake-outs.
Let’s consider, for example, postgraduate young Chinese in Sino-
Western enterprises in China. What do young MBA students seek in
their Sino-Western or Sino-Japanese enterprise positions? They seek
opportunities to develop professionally and to be promoted for their
performance above expectationsby a competent and personally
interested leader. They seek to be understood at some deeper-than-
surfacelevelandbelistenedtowhen making important suggestions.
Although they are heavily recruited by search agents for more
attractive positionswith other companies, they would prefer not
to leave. But they do leave when they lose hope of improvement.
Based on our five years of research on 150 Chinese MBAs in Sino-
Western corporations doing business in Shanghai’s economic areas,
the companies are wasting valuable Chinese managerial resources
by failing consistently to train and control their middle-level
Western managers so that they lead by combining traditional
Chinese values with Japanese and Western ways of doing business.
This book should be required reading for all Western and Japanese
managers posted in Sino-Western or Sino-Japanese enterprises in
China. The simple act of discussing this book with their Chinese
subordinate managers should open the doors to better com-
munication. To convince young Chinese managers that they are
interested in understanding traditional Chinese values, Western
superior and peer managers should avoid many superficial cul-
tural stereotypes and caricatures of Chinese values. Young Chinese
managers reject such surface-level descriptions. Remember that the
turnover cost is larger than the cost of replacement by a warm body.
It also includes the loss of production during the learning-curve
interval and during the network-rebuilding interval. This can
become a significant figure after it is multiplied by the number of
Linking Chinese leadership theory and practice to the world 287