The Hard-Soft Dilemma in Managing Overseas Investments

This article focuses on a common dilemma that Chinese Companies face when investing overseas. A more comprehensive review of people related success factors is provided in the previous article: Overseas Investment: People Factors that determine Failure or Success.

Thisdilemma relates to the appointment of the top local executive in the overseas entity and what profile is most desirable. While there are many factors to be considered, for senior Chinese leaders it often comes down to the hard or soft option. First impressions during interviews and management presentations might favor the local leader who conveys a confident grasp of the business and a decisive view on the way forward: those often described as“hard-nosed” and “no-nonsense”.

However, a softer, less aggressiveforeigner might be preferred since they would presumably bemore compliant and easier to manage than a harder, more strong willed one. While either preferential impulse may be very tempting, it is wise to think more deeply about the potential consequences and to make a more nuanced decision.

If the acquired entity’s business is performing well it may continue to do well under either type of leader. However, with ownership changes there are usually changes expected by the parent company. Initially it may be very hands-off to keep from disrupting the investment but over time changes will be expected. If performance deteriorates or an expected benefit to Chinese operations is not delivered then the parent company is likely to intervene quite abruptly.

The irony is: a hard local leader has the character to drive change quickly but may resist most stubbornly when it is imposed and a soft local leader may quickly embrace the change mandate in words but struggle in taking the hard actions to bring it about.

The nuanced decision is to select a local leader who will be adaptive as the business and relationship with the parent company evolves. The more globally minded, enlightened parent company leader will know that this evolution is mutual and will drive as much adaptation on the home front as in the overseas entity.

The information on this page may have been provided by a contributor to ChinaGoAbroad, and ChinaGoAbroad makes no guarantees about the accuracy of any content. All content shall be used for informational purposes only. Contributors must obtain all necessary licenses and/or ownership rights from the relevant content owner(s) before submitting such content (including texts, pictures, photos and diagrams) to ChinaGoAbroad for publication. ChinaGoAbroad disclaims all liability arising from the publication of any content/information (such as texts, pictures, photos and diagrams that infringe on any copyright) received from contributors. Links may direct to third party sites out of the control of ChinaGoAbroad, and such links shall not be considered an endorsement by ChinaGoAbroad of any information contained on such third party sites. Please refer to our Disclaimer for more details.

Lee Hawley

Regions & Countries
Human Resources

Show contact details please

Sign In or Sign Up


Regions & Countries
Service Areas
Employment & Immigration