Dear fellow KBC members,

what do you think about these points? How do you feel about the situation? Threatened ;-) or self-assured due to your experience in / related to Korea? (and other Asian countries)

Asia's endangered species: The expat

By Leslie Kwoh From Wall Street Journal

More Western firms are filling their executive positions with locals. Foreigners with no Asian experience need not apply

Forget expats. Western companies doing business in Asia are now looking to locals to fill the most important jobs in the region.

Behind the switch, experts say, are several factors, including a leveled playing field in which Western companies must approach newly empowered Asian companies and consumers as equals and clients—not just manufacturing partners.

Companies now want executives who can secure deals with local businesses and governments without the aid of a translator, and who understand that sitting through a three-hour dinner banquet is often a key part of the negotiating process in Asia, experts say.

In fact, three out of four senior executives hired in Asia by multinationals were Asian natives already living in the region, according to a Spencer Stuart analysis of 1,500 placements made from 2005 to 2010. Just 6% were noncitizens from outside of Asia.

"It's a strategic necessity to be integrated in the culture. Otherwise, the time to learn all of it takes forever," said Arie Y. Lewin, a professor of strategy and international business at Duke University's Fuqua School of Business. He adds that locals may better navigate a business culture where copycats and competitors often play by different rules.

What's more, a failed expatriate hire can be a costly mistake and slow a firm's progress in the region, said Phil Johnston, a managing director at recruiter Spencer Stuart.

To help companies fill Asia-based executive roles, at least two search firms—Spencer Stuart and Korn/Ferry International—say they have begun classifying executives in four broad categories: Asia natives steeped in local culture but educated in the U.S. or Europe; the foreigner who has lived or worked in Asia for a long time; a person of Asian descent who was born or raised in a Western country but has had little exposure to Asia; and the local Asian executive who has no Western experience.

For companies seeking local expertise, both firms said the first category is by far the most sought-after. But Mr. Johnston said those candidates are difficult to find and retain, and they can command salaries of $750,000 to $1 million—on par with, and sometimes more than, their expat counterparts.

German conglomerate Siemens AG in 2010 hired Mei-Wei Cheng, a China-born Cornell University graduate, to head its Chinese operations—a role previously held by European executives.

While Siemens's European executives had made inroads with Chinese consumers—building sales in the region to nearly one-tenth of global revenue—the firm realized it needed someone who could quickly tap local business partners.

After an extensive search, Siemens hired Mr. Cheng, formerly CEO at the Chinese subsidiaries of Ford Motor Co. and General Electric Co.

The decision to hire locally seems to have paid off for Siemens: In his first 18 months on the job, Mr. Cheng forged two wind-power joint ventures with Shanghai Electric Group Co.

Mr. Cheng communicates easily with local officials, a major advantage when it comes to selling energy technology to individual cities, says Brigitte Ederer, head of human resources for Siemens and a member of the company's managing board. Many local officials don't speak English.

Bob Damon, president of recruiter Korn/Ferry International's North American operations, said the current talent pool for executive roles is so limited that most top Asian executives simply rotate from one Western company to another, as Mr. Cheng did.

Other companies are adding to the demand by creating new positions in Asia.

Campbell Soup Co. last week announced the appointment of Daniel Saw as its first-ever president of Asia operations, while Canadian conglomerate Bombardier Inc. hired Albert Li to fill a new role overseeing its aerospace business in China. Both executives were born in Asia and have worked as regional managers for Western multinationals.

Meanwhile, younger Chinese professionals are positioning themselves to meet the need for executive talent in the years to come. Nearly four in 10 American M.B.A. programs say China was their fastest-growing source of foreign applicants last year, according to the Graduate Management Admission Council, which administers the Graduate Management Admission Test.

Foreigners with no Asia experience, on the other hand, need not apply, recruiters said. Spencer Stuart's Mr. Johnston said he occasionally receives inquiries from Western middle managers, proclaiming that they are finally ready to make a career move to the region. He advises them that "there is nothing about their experience that is interesting or relevant to Asia."

In hubs like Singapore and Hong Kong, expats receive as much as $200,000 a year in subsidies for housing, transportation and private schooling, Mr. Johnston said. Payments to offset taxes for these benefits add up to another $100,000. Altogether, a bad match can cost a company as much as $1 million, after figuring in relocation costs, he said.

Monster Worldwide Inc. Chief Executive Sal Iannuzzi said the company has been hiring locally for several years, in part because he found deploying expatriates cost too much. "It takes them six months to figure out how to take a ferry, they're there for 12 months, and then they spend the next six months figuring out how to get home," he said.

Like some other companies, Monster now tracks its own workers to ensure a pipeline of talent.

The online job-search company's current head of China operations, Edward Lo, a former fraternity brother of Mr. Iannuzzi, understands the local scene, is well connected in China and knows how to recruit, Mr. Iannuzzi said.

Among Mr. Lo's duties: finding his own successor before he retires.

Starwood Hotels & Resorts Worldwide Inc., based in White Plains, N.Y., also develops its own leaders for Asia, plucking people who have come up through the company ranks. For example, the head of Asia Pacific started in the 1970s on the finance team in Hong Kong, and the head of the Middle East region was a hotel manager who worked his way up.

Having grown up in their markets, managers understand customer needs, said Starwood CEO Frits van Paasschen. Regional heads in China, for instance, know that when dealing with land owners or developers, deals are less "transactional," and more "trust-based," he said. They also know that Chinese travelers—who now comprise the majority of hotel guests in the region—feel more at home when they're supplied with tea kettles, slippers and chopsticks, he added.

For fast-food company Yum Brands Inc., CEO David Novak calls his Asia-bred regional head and executive team "our single biggest competitive advantage." China has become the company's biggest earnings driver, comprising more than 40% of operating profit.

Thanks to Yum's China leaders, Mr. Novak says, KFC in China began serving rice porridge and soy milk for breakfast, and Pizza Hut now offers an afternoon tea menu—both of which have been big hits among local customers.

Source: http://globalconnections.hsbc.com/united-kingdom/en/news-insight/as...