Top management team comprises mostly foreign executives
The appointment of foreign executives in local organisations (FELOs), a rare phenomenon until recently, appears to take on an entirely new dimension. The decision of Chinese car manufacturer Qoros (观致汽车), for example, to appoint a top management team comprising almost exclusively foreign executives from significant cultural distance suggests that replicating products, services and management methods of organisations elsewhere in the world is rapidly becoming a common strategy for leapfrogging or at least competing with established multinational competitors.
Qoros president Guo Qian leaves the running of the company to foreign executives: the finance chief and purchasing manager are the only locals in the top management team. Vice-president Volker Steinwascher is the former chief of Volkswagen USA and a veteran of the industry. The design chief is Gert Volker Hildebrand of Mini and BMW-fame. Other members of the top management team include vehicle integration specialist Roger Malkusson (formerly GM / Saab), Klaus Schmidt (formerly with VW), and former McKinsey marketing man Stefano Villanti. Daniel Backman (ex Volvo) is the director in charge of product strategy and sales, while the director of quality is former GM / Opel man Ralf Nicolas. Other FELOs at Qoros include John Fenton-James (ex GM / Nissan Europe) and Peter Matkin (ex Jaguar / Land Rover). More than two thousand Chinese in the Shanghai headquarters and the Wuhu City factory are led by that foreign-dominated team.
What business strategy does Qoros pursue?
Research into what types of foreign executives are appointed by local organisations (Arp, 2013) refers to one of these as ‘replicators’ or ‘structure reproducers’. That is, this type of foreign executive is appointed by local organisations for the purpose of replicating the products, services or management structures of organisations elsewhere in the world. FELOs of this type are not appointed as chief executive officers to innovate and drive all aspects of operations and strategy. Instead, they are operatives with the role of replicating functional tasks and reproduce structures such as financial reporting or production systems. This distinct role of ‘structure reproducer’ (FELO type 2) versus chief executive ‘troubleshooter’ (FELO type 1) is found in aspiring multinationals as well as local organisations that focus entirely on domestic markets. In the case of Qoros, a quintessentially European car has been newly created / replicated by a local Chinese manufacturer, initially for the local Chinese market.
So far, this appears to be a successful strategy: In September 2013 Qoros 3 sensationally became the first mid-size Chinese car (after the 2010 Geely Panda compact) to achieve a 5-star NCAP crash-test rating. The total NCAP result of Qoros 3 even exceeds that of the internationally successful Volkswagen Golf. In future, this may be viewed as marking the era when Chinese manufacturers started going beyond building ‘good enough’ cars. What remains to be seen is whether type 3 and type 4 FELOs identified in research elsewhere will be present in that type of local organisation. Of particular interest will be FELO tenure and ability to make use of their unique insider / outsider status (see typologies: key characteristics).
Research on the FELO phenomenon in academic journals: Further Reading