For Chinese tech firms, company values are increasingly important, but tough to get right

Editor’s note: This was contributed by Elliott Zaagman a trainer, coach, and change management consultant who specializes in aiding Chinese companies as they globalize. To contact him, check him out on LinkedIn, or add ezaagman on WeChat.

What is your company? What do they believe in? What do they stand for? And why should anyone care?

Values are the source code, the DNA, that lies at the heart of any organization. It is values, more than anything else, which dictate the culture of a company; it is the culture which dictates the products and services which they offer; it is ultimately those products and services which define a brand. While many companies have been able to stumble upon one or two good ideas and then fade away, it is the ones with clear, consistent values which stand the test of time and build trust with their employees and customers.

Working in China, I have found that organizational values are really difficult to talk about. In researching this piece, I posted on Wechat, asking for good examples of Chinese organizations who have clear values and have achieved success from executing them. I received 30 responses (nearly all recommending either Alibaba, Lenovo, or Huawei), but in each case, when I followed up, it was very hard to get people to articulate what those values were, or how they impacted the behavior of the employees and the work the company does.

This is the best-case-scenario. My Wechat is filled with young, urban professionals, many of whom work in HR or PR for Chinese tech firms or global MNCs. In the past, when conducting corporate training for more traditional firms, when I would ask participants about how they would define their company’s values, the room would often grow silent and I could sense that it usually made the leaders there uncomfortable.  At other times, when I’ve asked people about what their company’s values are, they most often do one of two things: One is that they say something like “we are a top-ten company in China,” or “we want to be number one in x market.” That tells me absolutely nothing about what is important to your company, aside from that you associate your values with your status. Another common response is, “we are passionate and work hard,” which also tells me pretty much nothing.

So why is it so hard to find employees in China who can clearly express their company’s values? I asked 6 different Chinese professionals and received answers that fell along similar themes.

Misconceptions

One was just a simple misconception about what company values are. Many of the Chinese professionals I spoke to seemed to have a misconception of what values even were, seeing them as some sort of idealistic, pie-in-the-sky concept. “Becoming successful in business in China is so cutthroat and competitive, you can’t have values and be successful,” one business journalist told me. This idea of values misses the very definition of what values are. Values are not something you have more or less of. Some people and organizations have productive and helpful values while others have corrupt and destructive ones, but everyone has values. Saying that a company or individual has “no values” is like saying that a person has no DNA.

Power structures

Another common theme was navigating power structures. “In China, both the risks and rewards of complying with powerful individuals in the government are higher than in most other countries,” a Chinese leader of an MNC told me. “If a company is seen a principled, then they may also be seen as less reliable to bend to the demands of government officials in power.”

Just money and power

Another Chinese businessperson offered me a much more cynical explanation of Chinese business culture, which I should preface by saying that I do not personally agree with. “In China, might makes right, and money gets things done. Beyond that, it doesn’t matter. It’s just carrots and sticks: what can you force people to do, and what can you pay people to do. That’s it.”

Communication styles

A theme that made a lot of sense to me was simply about eastern vs western communication style. “Communication in the East is generally much more implicit, while that of the West is much more explicit. In the West, there seems to be a need to say everything out loud, but in the East, we are usually much more comfortable with things that are unsaid, but just must be seen and felt,” a Chinese citizen living in Canada explained to me.

The corporate culture “Ponzi scheme” vs “value investment”

Regardless of the reason, when a company lacks a clear sense of values around what they are and what they do, as both an employer and a consumer brand, they end up creating what I like to call a “corporate culture Ponzi scheme:” In this situation, the selling point for the company becomes “buy our products/work for us, because we’re a successful company.”

OK… why are you a successful company? “Because we make a lot of money.”

OK… why do you make a lot of money? “Because we’re a successful company.”

I experienced this recently when I spoke with a communications professional from a Chinese company that has recently received a lot of attention for its rapid expansion. We spoke in English and language was not an issue. When I asked her “how would you describe your company’s brand?” She responded, “we are a top-X company in China.”

“Anything else?” I asked…. Silence.

In contrast to the corporate culture ponzi scheme is the corporate culture “value investment.” In finance, the value investor looks for well-managed companies with proven business models. This approach does not look solely at the hype around a company or the performance of a few good quarters, but what is behind the performance, the foundational systems of the company and its place in the market which enable that success.

A ponzi scheme, both cultural and financial, works on the image of success, without enabling a system to support it, while a cultural and financial value investment builds it from the inside-out. In other words, values create value.

Values in the globalization process

If domestically, company values are important, internationally they are essential. In our own countries, even if we don’t realize it, we have a system of pre-conceived assumptions and values which govern our behavior. Often, we do not even consider how our values impact us. They are so deeply sewn within our way of thinking and behavior that we do not even recognize their existence.

When companies expand abroad, the values and assumptions of the culture of origin can easily clash with those of overseas employees and consumers. Without careful introspection towards one’s own values and curiosity towards that of those whom they are trying to attract, you are setting yourself up for unnecessary conflict.

Increasingly, at least in the area of consumer goods and services, the best companies achieve success by obsessively focusing on the customer. Amazon famously leaves an open chair at the head of the table in all of its executive meetings, meant to signify and emphasize the most important person at the company: the customer. For knowledge-based fields where success depends increasingly on the engagement of the employees, HR departments achieve success by obsessively focusing on the worker.

For global companies, this means expressing and acting in consistency with a value set that is globally resonant, bigger than simply the company’s culture of origin. Mark Zuckerberg expressed this well when discussing Facebook’s globalization, saying, “I don’t want Facebook to be an American company. I don’t want it to be this company that just spreads American values all across the world… My views on this is that you want to be really culturally sensitive and understand the way that people actually think.”

Their successes and challenges at this approach can be seen in Facebook’s handling of the Thai market over this past year. When their beloved king passed away last October, Facebook removed all advertisements from its Thai page, following a local custom of removing advertisements during a period of mourning. Facebook famously faced a more complicated quandary this past May, when the Thai government pressured them to remove a popular video that was deemed offensive to the current leaders. Forced to choose between their values of free speech and sensitivity towards local law and customs, they opted with the later, and removed the video.

Creating a values source code

While far from easy, establishing and behaving according to a set of values that are globally resonant is key in creating a foundational “source code” for an international organization. It doesn’t have to be complicated or overly idealistic, in fact, it’s often more effective if it is simple and practical. For example, Lenovo’s foundational principle of “We do what we say, we own what we do” is simple and straightforward, but also clearly lays out the principles of clear communication and responsibility that drive the company’s culture.

What I also like about Lenovo’s “Do what we say, own what we do” principle is that it is action-oriented, not just abstract terms. Many companies will have values like “excellence,” “honesty,” or “innovation,” but until those values are manifested in clear behavior, they are hollow, and confusing across cultures, as concepts like “honesty,” for example, may look very different in, for example, the direct, low-context communication style of Denmark vs the indirect, high-context style of Japan.

Aside from Lenovo, a company that definitely seems to have a strong foundation for the values of a global organization is Alibaba. A few months ago, I saw a friend from my childhood, who as far as I know had never been to China, share a video on Facebook of Jack Ma speaking publicly about his string of failures before finally creating one of the world’s most successful companies. One thing that makes Ma so globally resonant is his ability to speak in English, but also his tendency to consistently convey what is at the core of his company: an ethic of entrepreneurship. What I personally really like about this is that it is really easy to buy into, regardless of where you are from. It resonates with me, as I think about my father and grandfather, each who were small business owners, but I know it is also meaningful for people running their own businesses in Africa, Latin America, or India.

That ethic was displayed when Alibaba rang the opening bell at the New York Stock Exchange the day of their IPO. With Ma were eight small entrepreneurs, ranging from a Chinese bracelet seller to an American cherry farmer. Alibaba was making a bold and clear statement: “We started because of a small entrepreneur. We grew because of small entrepreneurs, and we will continue to be successful because we believe in the values of entrepreneurship.”

Don’t kill the sacred cows

“Ugly Americans” and “ugly Chinese”

When I was 20 years old, I went on a trip to Europe with a program from my university. Aside from a few vacations to Canada and the Caribbean, this was my first time outside of the United States. Before leaving, I remember the professor saying to us “whatever you do, don’t be an ‘ugly American.’” The term originated post-World War 2, when the rest of the world was recovering from the conflict, and the US was at a high-point of its economic and political dominance. “Ugly Americans” were Americans who went abroad, drunk on their newfound power and relative wealth, who displayed loud, arrogant, demeaning, thoughtless, ignorant, and ethnocentric behavior. My professor was encouraging us to be aware of this negative stereotype and to behave ourselves with courtesy and thoughtfulness when abroad.

These days, Chinese tourists have begun getting a similar reputation. Perhaps most famously and egregiously was the 2013 case of the Chinese teenager to etched graffiti into artwork in an ancient Egyptian temple:

In spring of last year, there was public outcry in Japan after photos circulated of Chinese tourists, climbing over Japan’s emblematic cherry trees with selfie sticks in hand, damaging the trees. Many began suggesting that Chinese-only zones would be required to minimize the destruction. In response to what they saw as rude behavior, the governments of Hokkaido (Japan) and Thailand, as well as China’s official news Xinhua News Agency, have issued guides for Chinese tourists, aimed at improving their behavior overseas.

I’ve experienced this anecdotally as well. While travelling on holiday to Sri Lanka, Thailand, Malaysia, Indonesia, and other countries, when I tell people there that I live in China, it is frequently followed by them telling stories of Chinese tourists stealing endangered coral from the ocean, damaging the natural environment, or speaking rudely to locals. While some of this can be remedied through “tourist etiquette guides,” a lot of it just comes from how people view the purpose of the travel experience. If you view it with curiosity, and see it as a learning opportunity to experience a different part of the world, you tend to be a well-behaved tourist. If you view is as a consumer, who paid for an international vacation and are trying to simply “get the most you can” out of it, you’re generally going to behave pretty poorly.

I should also clarify that in my own personal experience, the vast majority of Chinese tourists I’ve met are kind, polite, and respectful people, and I often travel abroad with Chinese friends. But in the court of public opinion, a few bad apples can ruin the entire barrel.

The “ugly” company

In the worst cases of rude tourists overseas, they are usually violating sacred institutions in a foreign country, many that they are simply unaware exist. Whether it be historical monuments, political entities, or religion, the worst violations come when someone “kills a sacred cow.” When foreign companies came into China decades ago, many suffered when they failed to respect certain Chinese political institutions. While those institutions are different from country to country, failure to respect them will certainly cripple a company.

The key point is to understand what those sacred institutions are in each market, and where the red lines are. In Thailand, it tends to be Buddhism and the royal family, as Facebook learned. In Brazil, the institutions of family, a liberation theology-focused Catholic church, and labor unions have created a work-life balance focus that has clashed with the ways that Chinese companies tend to operate.

In many countries, a free media is a far more established institution than it is in China. Because of this, traditional media tactics in China can backfire abroad. “In China, we would often buy media coverage, and that was an effective approach. But abroad, if you try to do that, people will view you as corrupt, and that approach will backfire,” said a Chinese PR professional who now lives abroad.

In the West in particular, a strict legal system is an institution that is central to their way of life. When Chinese companies attempt to deal with Western laws the way that they deal with Chinese laws, it both can bring upon unwanted legal scrutiny, but can also be seen as asking local legal professionals to forego the ethics of their profession. “I had to resign, I had no other choice. If I had gone through with what they were asking me to do, no local firm would ever hire me again. My reputation would be destroyed,” said a former legal executive for a Chinese firm in the US, who spoke on a condition of anonymity.

What’s the deal with Huawei?

In the seven years that I have spent working in China and for Chinese companies, I have heard complaints about one company far more than any other. From dozens of current and former employees who I have spoken to, both Chinese and foreign, people complain about Huawei with a passion and vigor that is absolutely unrivaled. People who I’ve spoken to complain about the ruthlessness that is necessary to climb the ranks at the company and the paranoia that permeates the company. In a piece that I wrote looking at the Glassdoor.com reviews of Chinese tech companies, Huawei received consistently low and disgruntled reviews the likes of which I rarely saw at other companies, with accusations of racism, failure to recognize local laws, lack of advancement opportunities for non-Chinese staff, and a LOT of comments like “lack of respect for human beings.” They also seem to do pretty poorly with PR abroad, gaining a reputation as a secretive organization with numerous embarrassing moments in handling foreign media.

So, my question for a long time has been why, when they seem to completely screw up so terribly when it comes to managing a global workforce and handling overseas media, are they succeeding as one of the top, maybe even the top Chinese company internationally? My conclusion is also has to do with values. Huawei has what may be the clearest set of values in the Chinese business world: They focus on the customer, and demand that their employees do whatever it takes to meet the customer’s demands, faster and cheaper than their competitors.

This means often neglecting the people-oriented aspects of a business. “Huawei’s HR is not really a professional HR department,” a long-time HR consultant said to me. “Their HR is just an arm of operations. Huawei exists to serve the company’s results and profit-oriented focus, so yeah, of course they treat people poorly, but they really don’t give a shit.”

This has been reflected in the conversations I have had with current and former Huawei employees who have spent a lot of time with the company. Many of them are openly hostile to attitudes of cultural sensitivity, with one of them referring to it as a “distraction.” Another described the idea of cultural inclusivity in global organizations as a “Western myth.”

In this way, I am conflicted. Would I personally want to work for Huawei? Absolutely not. But I definitely respect them. They know that they are, they get their projects done, they serve their customers. They’re consistent in that approach, both inside and out, and it’s served them well.

Final thoughts

• Be mindful and deeply introspective about what your values are. Not what you say they are but what they actually What is important to your management? What traits cause someone to be a “culture fit,” and why?
• Define your values in behavioral terms. Values like “innovation,” “honesty,” and “execution” mean different things to different people, but when you specify behavioral expectations, there is much less room for interpretation.
• Create a value set that is globally resonant. People naturally tend to divide themselves based on their nations and cultures of origin. In a global company, this can be toxic. This can be improved by emphasizing inclusive values that can be understood and bought into globally.
• Don’t do business like an ugly tourist. Before entering a market, have some interest and curiosity about the consumers and employees you are trying to attract. Be willing to learn, not simply to control.
• Avoid the “corporate culture Ponzi scheme.” Believe in something beyond your status in the market, or how much money you bring in. Stand for something consistently, even if it is something simple. Remember: values create