We have found that our clients, mostly highly sophisticated Fortune 100 companies, have embraced the rising tide of globalization. Globalization is an irreversible phenomenon.
I recently read a book called Globality authored by three management consultants from the Boston Consulting Group. The main thesis is, that today’s global reality is a paradigm where “we’ll all be competing with everyone, from everywhere, for everything. “ The authors explain that in today’s business environment, “business flows in every direction. Companies have no centers…Commerce swirls and market dominance shifts…Everybody will be trying to grab the same things that everybody else wants, especially the most precious and limited ones: raw materials, capital, knowledge, capabilities, and most important, people: leaders, managers, workers, partners, collaborators, suppliers. And of course, customers…Globality will affect everyone, everywhere, everything. And that means you. One day it may be your company Tata Group wants to acquire, your child calling home from Shanghai, your job moving to Mexico City, and your brand new (car) Chanfgeng gleaming in the driveway.”
In fact, reality as we have known it is changing so rapidly, many people and companies are not prepared for the near future (5-10 years).
What has changed and what is changing? Information Technology (IT) very broadly defined and access to knowledge enabled by IT has been the primary catalyst. A child hood friend of mine from my Argentina days sent me a link to a powerpoint presentation called Did You Know by Carl Fisch that he created for his school board. He wanted to make sure that his school district was preparing children for today’s reality. The take away from this presentation is WOW! --- The speed, abundance and newness with which things are changing boggle the mind.
The following are just a small sample of examples of the exponential velocity and awesome enabling power of IT.
- Years it took applications to reach a market audience of 50 million: Radio 38 years, TV 13 years, Internet 4 years, IPOD 3 years, FaceBook 2 years
- Number of Internet devices in 1984 = 1000, in 1992 = 1 million, in 2008 = 1 billion
- In 2008 it is estimated that 4 Exabyte’s (4. X 10 to 19th) of unique information will be generated this year. This is more than the previous 5000 years
- NTT Japan has successfully tested fiber optic technology that pushes 14 trillion bits/second…that is 2,660 CDs or 210 million phone calls/second
- It is currently tripling every 6 months and is expected to do so for the next 20 years
- The first commercial text was in December 1992…today, the number of text messages sent every day, exceeds the total population of the planet
- There are 31 Billion searches on google/month vs. 2.7 billion/month in 2006
- In 2007, 1 out of 8 couples married in the USA met online
- There are over 200 million registered users on my space…if this were a country it would be #5 between Indonesia and Brazil
- There are ~ 540,000 words in the English language this is about 5x more than Shakespeare’s time
- It is estimated that a week’s worth of the NY Times contains more information than a person was likely to come across in a lifetime in the 18th century
- China will become the #1 English speaking country in the world
- The 25% of India’s population with the highest IQ is greater than the US population of approximately 305 million people
- Current population growth rates in India and China are 5.8 x and 4 x respectively greater than the USA
- During the next 20 years, approximately 300 million Chinese farmers will migrate to Chinese cities. Most of these cities do not exist today. This will be the biggest migration and economic transformation in the history of mankind
- Tens of thousands of talented people from America, Europe and other parts of the world will migrate (temporarily and permanently) to China and play an integral role in China’s transformation
Combine all of the above with globalization and you have a global reality today few would have anticipated 10 years ago. Yes, the USA is facing big challenges, but American and European people and companies can successfully take advantage of the vast opportunities that globalism offers. Emerging markets are growing much faster than the mature markets of the USA and Europe. According to the Economic Intelligence Unit, by 2010 emerging market economies will account for 45% of the world’s GDP and 60% of GDP growth. Emerging markets led by the BRIC countries (Brazil, Russia, India and China) will certainly become the most important growth markets of the future. Three out of our four largest clients get more than 60% of their revenue from international sales with higher profit margins than domestic sales. By 2010 one of our clients expects to double revenue from emerging market countries. During the 1950s and 1960s Americans would have thought you were crazy if you told them that by the year 2007 44% of the top 20 most valuable companies (measured by market capitalization) would be companies from the developing world. And that by 2008 four of the world’s largest companies would come from China compared to 9 from the USA. During the past two years companies from Brazil and Russia were also on the list of top 20 most valuable companies. The tide of globalization is rising! Are you in a boat that is prepared to float with the rising tide? Or will you be under water?
Imagine building an economy for 300 million people during the next 20 years. Much of the world’s immediate future growth will come from China. China’s GDP between 2007 and 2011 is projected to grow by 9.1%. In 2008 China’s IT market was approximately $18 billion and it is projected to grow more than 14% between 2007 and 2011. By 2011 China will be the world’s third largest economy (today it is #4), the sixth largest IT market, the second fastest growth market for small medium businesses and a major hardware market serviced by tens of thousands of people and companies that specialize in selling solutions, software and services. China is now the largest market for mobile telephones and in the not distant future it will be the largest market for almost everything consumed on the planet.
Massive urbanization is coming to China. During the next twenty years approximately 1 billion people will be living in cities up from about 600 million today. This means 300 million people will leave their farms and join cities that today do not exist. This migration is equal to 98% of the current population of the United States. This unprecedented rapid urbanization will fuel GDP growth and change will be spectacular. According to a study by the McKinsey Global Institute, “China will have to build 900 to 1,100 gigawatts of power production capacity by 2025 to meet the energy demands of its cities. During this period, it will also have to pave five billion square meters of road, lay 28,000 kilometers of commuter rail, and erect 20,000 to 50,000 skyscrapers (for about 40 billion square meters of new floor space). “ Imagine what it will take to enable a transformation of this magnitude. Virtually every industry and segment of the country will grow: real estate, public and private infrastructure (new schools, hospitals, airports, transportation, etc), consumer products and goods, retail, heavy industry, services, etc. During the next 20 years China will be world’s most important growth market. China will become the #1 English speaking country in the world.
China’s Achilles heal is its dearth of management talent. The growing need for talented managers in China represents by far the biggest management challenge for MNCs and locally owned business. According to McKinsey & Company, “88 % of Chinese executives said their globalization efforts were hindered by the scarcity of people with real cross-cultural knowledge or expertise managing foreign talent. 93% said that Chinese companies would not achieve their global aspirations unless they developed suitable leaders more aggressively… (There is) a shortage of global talent in every department-especially those who can negotiate with partners and those who have a profound understanding of European and American markets.” At Celera Partners we anticipate increasingly intensified competition between MNCs and local companies for qualified global managers. As local Chinese companies continue to globalize their operations and enter new markets in Europe and the Americas, they will be hiring non Chinese managers throughout their entire organization including the executive suite.
We have a MNC client, one of the world’s largest technology conglomerates, that has developed and formalized a hyper growth strategy to capitalize on China’s extraordinary growth potential. They are aggressively mobilizing resources and leadership to accelerate growth. Headcount in China is anticipated to grow 25% year over year for the next five years. We have been retained to help them identify and recruit senior level executives. The company is seeking to recruit consulting talent capable of enabling deeper client relationships, selling and delivering solutions and services. Our client is ideally positioned to help their customers modernize infrastructures for high-volume, high-availability operations and revamping core business processes to grow rapidly. In order to achieve the company’s hyper growth objectives, our client must recruit a broad range of IT leaders to serve MNCs, emerging local market-leading companies (regional growth beyond Beijing and Shanghai), and the public sector. The company is seeking to recruit talent for all industry sectors and that are intimately familiar with higher value IT segments driven by SOA and virtualization trends around systems, middleware and services. For this client, we are looking to recruit talent from America, Europe and other leading markets in Asia Pacific.
China’s clarion call
As the US economy limps along for the next 2-3 years, career opportunities in China look increasingly more attractive. But to take advantage of today’s global reality requires that people leave their comfort zones – literally, move to a new country. Executives that are prepared to do a 2-3 year stint in China will be markedly better positioned for future career growth and advancement than executives that only have purely domestic experience in their tool kit. Executives (and their children) with substantive China experience will be increasingly in high demand for the foreseeable future by MNCs. China’s emerging local companies will be seeking leaders to help them penetrate new markets in America and Europe. And American and European executives working in China should anticipate returning to their home countries in leadership positions with responsibility for managing important pieces of international business.
About the blogger:
I am a seasoned professional executive search consultant and an avid student of business models. I am the founding partner of Celera Partners a highly successful retained executive search boutique firm that conducts recruiting assignments on a worldwide basis. We have emerged as a powerhouse executive search firm because we are working for some of the most influential and respected global companies. During the past several years our clients have included the world’s largest automotive company, the world’s largest Hi-Tech company, the world’s largest enterprise software company and the world’s largest outsourcing company. We work closely with the senior management and board members of our client companies on important transformation and change management initiatives that are global in scope.
