Source: Media Outreach
The first Whitepaper on China Best Managed Companies, released same day, indicates private companies in China can learn from leading management practices
Strategy, capabilities, commitment and financial strength are the four cornerstones of management excellence
SHENZHEN, CHINA – Media OutReach – 21 March 2019 – Deloitte China, with Bank of Singapore, the Business School of Hong Kong University of Science and Technology (HKUST), Harvard Business Review China and the Federation of Shenzhen Commerce, launched the Best Managed Companies (BMC) program in August last year, the first program of its kind in China to identify and recognize private companies based on their management systems.
The BMC review panel comprised more than 40 experts from Deloitte and Bank of Singapore. After six months of rigorous reviews, interviews and specialist research, 23 private companies from cities including Beijing, Shanghai, Shenzhen, Hong Kong, Nanjing, Changsha, and Hangzhou were named the first China Best Managed Companies winners. Beijing and Shenzhen outperformed other cities with six and five winners respectively. Today, executives from private companies from China and around the globe gathered in Shenzhen for the Best Managed Companies Forum 2019 and Best Managed Companies Awards Ceremony 2019.
Bank of Singapore is one of the proud sponsors of the Deloitte Best Managed Companies Awards in China. Derrick Tan, Global Market Head, Greater China and North Asia and Chief Executive, Hong Kong Branch, Bank of Singapore said, “The Best Managed Companies Awards puts a timely and well-deserved spotlight on Chinese-owned companies and entrepreneurs that are operating at the highest levels of performance, have a strong commitment to growing their business and developing leaders of the future. While the winners cover a wide range of business, what is constant is their drive to do better and to be better. These Chinese-owned companies have set the benchmark for excellence and will drive the entrepreneurial culture in China in the years to come. Heartiest congratulations to the 23 winners and I wish them continued success.
“At Bank of Singapore, many of our clients are entrepreneurs running family businesses. We understand how important it is to keep the flames of entrepreneurism burning. We are committed to supporting entrepreneurs in Greater China, whether it is by protecting and growing their wealth through our private banking and wealth management expertise, or supporting their business expansion plans as they take on the world through the corporate and commercial banking network of our parent, OCBC Bank.”
China has made incredible advances in developing its economy over more than 40 years of reform and opening up, with total GNP having grown by 22,400%. Private companies in particular have contributed significantly to China’s economic development.
The Deloitte China Whitepaper on China Best Managed Companies (the Whitepaper), outlines the significance of private companies to China’s economy — the private economy has contributed more than 50% of state revenue; over 60% of GDP, fixed-asset investment, and foreign direct investment; in excess of 70% of enterprise innovation and new products; more than 80% of urban jobs and more 90% of new jobs. The Whitepaper includes Deloitte’s analysis of the overall development of private companies in China and a sample questionnaire on their management, case studies on the first BMC winners and insights and opinions on the management of China’s private companies.
“By launching the first BMC program in China, Deloitte worked with partners in various sectors to nominate candidates, review candidates’ information, organize Best Managed CEO Lab on-site review and mentorship, and arrange reviews by an Independent Review Committee. The final list of 23 of winners shows management excellence across different sectors. As we all know, multiple factors are driving the rapid growth of the private economy, especially policy incentives and institutional innovation, and institutional reform and innovation at the state level. But at last, the sustainability of a company relies on its own competence. We hope that the BMC program will gradually realize our vision, which is identifying and witnessing companies excelling in corporate governance to sustainably grow with their outstanding management standards,” says Zhao Jian, lead partner of the BMC Program.
“Since its entry into the WTO, China has been accelerating exchanges between domestic and foreign enterprises and enhancing enterprise management in both theory and practice, ” adds Liu Xiao, co-publisher of Harvard Business Review China. “In addition, entrepreneurs and entrepreneurship play a key role in promoting private economic growth, with three generations of entrepreneurs witnessing the surging development of China’s private economy since reform and opening up. This gives the introduction of the BMC program in China by Deloitte profound significance. Great entrepreneurship deserves broad recognition.”
With support from HKUST Business School, Deloitte China conducted a nation-wide survey on the enterprise management and operation of private companies across different industries to better understand and analyze the overall management and operational status of private companies in China. The survey focused on questions about the strategy, capability and commitment of private companies. Its results show that private companies in China are well aware of their own management strengths and pain points. Based on feedback from interviews, the Whitepaper also summarizes three management strengths and five management pain points of China’s private companies:
Five pain points
Strong ability to integrate value with a customer focus
Unique core values and strategic goals
Organizational models that effectively support rapid business development and iteration
Lack of strategic execution and oversight capabilities
Uncompetitive salaries hindering the attraction and retention of top talent to spur innovation
Lack of innovation mechanisms (technology, management, business model innovations)
Poor execution of strategy due to misjudgments of new businesses and a lack of effective analytics
Lack of strategies and experience in international operations and management
Dean of HKUST Business School Professor Tam Kar Yan said, “Chinese private enterprises have made far-reaching contributions to the economic and societal development on the Mainland and across the world. It is our honor to be the knowledge partner of the Deloitte BMC Program, through which we can harness our professional knowledge to select and recognize some of the best managed companies in China, and thus promote best management practices.
“There are many outstanding and high growth private enterprises in Shenzhen, including a number of Fortune Global 500 companies and other leading corporates in specific market segments. Shenzhen has introduced various initiatives to protect and support private enterprises with the right services,” says Lin Hui, member of the Standing Committee of Shenzhen Municipal People’s Congress, and executive president of Federation of Shenzhen Commerce and Shenzhen General Chamber of Commerce. “In the future, Shenzhen should continue to empower private companies, which will play the role of driving the development of a level playing market. It should seek to create a market environment with fair competition, build a peaceful business ecosystem, simplify its business policies, and reduce burden on businesses. It should also introduce policies to propel the development of a high quality economy, reduce tax burden, facilitate capital raising and support targeted business segments and industries. It should also establish business platforms that cater to the needs of companies, focus on developing the platform for shared infrastructure, and speed up the connection within the industry value chain. Shenzhen would also need to create platforms for royalty transaction, government services and the sharing of corporate credit information.”
“Strategy, capabilities, commitment and financial strength are the four cornerstones of enterprise frameworks for management excellence. Generally, private companies in China have focused more on business than management and pursued rapid business growth rather than sustainability. When a company grows big enough, it should take into full account ‘sustainable’ profitability and growth as well as its social responsibilities,” concludes William Chou, vice chair of Deloitte China and leader of Deloitte Private. “Companies need to address several emerging issues amid uncertainties in the future global economy. In addition to the good number of successful private companies emerging from China’s reform and opening up, there remain more hidden champions with excellent management performance to be discovered. Through our BMC program, we hope to encourage more outstanding private companies to learn from best managed companies in other countries and improve management capabilities while pursuing their own business growth. Deloitte aims to work with partners and build a platform to facilitate the development of private companies, an essential pillar of China’s economy.”
By analyzing the stories of the first BMC winners in China, Deloitte proposes the following solutions for Chinese private companies to achieve management excellence:
Develop long-term strategic planning as early as possible, focusing on future perspectives with clearly defined long-term vision, medium-term strategies and short-term plans;
Do not innovate for innovation’s sake. Build a clear innovation management and planning system to pursue targeted technology and model innovations, and allocate sufficient resources and talent;
Think globally and enhance international influence by integrating into local communities and value systems allowing companies to grow into “global organizations”;
Adhere to people-oriented principles to continuously invest in talent development, sustain and develop corporate culture and entrepreneurship, and establish a sound social responsibility management system to inspire teams’ commitment to shared vision;
Lastly, be proactive and prepare for changes. Be flexible and responsive in the face of external changes, displaying not only an ability to survive and withstand risks, but also management excellence. Such risk management and response capabilities become even more important in the context of macro-economic downturns and intensifying de-globalization.
– Published and distributed with permission of Media-Outreach.com.