A new survey by SwissCham Shanghai looked at the relationship between the senior management of Swiss companies in China and their headquarters in Switzerland. The study found that there is a lot of communication, but many executives in China believe they are not well understood and not given enough power to make decisions to act in accordance with market demand.
For a good number of the 73 Swiss companies that participated in this survey, the role of the Chinese market is significant. Over 54% indicate that revenue generated in China contributes between 10% and 50% to worldwide sales.
Decisions take too much time
Given the importance of the Chinese market and its size, a large part of the country heads believe that they do not have enough autonomy and decision power. Over 70% said the headquarter does not understand the Chinese market enough, and over 74% said that decisions take too much time. 48% have the opinion that they are not receiving enough resources from Switzerland.
When asked what kind of characteristics from the headquarter cause problems, the survey reveals an apparent dissatisfaction by the executives in China. Close to 58% said the HQ lacks a real understanding of the Chinese culture. Other issues of concern are: 1. the perception that the headquarter wants to play a certain role in every decision concerning the Chinese market (33%), and 2. the requirement by the head office to explain everything but then not to be able to make the right decision (34%).
Decisions are made jointly, but not always
These disagreements are somehow softened when asked who is going to make the final decision when opinions differ. Most respondents (54%) say that both sides will find a solution which makes good sense for the business. In other words, a compromise is found. 43% say that the HQ is having the final say, and 18% reveal that the management in China is going to make the final decision.
Daily or weekly communication prevails
Another positive takeaway from the survey was recorded when asked how often the China management and the headquarter communicate. Over 64% of the respondents indicated they communicate daily or several times a week. Only five companies (7%) said they get in touch with HQ once a month. Given the current travel restrictions, communication is happening online, mostly via Email (89%), Microsoft Teams (80%) and phone calls (65%). Wechat (22%) and Zoom (15%) are used, but to a much lesser extent.
Language is not the problem, but the lack of cultural understanding
When asked how the communication with the headquarter can be improved, 61% indicated that this can be achieved by giving more decision power to the Chinese senior management. 45% believe that the HQ should receive more information about the Chinese market and 43% think visits to China could help to improve the understanding and communication. 40% would find it helpful if the headquarter had a dedicated China team in Switzerland that is supporting both sides (more about this topic is discussed in this article about the Chief China Officer). Interestingly, only five company representatives (7%) believe that language training for either side would be helpful. More important than the language seems to be cultural training, which is favored by 36% of all respondents.
Discussion topics: Everything except the FTA
In terms of the topics that are on the agenda, the vast majority (85%) discusses regular updates, yearly targets and strategy. Other major topics are new challenges, competition and markets, which are mentioned by 68%, followed by new market opportunities and investment options (56%) and supply chain changes (37%). Not a hot topic at all seems to be the Sino-Swiss Free Trade Agreement. A mere three companies (4%) indicated that they are talking about the agreement.
While the survey did not ask about the nationality of the participants, the question about the communication language revealed that a large number of Swiss companies have localized their C-level management. Only 34% indicate that they are communicating in German (or Swiss) language, and a mere 5% speak with each other in French, none in Italian.
When asked when and where the next meeting with the headquarter will take place, the most common answer was “not sure” (47%), while about 1/3 believe they will have the next face-to-face meeting in 2022.
More information
For questions about the survey feel free to contact the author Peter Bachmann, Executive Director of SwissCham Shanghai, by Email: p.bachmann@sha.swisscham.org 
