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Why China doesn't export world-class CEOs

The appointment of India-born Satya Nadella as Microsoft Corp.'s CEO has caused a bit of a stir in China, where people are questioning why Indians but not Chinese are getting top jobs in the U.S.

Language and familiarity with Western culture are the obvious reasons why chief executives such as Indra Nooyi of PepsiCo Inc., Anshu Jain of Deutsche Bank AG and MasterCard Inc.'s Ajay Banga have succeeded in the West. But headhunters also say Indians are more willing to move than Chinese, who see more opportunity and good pay at home.

Salaries for management positions at the director level in China are already $131,000 a year, almost the same as in Japan, and four times as much as in India, where executives at that level earn $35,000 on average. Chinese pay is just one-fifth lower than the average level in the U.S., according to a survey of technology companies by Aon Hewitt, a human-resources consulting company.

While India remains a tough place to live, China has become more comfortable in recent years, ranking as the No.1 country for expatriates in an HSBC survey. Even those Chinese executives who move away to escape pollution and a slowing economy are more likely to land in Hong Kong or Singapore than get real international experience in markets such as Southeast Asia or Latin America.

"How do you get a Chinese to move to Brazil in a developmental sequence? That's a big challenge," said Emmanuel Hemmerle, a senior adviser to Korn Ferry, an executive search firm. "China is such a high-growth market. Everyone sees that's where the opportunity is."

China suffers from a shortage of top talent, despite its enormous pool of university graduates, with 7.3 million more expected in 2014. Consulting firm McKinsey & Co. suggests in a report that fewer than 10% of Chinese job candidates on average would be suitable for work in a foreign company because of their poor command of English and an education system that focuses on theory rather than practical skills.

Western companies aren't always the employer of choice in China anymore. State-owned enterprises and private companies are bidding for home-grown talent. With so much attention lavished on the most promising executives in China, many feel their opportunities are greater at home than abroad.

They may be right. The brightest workers in China get promoted quickly. On average, it takes 15 years for someone to move from intern to CEO in China, compared with 25 years outside China, according to Aon Hewitt. "Since there is an overall talent gap in China, companies tend to ask a high-potential Chinese to stretch into more senior roles to avoid using imported talent," said Don Riegger, managing director at Deloitte & Touche Overseas Services LLP.

In the consumer-goods industry, for example, executives in China can receive substantially higher pay than their counterparts in the U.S., according to Mr. Hemmerle. Chinese executives who moved abroad sometimes received smaller raises and were promoted less rapidly.

In some cases, multinational companies want to keep their best Chinese executives inside China because the market is so important to them. However, that could hurt the careers of those executives, because they become known as China specialists and are seen as less adaptable to other markets. In other cases, companies that try to send their Chinese executives abroad often feel a push-back.

Charles Wu, a 36-year veteran at International Business Machines Corp. who has worked both in the U.S. and China, has seen a lot of Chinese employees go on international assignments and come back in a year or two. "They tell me China is developing very quickly and they don't want to be out of touch," Mr. Wu said.

But there are downsides to being too attached to China. The risk is that they are overtaken in their careers by the next wave of Chinese managers, many of whom have better language skills and a broader world view.

Chinese executives who choose to work for domestic companies to avoid foreign postings could also be surprised. Increasingly, large Chinese private enterprises require multiple assignments outside China for executives to move up the ranks. State-owned enterprises are also globalizing and sending staff abroad.

Beijing native Amy Yang said she doesn't regret moving to the U.S. in 2007 with a major consumer-goods maker, even though headhunters tell her that she might have been promoted faster and gotten better pay if she had stayed.

"If I just stayed in China, I would not have opportunities to build brands and lead innovation at the global level," said Ms. Yang, who is now looking for opportunities either in the U.S. or Asia. "A career is a marathon, not a sprint. My global experience will pay out in the long run."


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