from Third Quarter 2010
Corporate Board Member
by Craig Mellow
Want a job with brutal travel demands and frequent opportunities to inadvertently offend your colleagues? A board seat at a Chinese company will fit the bill, and there are plenty of them out there. The dozens of Chinese outfits that have listed their shares on Western stock exchanges are hunting for foreign directors, particularly finance specialists to sit on their audit committees and help navigate the maze of compliance. In addition, “these companies need to develop an internal audit department, which is something most of them haven’t even thought about,” says Raymond Leal, 70, a retired Atlanta banker who chairs the audit committee at pork producer Zhongpin Inc.
Foreigners who have served on Chinese boards prize the adventure, whether it’s helping a young company emerge as a global alternative-energy power or sell ham in villages with no refrigeration.
But the partnership isn’t always easy. Knowing how to speak to fellow directors and management without seeming rude is one of the big challenges, and we’re not talking language barriers. Interpreters can take care of those, and besides, more Chinese are learning English. The tricky part is exercising oversight while avoiding a bossy or superior tone, which may be tough to do. Gradually, though, locals will realize that what might initially have seemed like excessive straightforwardness on a foreign director’s part is really intended to help the company, says Remo Richli, 47, a partner at the mergers-and-acquisitions advisory firm BridgeLink in Basel, Switzerland, and chairman of the audit committees of two Chinese companies, A-Power Energy, which among other things builds wind turbines, and Origin Agritech, an agricultural biotechnology concern.
Susan Wang, a Californian who sits on the audit committee of Chinese solar-equipment maker Suntech Power, sounds another warning. “Rough language or four-letter words are not acceptable,” she says. “The Chinese will just shut down and go into passive-aggressive mode.” Fortunately, there’s a remedy for most cultural faux pas: the marathon collegial dinners that Chinese depend on for bonding. “Eating and drinking together are important,” Richli notes.
Boards in China have one big edge over their U.S. counterparts. Chinese directors can be totally candid at board meetings without worrying about whether their opinions will drag them into a shareholder suit. They may not like pushy foreigners, but they’re freewheeling in offering dissent. “They’ll actually commit to paper a remark like ‘I totally disagree with this strategy,’” says Wang. “Directors are far more cautious on U.S. boards.”
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topic tags: board of directors, corporate governance, international