made in

FMCG
By Li-Ming Wen

“There are only three rules of sound administration – pick good men, tell them not to cut corners, and back them to the limit. Picking good men is the most important.” – Adlai Stevenson, U.S. Politician
Multinationals in China appear to heed to Adlai Stevenson’s words. Take a look at some of their top management. It is easy to spot people who come from backgrounds not similar to their current area of work. That as more and more businesses in China adopt a consumer-focused approach. Combined with a shortage of talent, businesses often look outside their domains. And people with a background in FMCG seem to be the most sought after. Key positions in MNC’s – be it in marketing, business development, general management, supply chain and HR will most likely be chosen from an FMCG background. The company could be an internet start-up operation, a white goods manufacturer, a computer game company, an insurance group or a media and entertainment corporation. As a matter of fact, the trend today has gone beyond the consumer service and durable goods sector to such unexpected areas as B2B and financial services. Says Lawrence Chi, Regional Director of Human Resources for Greater China, for the The Walt Disney Company (Shanghai) Ltd., “As a diverse entertainment-media company, we straddle across many different industries. When we are in search of talent, many are from the FMCG sector. Their individual success in the dynamic China consumer market has prepared them to be responsive and customer focused – and that’s key to be effective in any function in any industry.”

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China’s retail scene is booming, but most of the key players – whether vertical retailers or department stores – are local companies. The management talents from these organizations don’t typically match the needs of their MNC counterparts.
The reason for this strong demand from other industries can be manifold. Let us take a look at some of the key issues.

Consumer-focused Business Models
In recent decades, several industries are re-looking their businesses – to evaluate and change their original business models. This shift generally tends to take a more consumer-focused approach. So it is only natural that they borrow the model from FMCG/Consumer goods businesses. Many traditional non-FMCG categories have taken this route especially in areas like channel set-up, customer service, marketing communication and corporate citizenship development. Even in bio-tech industries one can find manufacturers quickly adopting methodology and formula traditionally used by FMCG players. Invista (a former DuPont subsidiary and manufacturer of fiber like Lycra), traditionally from the B2B sector, produces raw materials used for garment production. The company actively initiated marketing communications, promoting their own branded raw material (Lycra). It was aimed to enhance the value of the finished garment, generate demand and create product loyalty. A similar example is “Intel Inside” campaign undertaken by the computer chip manufacturer. All this demanded an aggressive FMCG marketing talent. Today several leading business executives, including CMOs of MNCs, were originally key position holders in the FMCG/packaging goods sector.

Shortage Of Domain Talent
Another reason for such movement of talent, especially in China, could be related to the lack of senior leadership talent in certain spaces. A typical example would be retail. In recent years, with the opening up of the retail sector to foreign direct investment, there are more and more MNCs entering China. Many of these top international retailers end up with top management talent from FMCG/packaging goods industry. In the case of retail, this could be largely due to a lack of established senior management talent in its own space. China’s retail scene is booming, but most of the key players – whether vertical retailers or department stores – are local companies. The management talents from these organizations don’t typically match the needs of their MNC counterparts. This is of course not a reflection of the quality of the local talent. In fact, they are very experienced and comparable. But MNCs normally look for senior leadership not only able to execute and deliver business results in China, but also

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those who can communicate effectively with their international counterparts, at the regional or global headquarters. Ideally it would be someone who can lead a top-level business discussion in a New York boardroom, and at the same time get his/her hands dirty in their market in China. Since talent from their local rivals answers only 50 percent of their need, the MNCs naturally tend to shop for talent from outside. When doing that, they look at industries with a close consumer focus – and that will have to be the FMCG sector. Today, it’s probably safe to say that more than 80 percent of CMOs in the international retailers in China, come with a FMCG resume. Of course, there are several other reasons contributing to this trend. Given the fast pace and sophistication of FMCG domain, their comprehensive training and professional development, individuals from this industry are typically well exposed, and bring a rather seasoned understanding and appealing skill-set. In general, the transfer of business talent – especially in sales, marketing and general management is a clear trend. Based on Heidrick & Struggles’ experience and observation, here are some suggestions for companies eyeing talent from the FMCG sectors:

Identify Core Competencies
In the search for a senior marketing position, instead of shopping for a savvy marketer from a packaging goods sector who has a track record of building a brand in China, what the hiring party should firstly understand is the brand development. In other words it is the top marketing competencies that the internal role requires. It could be a different marketing segment such as marketing intelligence, or pricing matrix management or whichever comes higher in priority.

In the search for a senior marketing position, instead of shopping for a savvy marketer from a packaging goods sector who has a track record of building a brand in China, what the hiring party should firstly understand is the brand development.
Manage Expectations
The operational space of a B2B or industrial company could be rather different from the packaging goods sector. Many times talent from the FMCG/consumer sectors is recruited by with an expanded personal responsibility and title, and a different organizational role. After an initial honeymoon period, the candidate realizes the gap in almost all aspects – from organization structure to process to resource availability and personal impact. Unfortunately in many cases, it ends up following a failure to adjust. Within a short time the B2B or industrial company stands to lose such talent.

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Interestingly, many of those who leave after their inability to adapt themselves move not back to the FMCG space, but to organization with more similarities to their original background.
Interestingly, many of those who leave after their inability to adapt themselves move not back to the FMCG space, but to organization with more similarities to their original background. They tend to make a “smarter” 2nd choice, appear to have learnt their lessons and adapt to their latest organization better. The lesson of course is that it is a safer bet to go with individuals who have already been “tested-out” outside the FMCG space!

Li-Ming Wen is the Partner-in-Charge at the Shanghai office. An active member of the firm’s global Consumer Practice, he focuses on the Greater China market, serving the recruitment needs of global and local consumer products and services companies and sectors including FMCG, consumer durables, media & entertainment, hospitality, health care, and luxury goods. Based in Shanghai, he can be reached at +86 (21) 6136 1988 or lwen@heidrick.com.

Copyright 2008, Heidrick & Struggles. All rights reserved. No part of this work may be reproduced in any form without written permission from the copyright holder.

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