VideoIt's not every day that a CFO fresh off the plane draws a line in the sand. But Wayne Chang, who became CFO of General Electric's Medical Systems China unit two years ago, walked into the job in Shanghai with a certain confidence that people would listen to him.
He needed it, because GE's China goals were typically big. His mandate: pushing company sales to US$1 billion from US$200 million in five years, or to 30 percent from 20 percent growth a year. Chang's strategy for growth involved customer financing, the first time that GE had tried this outside of its aircraft leasing activities in China, which structured deals in US dollars.
The customer financing at the medical unit would be in renmimbi and would involve close relationships with Chinese banks.
Customer financing naturally bolsters growth, but also carries the risk associated with arranging loans for customers in boom markets. The practice came under fire in the US after many technology companies' customer-financing programs went bust after the tech bubble burst.
Ultimately, Chang was able to overcome reservations and built confidence in the plan. "A lot of people would like to buy our products but need financing to be able to do so," says Chang, who is 34 years old. "So we have to find an external third party, say banks, to provide financing. But China being an immature financing market, we have to carefully manage risk in order to successfully drive growth," he says.
The success of the project hinged upon the capacity to pore through balance sheets of potential business partners and instill risk management skills to his staff. Chang had good experience to contribute here. He had spent long hours as an internal auditor to GE units around the world as part of the company's fast-education training program for finance executives. As for meeting those Herculean goals: Chang says he's on schedule. GE Medical Systems China is growing at 25 percent per annum with a projected US$600 million revenues for yearend 2003.
Leadership, or Effrontery
Chang's confidence might have struck some long-time employees as effrontery, but GE has made a policy of encouraging its finance professionals to assert themselves. Chang is one of 15 CFOs in GE's worldwide operations that entered the company in a special training unit designed to instill leadership into a finance team—and make those skills transferable across hemispheres and cultures. Other global companies, including American Express, Proctor & Gamble, and Microsoft, have also developed leadership and fast-track career programs, and swear by them as costly, but ultimately, value-building long-term investments. In Asia, the concept is relatively new but several companies with global reach have created their own campuses to train the cream of their recruits. These range from Infosys, the Indian IT service provider which runs a leadership institute at its campus in Bangalore, to Legend, the Chinese computer maker, which has its own management school on the outskirts of Beijing.
Building in corporate efficiency and accountability through in-house training is not, however, a route that all companies can take. As Hellmut Schutte, dean of the business education institution INSEAD in Singapore, points out, most companies don't have the resources. And even if there is money for grooming would-be finance chiefs, human resources may be a problem. Not every company can afford to lose 20 or 30 people to a training program, and not every one of those same people is likely to be capable of training. "If you're a good manager, it doesn't mean you are a good teacher," says Schutte.
Even if you are, it may not be enough, according to Larry Lang, professor of finance at Chinese University in Hong Kong. A textbook-perfect teacher dedicated to turning out the "exceptional finance professionals" of a GE-scale training program may find the textbook itself is inadequate. "You know these general kind of training materials are not successful for China. There's nothing wrong with the theory but you need in-depth discussion, you need local cases, you need to adapt for the local environment."
Getting the right local spin on training materials for CFOs is not as important as it is for CEOs, says Lang, but it is still vital for finance chiefs to know the market and to be more than aware of the law from liability down to the ever-changing minutiae of the rules on IPO reporting.
The other, perhaps lesser problem is that instilling a strong sense of corporate culture could result in narrow-minded rather than single-minded leaders. "That's the drawback with any internal program," says Schutte, "it leads to in-breeding. Some companies have a corporate culture and they manage—although I don't like to use the word—to clone each other."
That said, Schutte concedes that big in-house training programs can spawn plenty of healthy debate among "graduates", particularly if their corporate alma mater has a diverse range of businesses. He also points out that there are Asian companies that have enviable training facilities. "Korea and Japan have large institutions, particularly Japan, and many business schools would pale in comparison." And large institutions, inevitably, can seek out the best of the young high-fliers.
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