A View From INSEAD
The Partnership Between China’s Midea Group and INSEAD
In a new direction, one of China’s largest appliance makers, Midea Group, is launching products under its own brand and taking them global.
“Midea has rapidly transformed itself from a company focused on original equipment manufacturing (OEM) in China to becoming a global player in the branded space,” says Prof. Michael Witt, INSEAD programme director and faculty member. “As a result, it’s increasingly having to grapple with challenges related to cross-cultural diversity and global management. Through close collaboration, we came up with a week-long Executive Education programme that both fits Midea’s strategic needs and plays to INSEAD’s strengths as a global expert in international management and marketing.”
Midea had reached a stage in its development where it realised it needed to give more support at a cultural level to its cross-border senior leadership team – individuals of different nationalities, working in different cultures, businesses and functions, who came together to coordinate aspects of the multinational operation on a global basis.
Managing global cultural diversity
“We felt the company was at a point where we had to get more international,” explains Vice President Andy Gu. “For instance, in the past, Midea’s training programmes always took place in China, and in Chinese. But there was a growing need for our globally diverse senior executives to get to know each other better, leverage their strengths to work together more effectively and help support each other in a business sense. So our successful collaboration with INSEAD came out of a human resources initiative to develop a programme that would help us bond as a team.”
Ray Yu, Supervisor, Human Resources Planning, Operations & Human Resources, Midea International Division, agrees. “Since 2012, Midea has been focused on bringing joint ventures into the organisation,” he says. “So we have a great many more foreign staff. We wanted to help our foreign executives understand Midea’s Asian corporate culture, with its highly centralised structure – and at the same time, we wanted to support our Asian executives as they build relationships with their foreign counterparts. It is a fact that many organisations in China lack the confidence to deal with Western companies.”
Building a global brand
With Midea’s business rapidly expanding, its senior leadership team was also struggling with how to align ideas and direction and arrive at a consensus that would help them present the company as a global brand.
“The ways of operating we’d developed in China don’t necessarily work abroad,” Gu says. “We wanted to formalise our senior management team’s local and global perspectives into a winning corporate strategy.”
“Midea is a young and unknown brand outside China, aiming to compete with very well established and international brands,” says programme participant Henrique Mascarenhas, Marketing & After Sales Director, Midea Carrier Brasil.
“To succeed, we must create a framework which takes the consumer’s ‘brand experience’ into account – focusing on such areas as product development, communications, trade marketing and after sales – and we have to deliver results in a multicultural environment where company’s shareholders are Chinese and North Americans. No easy task.”
INSEAD’s programme for Midea was designed for a company that wants to seize global opportunities today. As Prof. Michael Witt puts it, “We focused on putting together a learning experience that could help equip Midea’s leaders with the latest strategic tools and frameworks available, to learn from best practice from the world’s leading companies, and to adapt rapidly to this ever-changing environment.”
A close and collaborative partnership
The INSEAD-Midea Group programme was created through close collaboration in order to meet Midea’s specific needs.
“Right from the start, we were pleasantly surprised at Prof. Witt’s knowledge and experience of the issues facing companies in China,” says Mr Yu. “While there is plenty of growth and opportunity there, there is often little understanding of what it takes to build a winning global strategy. Executives often see this side of things as being a high level issue belonging more to their superiors.”
Midea wanted its programme to draw on case studies of successful global companies such as Sony and Apple, then focus on lessons it could learn from these for its own success.
“At our initial meeting we rapidly fleshed out the aims and objectives of the programme we wanted, and that set the tone for the collaboration – we felt confident throughout the planning process that we were all on the same page,” Mr Yu reports.
“Holding the programme at the INSEAD campus in Singapore also made total sense as it is a very comfortable environment both for our Chinese staff and our foreign executives.”
Providing a framework for future business decision-making
For participants, a strength of the INSEAD-Midea Group programme was that it gave them a way to connect their on-the-ground experience to analytical tools that can help guide future business decision-making.
“The programme gave me a great framework to analyse the business systems of different foreign markets,” says Francoise Liu, Vice President, Overseas Sales, Residential Air Conditioner Division. “And because the programme was customised for Midea’s needs, the case studies raised directly relevant and thought-provoking issues.”
The opportunity for cross-cultural exchange also proved fruitful. “Knowing INSEAD’s excellent reputation, I had great expectations of the programme and these were definitely met,” says Mr Mascarenhas.
“The fact that the sessions were cross-cultural were another highlight. The comprehensive understanding that I obtained of how other cultures operate not only makes my foreign relationships easier but has actually changed the way I see the world. At the same time, I think the network created among the participants is something that will last for life. For me, the programme was nothing short of a game changer.”
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