ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Business

China's young, job-hopping CEOs contrast with Japan's older execs

Study shows Chinese companies are more 'Western' in picking new bosses

TOKYO -- Both Japan and China have their fair share of successful CEOs. Japan claims Masayoshi Son of SoftBank, a telecommunications company, and Tadashi Yanai of discount clothing seller Fast Retailing, for example. China's Jack Ma Yun built Alibaba, a huge internet retailer. His rival, Tencent's Pony Ma, is another of the country's biggest business stars.

But a recent study has found that China and Japan go about finding new CEOs very differently. 

According to PwC's Strategy& survey of CEO succession among the world's 2,500 largest publicly traded companies, 14.9%, or 372, chose a new CEO in 2016 through normal succession, dismissals or mergers. The rate of change at the top of Japanese and Chinese companies, at 15.5% and 15.2%, respectively, was close to the global average. Where they differed substantially was in their pattern of succession.

Japan was an outlier in several respects. One stark example was the age of the boss. The average age for all new CEOs was 53, versus 61 in Japan. Although there are signs of change, most Japanese companies still promote people based on seniority. The chances of a young executive being crowned CEO in Japan remain relatively low.

The research also revealed that only 33% of new CEOs in Japan had worked at other companies, compared with a global average of 74%. And only 4% held master's of business administration degrees. Worldwide, the figure was 36%.

"Jobs [in Japanese companies] often do not require specialists, which makes it hard for workers to change jobs and perform at different companies. There is also a negative image attached to changing jobs in Japan," said Kenji Mitsui, a partner at Strategy&. "The low rate of MBAs among CEOs is reflective of the fact that Japanese people in general do not hold MBAs because of their lack of English skills and a lack of influential MBA schools in Japan or in nearby [countries]."

Mitsui added that because many Japanese CEOs build their careers in a fairly culturally homogeneous environment, Japanese companies are at a big disadvantage when it comes to competing globally.

Chinese chief executives, on the other hand, are more or less in line with the global average. The average age of new CEOs in China is 51. Fully 68% have worked at other companies, and 35% hold MBAs.

One of the few similarities between Japanese and Chinese companies is their apparent aversion to picking foreigners to run the show. All of the CEOs of Chinese companies surveyed were Chinese. The same was true of the Japanese concerns.

"Over the past two decades, the transition to a market [economy] and global integration have significantly transformed the way in which Chinese companies operate," said Xu Huchu, managing director of Strategy& for greater China.

"Such changes are also seen in the human-resource realm, where the transformation to more Western-style human resource practices, including CEO appointment and development, is among the many factors contributing to the modernization and success of Chinese companies.

"Relatively young CEOs -- with exposure to formal higher education, profound professional experience and global management ideology -- tend to play a more active role in introducing state-of-the-art managerial practices and in triggering a firm's innovations and organizational changes, and thus [find] a path to competitive advantages for companies in transition economies such as China," Xu said.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends June 30th

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media