CELLPHONES – Xiaomi Nets New Western Exec From Spotify
Bottom line: Improved working environments are allowing Chinese tech firms to compete with multinationals for top talent, a template that state-run firms and other industries would be wise to follow.
Fast-rising smartphone maker Xiaomi made headlines last week when it lured away a top western executive from European online music streaming giant Spotify by offering him an attractive new job at its Beijing headquarters. The move marks the latest in a stream of high-profile defections by technology executives from comfortable jobs at major western firms to join up-and-coming Chinese names like Xiaomi and Baidu (Nasdaq: BIDU).
The movement reflects a maturation for China’s fast-growing high-tech sector, whose rapid rise and improving working conditions are making companies more competitive with big western names traditionally preferred by many highly-skilled workers. But the trend is still limited mostly to China’s private high-tech sector, and is largely absent in state-run firms and other industries.
Beijing should take fresh steps to try and change the situation by encouraging companies to offer policies and adopt more western-style business practices that can entice more upwardly-mobile Chinese and foreign talent to work at domestic companies.
It has made similar efforts to attract such talent in the past, usually offering generous salaries at big-name state-run firms and other perks like residence permits. But most of those efforts have failed because they didn’t address the core issue of competitive work environments and transparent and merit-based career advancement opportunities.
Xiaomi’s meteoric rise has made it a global superstar over the last 3 years, as the company rolled out a series of well-designed smartphones and savvy marketing campaigns to position itself as a cool and trendy brand. Its successful strategy recently propelled it to the number 3 spot in the global rankings for smartphone sellers, behind only well-established leaders Apple (Nasdaq: AAPL) and Samsung (Seoul: 005930).
Its rapid rise has helped the company attract some leading global talent, starting last year when former Google executive Hugo Barra joined its ranks. It enticed Barra not only with its strong growth prospects, but also by offering him an exciting position as leader of its new globalization drive.
Last month, Xiaomi attracted another former Google manager when it hired Jai Mani to lead its new push into India. In the latest move of this global hiring spree, the company has reportedly just recruited US-based executive Donovan Sung away from European online music giant Spotify. (English article) Sung will reportedly leave his job as Spotify’s first product manager in the US for a new role leading Xiaomi’s international product development team at its headquarters in Beijing.
Xiaomi isn’t the only company poaching promising foreign talent. Last month, prominent software executive Zhang Yaqin also made headlines when he left a prestigious job leading Microsoft’s (Nasdaq: MSFT) Asia R&D lab in Beijing for a new high-level position at leading Chinese search engine Baidu. Others poaching big-name executives recently include e-commerce leader Alibaba (NYSE: BABA), which in May hired Jim Wilkinson away from his job as executive vice president at global beverage giant PepsiCo (NYSE: PEP) to become its new head of global public relations.
The recent poaching of top talent by Chinese firms dates back several years, when PC giant Lenovo (HKEx: 992) and telecoms equipment leader Huawei began similar hiring sprees as part of their own globalization drives. But those drives have reportedly been less successful due to culture clashes, and in one of the most high profile cases former Dell executive Bill Amelio left Lenovo in 2009 just 3 years after becoming its first long-term non-Chinese CEO.
While Lenovo and Huawei are private companies, both were founded and led by an older generation of Chinese with technical backgrounds and little business experience, which may have hurt their ability to retain top talent. By comparison, companies like Xiaomi, Baidu and Alibaba were founded by a younger generation of more business-savvy Chinese entrepreneurs who have embraced many western business and management practices.
That embrace has helped them to develop corporate structures and internal practices that can excite and attract top talent, including performance-based pay and transparent hiring and promotion policies. Such workers, both foreign and Chinese, like their new employers not only for their growth prospects but also for their better-defined career development paths and dynamic work environments that encourage innovation and risk-taking.
By comparison, many big state-run companies and private firms in traditional sectors are often characterized by hierarchical corporate structures that are frequently bogged down in bureaucracy and opaque career development processes. Beijing leaders should work to change the situation by pressuring big state-run firms and private companies to adopt more western business practices such as transparent hiring and job promotion policies and performance-linked compensation. Such changes could ultimately help more Chinese firms join companies like Xiaomi and Baidu in attracting top-level talent.
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