Bain & Company Global Survey of Top 25 Management Tools Suggests Chinese Management Sophistication Still Lagging; Tool Choices by Chinese Firms Reveal Focus on More Tactical Management Methods

Business Wire, April 20, 2005

NEW YORK -- Chinese management savvy is still emerging, this according to Bain & Company's newly-released 2005 Management Tools & Trends survey. Bain finds that 88% of Chinese executives feel their products and services are behaving more like commodities and that 83% agree excessive complexity is raising their costs and hindering their growth. Yet Chinese firms are far less active than their Asian and Western counterparts in using more advanced management tools that support corporate strategy development and growth initiatives.

Key findings from the survey of 960 global executives (including 212 Chinese business leaders) show that:

--Strategic Planning is the #1 management tool used globally, and in each individual region - but is ranked 7th by Chinese firms on their list of management tools used

--Strategic Alliances and Growth Strategies - key management tools used by many Asian and Western companies to help foster growth - are both included in the Global top 10 list of tools used, but are nowhere to be found on China's top 10 list

--Conversely, three tools among the top 10 most used tools in China, that are not among the top 10 tools used in any other region are: Total Quality Management (ranked 2nd), Supply Chain Management (ranked 6th) and Knowledge Management (tied for 8th)

--Mission and Vision Statements are ranked 8th overall by Chinese companies (tied with Knowledge Management and Business Process Reengineering) but are ranked 2nd by other Asian companies and 3rd by companies in North America

--Scenario and Contingency Planning was used by just 10% of Chinese firms but by 54% of firms elsewhere

"The management tools used to become the world's leading factory are quite different than those required to lead global innovation," said Darrell Rigby, senior Bain partner and survey founder.

Key Chinese Management Trends

Bain's survey of Chinese executives revealed a number of important management trends, including:

--Nine of ten executives agree that innovation is more important than cost reduction for long-term success

--To be better at innovation, 80% of executives feel they should partner with outsiders, even competitors - though surprisingly, open-market innovation (the practice of partnering with competitors to innovate) was one of three tools with the highest defection rates

--Only 39% of Chinese leaders agreed with the statement that "We have the capability to effectively manage a global supply chain"

--Executives have mixed feelings about the current appeal of the CEO job, with 37% agreeing it is far less attractive than it was 10 years ago while 25% disagree

--More than half of Chinese executives agree that acquisitions will be critical to achieving their growth objectives in the next 5 years

--Three-fourths say insufficient customer insight is hurting their performance

Bain also found that Chinese companies use fewer tools than their global counterparts at all company sizes and that the odds of success vary widely for different tools. For example, 31% of those who use TQM (one of the most widely used tools by Chinese firms) reported that they were extremely satisfied with the tool, while only 8% said they were dissatisfied, creating a positive "satisfaction spread" of 23 points (31% less 8%). TQM and RFID received the highest satisfaction scores by Chinese companies.

Bain launched its Management Tools & Trends survey in 1993 as a multi-year project and has assembled a database that now includes 7,283 respondents from over 70 countries in North America, Europe, Asia, Africa, the Middle East and South America. The 2005 edition reflects findings from 960 global executives surveyed during 2004, including 212 Chinese business leaders. Executives were asked questions about the use and satisfaction by their companies with 25 of the most popular management tools and techniques. To qualify for inclusion in the survey, a tool had to be:

--Relevant to senior management

--Topical (as evidenced by coverage in the business press)

--Measurable

To receive a copy of the complete 2005 Management Tools & Trends survey or to schedule an interview with survey founder, Darrell Rigby, please contact: Cheryl Krauss, e-mail: cheryl.krauss@bain.com or ph.: 646-562-7863, or Frank Pinto, e-mail: frank.pinto@bain.com or ph: 917-309-1065.

About Bain & Company, Inc.

Bain & Company is one of the world's leading global business consulting firms, serving clients across six continents on issues of strategy, operations, technology, organization and mergers and acquisitions. It was founded in 1973 on the principle that consultants must measure their success in terms of their clients' financial results. Bain's clients have out performed the stock market 3 to 1. With offices in all major cities, Bain has worked with over 2,500 major multinational and other corporations from every economic sector, in every region of the world. For more information visit www.bain.com