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Old 16th March 2016, 16:05   #1
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Default Expat CEOs: Why are car manufacturers in India obsessed with them?

Let's take a look at the bosses of Indian car companies. Remove the smaller ones and consider the Top 10 car manufacturers. Mahindra & Renault are the only exceptions with Indian leadership at the top. Home-grown Tata Motors alone has had 3 Expat CEOs in the last 6 years!

So, what makes the auto industry so unique that 8 of the top 10 manufacturers are headed by expats? That merely 7 of the 22 names below are of Indian bosses?

It's certainly not a lack of local talent. India's top 10 companies (across all industries) are headed by Indian bosses. And it's not a question of MNCs either - Microsoft India, Citi Group, Nestle, P&G, Apple etc. are all led by Indian CEOs.

Indian Car Company CEOs / MDs:

Audi - Joe King
BMW / MINI - Philipp Von Sahr
Chevrolet - Kaher Kazem
Fiat - Kevin Flynn
Ford - Nigel Harris
Honda - Katsushi Inoue
Hyundai - Y.K. Koo
Isuzu - Naohiro Yamaguchi
Jaguar Land Rover - Rohit Suri
Mahindra - Pravin Shah
Maruti Suzuki - Kenichi Ayukawa
Mercedes-Benz - Roland S. Folger
Mitsubishi - P. Vijayan
Nissan & Datsun - Arun Malhotra (MD) / Guillaume Sicard (President)
Porsche - Pavan Shetty
Renault - Sumit Sawhney
Skoda - Sudhir Rao
Tata - Guenter Butschek
Toyota - Akito Tachibana
Volkswagen - Dr. Andreas Lauermann
Volvo - Tom von Bonsdorff

Top 10 Indian Companies (by market capitalization):

TCS - Natarajan Chandrasekaran
Reliance - Mukesh Ambani
Infosys - Dr. Vishal Sikka
HDFC Bank - Aditya Puri
ITC - Yogesh Chander Deveshwar
Sun Pharma - Dilip Shanghvi
Coal India - Sutirtha Bhattacharya
ONGC - Dinesh K Sarraf
HUL - Sanjiv Mehta
Bharti Airtel - Gopal Vittal

And it's not about being an MNC either:

Microsoft India is headed by Karan Bajwa
Nestle - Suresh Narayanan
P&G India - Shantanu Khosla
IBM India - Vanitha Narayanan
Coca Cola India - Venkatesh Kini
Citi India - Pramit Jhaveri
Apple India - Maneesh Dhir (until very recently)

Last edited by Aditya : 16th March 2016 at 16:41.
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Old 16th March 2016, 16:23   #2
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Default Re: Expat CEOs: Why are car manufacturers in India obsessed with them?

I guess it is because the India Auto Industry is still in its nascent stages, India auto really started moving in the late 90's and hence does not have enough talent which has experience in end-to-end areas from R&D, manufacturing, distribution, export & branding etc. While overseas the talent has been nurtured over the decades. But again thats a guess...
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Old 16th March 2016, 16:27   #3
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Default Re: Expat CEOs: Why are car manufacturers in India obsessed with them?

In a Company's administrative structure, the CEO is the key decision maker. It is understandable in cases of a consortium comprising Indian and Foreign business units, coming togather for a purpose where the foreign unit holds majority of stakes. Here the foreign unit is more concerned about its investments (read business interests) and do make a point to include such a clause in the share holders agreement or the Articles of association of the company, to have a CEO appointed by it. Not only being limited up to here, some investors / share holders go to an extent of reserving all key positions and HOD's under its Employment (read control).

However, in companies that are totally driven by Indian investors, having a expat CEO may not seem to be very likely.

In my opinion, it has nothing to do either with geography or the talent pool, but instead it is the preference of the Majority Invester / Chief Promoter, which decides on the appointment of the CEO.

Looking at the Indian Automobile Industry, most of the manufacturers have their manufacturing units in India whilst substantial sales business are made overseas as well. Hence a CEO who can manage both these arms of manufacturing and sales while acting as a bridge between parent company and the Indian conglomerate, is preferred unequivocally.

Last edited by King_pin09 : 16th March 2016 at 16:45.
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Old 16th March 2016, 16:53   #4
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Default Re: Expat CEOs: Why are car manufacturers in India obsessed with them?

My guess is
1. the market for CEO's is global
2. India, the local talent pipeline from the local industry is rather small, given the rapid expansion we have seen recently, so all the high performers have more than enough opportunities in their current roles or organizations
3. Globally the industry is rather stagnant, so you have a lot of people in senior positions who have to move up or out - and find themselves in developing market roles

The reverse is true for infotech industry - Indian industry is a lot more robust and mature compared to the videshi competition, and you see a lot of indian CEO's in infotech than videshi's
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Old 16th March 2016, 17:31   #5
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Default Re: Expat CEOs: Why are car manufacturers in India obsessed with them?

The problem with expats being given these top jobs is that, they would tend to rely more on market research than knowing things by heart. An Indian can better sense the pulse of the market as he is part of it himself.

As far as why these jobs are given to expats, I guess some of these could be internal job transfer within the company and hence people holding similar roles in other countries take up the leadership in India.
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Old 16th March 2016, 17:51   #6
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Default Re: Expat CEOs: Why are car manufacturers in India obsessed with them?

Quote:
Originally Posted by GTO View Post

So, what makes the auto industry so unique that 8 of the top 10 manufacturers are headed by expats? That merely 7 of the 22 names below are of Indian bosses?

It's certainly not a lack of local talent. India's top 10 companies (across all industries) are headed by Indian bosses. And it's not a question of MNCs either - Microsoft India, Citi Group, Nestle, P&G, Apple etc. are all led by Indian CEOs.
What a coincidence!
I was just giving pep talks to one of my younger colleagues with a similar topic. I was giving the example of the Raj Nair CTO of Ford Motor company. In fact after seeing the development video series on the development of the Focus RS, i was wondering how meritocracy reigns in a foreign organisation and not just grey hairs or white skin.
The way the organisation there respects the decision by Raj could be an inspiration to a budding engineer from our country.

In case you guys have not seen, the 7 part series starts with the below video.
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Old 16th March 2016, 18:24   #7
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Default Re: Expat CEOs: Why are car manufacturers in India obsessed with them?

I had tried applying in the past. No interest from them
I had done a little research too- nearly zero IIM grads even in middle management of automobile firms. They do not participate in campus placements
I knew one such person who quit a top german manufacturer- says being Indian you never make it to the top here, its a cultural thing
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Old 16th March 2016, 18:32   #8
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Default Re: Expat CEOs: Why are car manufacturers in India obsessed with them?

There are many things at play here and its complex :

In India the FMCG industry is quite robust when it comes to honing talent. FMCG companies like ITC, HUL have been hiring management trainees from business schools since decades. These guys get great exposure because of India's diversity and the companies provide them with great roles and hence these people rise to the top and even become global CEOs. Case in Point : Indira Nooyi , Global CEO Pepsi ; Rakesh Kapoor is Global CEO of Reckitt Benkiser (makers of Dettol), Leena Nair is Global Chief HR at Unilever; Above mentioned examples of Nestle , Coca Cola , P&G , HUL are all FMCG companies. Airtel CEO is ex FMCG (Unilever)

The automobile Industry however never really had such a robust hiring / talent management program in India. Secondly it was never really glamorous to work in this industry hence many youngsters did not get attracted to it in the first place. In the US the automobile industry is huge and people aspire to go work for FORD/Chrysler/GM but thats not the case in India. Also the millions of engineers that India produces want to become either Electronics engineers or IT engineers. Nobody want to touch mechanical engineering because our society looks down upon it.

Its also important to note that these companies did not pay as much as other industries like the FMCG industry. Also the IT industry with its college placements took away all the quality engineers , IT companies also gave the opportunity to go On-site etc.

Another point is that many automobile companies are Japanese / Korean. Japanese and Korean companies believe in their own people heading the companies. This point is proved if you look at Korean companies from other sectors like Samsung , LG. Japanese companies like Sony / Panasonic / Nikon / Sharp etc are all headed by Japanese people.
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Old 16th March 2016, 18:34   #9
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Default Re: Expat CEOs: Why are car manufacturers in India obsessed with them?

Missed Ashok Leyland who has a expat Indian MD. Vinod Dasari.

http://www.ashokleyland.com/leadership-team-member/64

I guess it has to do with the technological lag of Indian auto Industry products. The expat MD's have more experience with newer technologies, larger volumes, better safety regulations etc. It would be easy for them to lead activities in am emerging auto market.
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Old 16th March 2016, 18:45   #10
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Default Re: Expat CEOs: Why are car manufacturers in India obsessed with them?

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Originally Posted by aseemjuneja86 View Post
Another point is that many automobile companies are Japanese / Korean. Japanese and Korean companies believe in their own people heading the companies. This point is proved if you look at Korean companies from other sectors like Samsung , LG. Japanese companies like Sony / Panasonic / Nikon / Sharp etc are all headed by Japanese people.
This is true. The Japanese and Koreans prefer their people on the spot in these senior leadership positions.
Its about trust as well as communication both.
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Old 16th March 2016, 19:42   #11
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Default Re: Expat CEOs: Why are car manufacturers in India obsessed with them?

Indian CEOs might have a good idea about what customers want to buy (high mileage, affordable, features, stand out looks, beige interiors, lots of chrome ) and also about business aspects like managing and expanding dealers, sourcing low cost components and so on.

But expat CEOs will have a better idea about finer details like driving ergonomics, usage and sourcing of quality spare parts, closer shutlines, cost control during manufacturing, better customer experience during servicing (by adopting technology, for example).
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Old 16th March 2016, 19:50   #12
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Default Re: Expat CEOs: Why are car manufacturers in India obsessed with them?

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Originally Posted by Jomz View Post
Same for Ze Germans.
Ze Drim auf vorrld domination vill finally komm drue..

JOKE:
English in the Future

Directors at Daimler Benz and Chrysler have announced an agreement to adopt English as the preferred language for communications, rather than German, which was another possibility.

As part of the negotiations, directors at Chrysler conceded that English spelling has some room for improvement and have accepted a five-year phase-in plan. In the first year, "s" will be used instead of the soft "c". Also, the hard "c" will be replased with "k". Not only will this klear up konfusion, but komputers have one less letter.

There will be growing kompany enthusiasm in the sekond year when the troublesome "ph" will be replased by "f". This will make words like "fotograf" 20 persent shorter.

In the third year, DaimlerKhrysler akseptanse of the new spelling kan be expekted to reash the stage where more komplikated shanges are possible.

DaimlerKhrysler will enkourage the removal of double letters, whish have always ben a deterent to akurate speling. Also, al wil agre that the horible mes of silent "e"'s in the languag is disgrasful, and they would go.

By the fourth year, peopl wil be reseptiv to steps sush as replasing "th" with "z" and "w" by "v".

During ze fifz year, ze unesesary "o" kan be droped from vords kontaining "o", and similar shanges vud of kors be aplid to ozer kombinations of leters.

After zis fifz yer, ve vil hav a reli sensibl riten styl. Zer vil be no mor trubls or difikultis, and employes vil find it ezi to kommunikat viz eash ozer.

Ov kors al supliers vil be expekted to us zis for all busines komunikation via DaimlerKhrysler.

Ze drem vil finali kum tru.

Last edited by shankar.balan : 16th March 2016 at 19:52.
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Old 16th March 2016, 20:22   #13
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Default Re: Expat CEOs: Why are car manufacturers in India obsessed with them?

Yes, it's true that the domestic operations of Japanese, South Korean and German automobile companies are generally headed by one of their own people. There may be a few exceptions (like Mr. Subbu heading Hyundai India or Mr. Khattar heading Maruti Suzuki for some years in the past), but they're very rare indeed.

I'd say these companies are only better off for it! For such companies, it's not just a trust or communication issue, but mainly one of culture. I don't mean "culture" as is commonly used in everyday parlance, but more like an automobile manufacturing culture.

The primary business of these companies is manufacturing cars. Associated activities are usually taken care of by departments filled with (and headed by) local people.

One can't expect someone who isn't immersed in the automobile manufacturing culture of these companies to head the domestic operations. It doesn't usually work, and is just too big a risk to take!

Take Toyota, for instance. If I were a shareholder of Toyota, I would be utterly aghast if someone who was the king of making soaps & shampoos (or the empress of selling colas & crisps, or the emperor of manufacturing mobiles & tablets etc.) starts heading the domestic operations of Toyota. Nine out of ten times, it just wouldn't work. It's a massive risk to take.

Forget unrelated fields. For a company like Toyota, even a person who was completely immersed in and grew up in the automobile manufacturing culture of a company like, say Tata (no offence meant to Tata Motors), would be a misfit to head Toyota's Indian operations. It's a risk that's just too big to take!

So yes, call me whatever names you want, but I'm quite glad that these companies are headed by folks whom the respective global HQs feel are the best fit for post of CEO of domestic operations. Since these companies are relatively new entrants in India, it may take a long time for locals who grew up in the automobile manufacturing culture of such companies to reach the position of CEO. Till then, if the respective global HQs feel that expats are the best fit, then so be it!

Last edited by RSR : 16th March 2016 at 20:32.
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Old 16th March 2016, 20:25   #14
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Default Re: Expat CEOs: Why are car manufacturers in India obsessed with them?

Well, nice topic. The main reasons are already put forth, my 2 cents:

- Indian auto industry is heavily dependent on technology transfer from overseas. Before the economy was forced open in the 1990s, we had no access to foreign technology, and all we did was buy old tools and dies and a drivetrain from someone and put it together. R&D did not exist. Without an open market, why would you spend millions and decades developing tech? In the 1990s, things began to heat up. While foreign firms had the tech, they could not understand the market and struggled to provide competitive prices. It all changed with Hyundai and others getting into the mass market and started wiping out domestic companies. Now, Indian auto companies feel they have to rely on expat leaders since they bring with them experience and an understanding of the global scenario.

- Lack of talent pool: Most companies mentioned having Indian leaders are FMCG/ services sectors. There are lots of Indians who has worked for foreign firms in these sectors right from trainee phase going on to middle management and hence there is a healthy pool to choose from. However, Indians traditionally haven't preferred working in the auto sector because of lack of interest in the sector and the remuneration being not stellar, and the talent pool is meagre when companies hunt for the top honcho posts.

- Cultural thing: Foreign firms setting up shop in India prefer foreigners to lead them, as they feel they need one of their own at the top. Auto industry is very conservative when it comes to work culture and often lags behind in diversity. Also, as mentioned, the Japanese and Koreans never leave decision making to outsiders. If they have their way, not even a bolt would be designed/manufactured outside their country (I work with the Japanese, so I know)

I believe after in decades, we will have Indians at the top. Auto sector is a core Industry, and unlike tech/services firms, you need decades of experience and knowledge to make it to the top. Just being a great manager/bean counter/market strategist does not suffice.
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Old 16th March 2016, 20:31   #15
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Default Re: Expat CEOs: Why are car manufacturers in India obsessed with them?

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I had done a little research too- nearly zero IIM grads even in middle management of automobile firms. They do not participate in campus placements
I'm from a Tier 1.5 B school, Mahindra, Tata motors, Maruti, Hyundai, Renault Nissan all have hired from us at some point and we have senior alumni in most of them.
One of my classmates works for Audi.
Ford went to IIMC last year... I could come up with a longer list, but i think that's enough data points.

Last edited by greenhorn : 16th March 2016 at 20:40.
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