Ann Arbor Times

Chinese firms are increasingly hiring executives with international experience to navigate the challenges posed by the U.S.-China trade war, according to a study from the University of Michigan. The research highlights a trend among Chinese companies to recruit leaders skilled in European markets and marketing, as they seek strategic insights to adapt to global changes and explore alternative growth markets.

The study examined 3,440 Chinese public firms and found that as exports to the U.S. decline due to rising tariffs, these companies are focusing on European markets as a primary alternative. Exports to non-U.S. countries, particularly the European Union, have seen moderate increases following tariff hikes related to the trade war.

Executives with European experience bring valuable knowledge and networks that help firms establish new buyer-supplier relationships and expand sales channels in unfamiliar territories. Marketing skills are especially sought after among these hires, reflecting an emphasis on enhancing customer engagement in alternative markets and building brand loyalty abroad.

“Chinese companies are pivoting to leaders who understand the complexities of foreign markets, especially the European market,” said Jagadeesh Sivadasan, professor of business economics and public policy at U-M’s Ross School of Business. “Their expertise is particularly valued for helping firms navigate the challenges of sustaining operations and expanding in non-U.S. markets.”

The research indicates that firms heavily reliant on foreign markets have increased their proportion of executives with international experience more significantly than those with limited foreign exposure. Executives who have worked abroad are preferred over those who returned home after studying overseas due to their ability to leverage foreign networks during crises or when entering new export markets.

Additionally, executives with international backgrounds receive higher equity-based compensation compared to their locally focused peers. This pay structure ties earnings to company performance, underscoring firms' reliance on these leaders for stabilizing and growing international revenue streams. These executives play a strategic role by not only boosting revenue but also establishing and expanding foreign subsidiaries—an effective response to export tariffs by shifting production away from China.

The significance of internationally skilled executives is further highlighted by stock market reactions; companies experienced sharper declines in stock value following unexpected departures of such leaders during the trade conflict period. This suggests investors see them as critical assets for managing global economic disruptions.

“Executive human capital proved essential in helping firms navigate the challenges posed by adverse trade shocks,” Sivadasan added. “The presence of leaders with foreign experience enabled companies to stabilize and grow internationally, even as tariffs disrupted traditional trade channels.”