Diversity, Equality, and Inclusion (DEI) have become global imperatives in the corporate world, and for good reason. Studies have consistently shown the benefits of diverse teams, such as McKinsey’s report revealing that companies with ethnically diverse leadership teams are 35% more likely to outperform their peers financially. While I am a strong advocate of DEI, I believe it’s important to explore the complexities and challenges that organisations face in implementing it, especially in unique markets like China.
The Evolution of DEI in China
In the 1990s, the leadership of most multinational companies (MNCs) in China was dominated by expatriates. Back then, the lack of skilled local talent with both foreign language proficiency and cross-cultural understanding necessitated this model. However, over the last two decades, the landscape has changed drastically. Today, Chinese nationals with international education and experience lead the majority of MNCs operating in China.
While this shift has removed the proverbial “glass ceiling” for many PRC (People’s Republic of China) professionals, it has also reduced diversity in many organisations, particularly in terms of nationality. The Shanghai lockdown during COVID-19 in 2022 exacerbated this trend, with many expatriates leaving China and companies finding it increasingly difficult to attract foreign talent.
As a result, organisations in China now face the challenge of balancing DEI goals while working with a talent pool that has become less internationally diverse.
The Challenges of Enforcing DEI Targets
While the benefits of DEI are clear, enforcing rigid DEI targets can present unintended consequences. For instance, some companies mandate that final candidates for senior management roles must meet specific demographic criteria, such as gender. While this aims to address historical imbalances, it risks undermining meritocracy if the most suitable candidate is overlooked due to these criteria.
A specific example from my experience as a search consultant highlights this issue. A client “explicitly but secretly” requested that the final candidate for a senior position be female to meet the company’s DEI target. While there are many highly qualified female executives, in some cases, the most suitable candidate for a particular role may not align with these requirements. Such practices raise important questions: Does prioritising demographic attributes over qualifications amount to discrimination? And what is the right balance between achieving diversity and maintaining meritocracy?
Unique DEI Considerations in China
1. Cultural Diversity Within China
China itself is home to 56 recognised ethnic groups, each with its own language, culture and traditions. However, Han Chinese represent over 90% of the population, which can make achieving ethnic diversity in organisations challenging. For companies operating in China, fostering inclusivity for ethnic minorities remains a relatively underexplored area of DEI.
2. Gender Representation
While gender diversity has improved in some sectors, challenges remain. According to the World Economic Forum’s Global Gender Gap Report 2023, China ranks 107th out of 146 countries in gender parity, with significant gaps in political and economic participation. Women hold fewer senior leadership positions and cultural norms often perpetuate traditional gender roles. While efforts to address these imbalances are growing, rigid quotas can sometimes lead to tokenism rather than meaningful change.
3. Age Diversity
China’s rapidly aging workforce presents another unique DEI challenge. With a declining birth rate and a rapidly growing population of older workers, companies must navigate intergenerational dynamics while ensuring inclusion across age groups. Organisations that embrace age diversity often benefit from a mix of innovation from younger employees and the experience of older workers.
4. LGBTQ+ Inclusion
LGBTQ+ inclusion is a relatively sensitive topic in China. While progress has been made, such as increased visibility during Pride Month, systemic barriers remain. According to a United Nations Development Programme (UNDP) report, only 5% of LGBTQ+ people in China feel comfortable disclosing their sexual orientation or gender identity at work. Other reports indicate that LGBTQ+ people in China face discrimination and harassment in the workplace, including:
- 20% of LGBTQ+ people have experienced workplace discrimination or harassment
- 14% of LGBTQ+ people have been denied employment because of their sexual orientation or gender identity
- 8% of people interviewed believe they have been fired because of their sexual orientation or gender identity.
This highlights the importance of fostering safe and inclusive environments for employees of all identities.
The Role of Leadership in Driving DEI
Leadership plays a critical role in embedding DEI into an organisation’s DNA. According to a 2022 Deloitte report, companies with leaders who actively support diversity are 70% more likely to see positive DEI outcomes. However, in China, cultural nuances require leaders to balance global DEI initiatives with local realities.
For instance, companies may need to adapt DEI strategies to align with local labour market conditions, cultural expectations and legal frameworks. This requires thoughtful leadership that goes beyond meeting quotas and focuses on creating inclusive cultures where all employees feel valued.
Where Do We Go From Here?
As companies strive to achieve DEI goals, particularly in unique markets like China, it’s essential to adopt a holistic approach that recognises the nuances and challenges of each region. Rather than focusing solely on quotas, organisations should emphasise long-term strategies, such as:
- Investing in local talent development to ensure sustainable growth.
- Creating mentorship programmes to support underrepresented groups.
- Conducting unconscious bias training to foster an inclusive workplace culture.
- Measuring DEI progress with qualitative as well as quantitative metrics to ensure meaningful impact.
Conclusion: Beyond the Numbers
While the data underscores the value of DEI, implementing it is rarely straightforward, especially in a market as dynamic as China. Companies must navigate challenges such as reduced international diversity, cultural nuances and balancing global DEI mandates with local realities. The key lies in adopting a flexible, thoughtful approach that focuses on creating inclusive cultures rather than simply meeting targets.
Ultimately, the success of DEI initiatives depends on their authenticity. By prioritising inclusion and equity alongside diversity, organisations can not only meet their DEI goals but also create workplaces that thrive in the face of complexity.