HONG KONG, July 7 (Reuters) - Forget fresh-faced college students back-packing in China and teaching English. Now seasoned Western executives are vying for experience there, with some sacrificing pay for an insider's view of the world's fourth-largest economy.
The latest: Stephen Newhouse, former global president of Morgan Stanley (MS.N: Quote, Profile, Research), who decided to join the board of little-known AJ Corp. (600643.SS: Quote, Profile, Research), which controls ailing Shanghai brokerage AJ Securities.
AJ, which did not disclose how much the high-powered banker makes as an independent director, pays 200,000 to 300,000 yuan ($25,000-$37,500) a year to other directors. In 2004 by contrast, Newhouse received a package worth about $18 million.
Newhouse left Morgan Stanley last April as part of an exodus touched off by a top management shuffle. His surprise move to join the obscure Shanghai company was seen as worthwhile by some.
"That is a smart move because they can be part of industries," said Lee Sands, a former U.S. trade negotiator who is a now a consultant in Shanghai. "There is a kind of gold rush going on in China."
From state-owned industries such as energy and banking to less politically sensitive consumer sectors such as beverages, Chinese firms -- keen to import foreign know-how before going public or setting up overseas businesses -- are increasingly open to the idea of a "laowai", or foreign, boss.
For foreign firms and governments, executives' first-hand Chinese expertise is becoming an increasingly coveted asset. Recently appointed U.S. Treasury Secretary Henry Paulson, for instance, had made 70 trips to China since the 1990s and is well connected in Beijing.
That sort of inside track is valuable in Washington's push to get Beijing to accede to everything from a stronger yuan to freer financial markets.
Another prominent banker, John Thornton, long a leading contender for the top job at Goldman Sachs (GS.N: Quote, Profile, Research), retired in 2003 at 49 to teach at Beijing's prestigious Tsinghua University. He was the first non-Chinese to become a full professor there.
In his new capacity, Thornton has befriended many state and local government leaders, even giving private management classes to some. Those relationships could help him broker deals if he ever decided to go back to banking.
"The rise of China might be the most important thing in our time," Thornton said during a speech at Hong Kong University.
QUEST FOR FOREIGN KNOW-HOW
The list of Western executives pursuing work experience in Asia goes on. Chinese companies with foreigners on boards include Shanghai Pudong Development bank (600000.SS: Quote, Profile, Research), Shenzhen Development bank (000001.SZ: Quote, Profile, Research), Tsingtao Brewery (0168.HK: Quote, Profile, Research) (600600.SS: Quote, Profile, Research), and energy company CNOOC Ltd. (0883.HK: Quote, Profile, Research)(CEO.N: Quote, Profile, Research).
"Chinese state-owned companies need to compete internationally and they want to become more transparent," said Sam Tung, director of executive search firm SearchBank. "The only way to do that is to bring in Western-style management."
Some investors would like to see more foreign executives directing Chinese companies.
Analysts warn, however, that simply enlisting a foreign expert -- a term long used by Chinese organisations to refer to imported overseas talent -- was not a magic-bullet solution.
Culture and language barriers can stymie their effectiveness. Others might be daunted by the sheer task of trying to overhaul massive state enterprises that are accustomed to cosy government deals and easy access to bank loans when needed.
Lonnie Dounn, a former senior banker with HSBC Holdings Plc (HSBA.L: Quote, Profile, Research), resigned as Bank of China's (3988.HK: Quote, Profile, Research) (601988.SS: Quote, Profile, Research) chief credit officer in April after just 13 months on the job.
People who know Dounn blamed the departure on language barriers and frustration with mainland banks' opaque corporate culture, the South China Morning Post reported.
"If you join at the board level, you are 20,000 feet above and not involved in all the politics," Sands said. "If you come at the mid-level, it is really hard." (Additional reporting by George Chen in Shanghai)
