The Chinese have a saying “挂羊头卖狗肉”, or hanging a sign up for lamb and instead selling dog. What this means in practice is that companies hire a (white) person for show to make it look like they’re international, or doing what they’re supposed to do, when they are neither international nor following the rules. There’s even arguably a case that Huawei is using Britain to say: you see, Britain trusts Huawei, it must be fine, when the reality is different.
If China hires foreigners for show, the world described by David Enrich in Dark Towers is much more complex (although Enrich's main goal seems to stop at pinning the blame for Trump on Deutsche Bank, but as this review in the Guardian says the book gave no conclusive evidence Trump was funded by Russia, or illegally). Deutsche Bank hired people from around the world—India, Senegal, Mainland China, and Russia. However, the author seemed to focus uniquely on the perils of Anglo-Saxon culture. He never considers the cultures of all the diverse people at Deutsche Bank. He stops at the difference between German culture and ‘toxic’ Anglo-American culture. Now, I’m not disputing that what he describes is indeed malignant; what I’m asking is how many Korean C-suite men have been in jail? How many businessmen and presidents? What about India and China? Pakistan? Japan? Recently, Goldman Sachs proudly touted that it is only investing in western companies with diverse boards, but these diversity requirements won’t apply in Asia. We cannot say for certain that forcing diversity on Asia would improve corporate governance.
We can say that forcing pilots at Korean Air to speak English made flights safer. We can also say that forcing superficial diversity targets on Western companies without acknowledging cultural differences might be not so much an improvement, as importing even worse cultural norms and practices from the rest of the world.
True diversity is not just making our boardrooms look beautiful by adding a bit of colour—people are not clothes or furniture—true diversity comes from the depth of different opinion. The dogged investigators and questioners who are needed to scrutinise managers and executives do exist in Asia and Africa, but are Asian managers going to hire them without being forced?
Mandating superficial diversity of colour risks importing and transplanting ways of working that led to the crisis not only at Deutsche Bank, but also those at Theranos described in the chapter 'Sunny' in Bad Blood, and of course what led to world chaos from the Chinese Communist Party's mishandling of Chinese Coronavirus. Buffett has said many times he doesn’t invest in what he doesn’t understand. Simply looking at the surface and saying—hey this company is worth investing in because of its colourful boardroom—and not assessing the culture underneath, is as risky as buying a CDO without looking at the mortgages in it. Equally, investing in a country such as China or Korea, which have no (real) diversity of colour or thought is perhaps the most risky strategy. Western companies would arguably be better focused on diversity of opinion. How you measure thought and opinion in an annual report is another question. Perhaps how many times did managers go on record as disagreeing with their boss? How many times did executes seek out objections and different ideas?
In Dark Towers, the difference between Edson Mitchell and Anshu Jain was arguably that Mitchell actively sought out people such as Broeksmit who disagreed with him, and considered what was best full stop; Jain surrounded himself with an army of yes-men who wanted what was best for Anshu’s ‘face’. The key here is not diversity, but the difference between Western culture, (built on Greek ideas of free and open debate) that tolerates and even rewards disagreement, and Asian culture that crushes it. Just as the Chinese saying 挂羊头卖狗肉 describes a real practice in China, language isn't only about words, and diversity isn't only about colour, it is the culture behind that is important. We might not like stereotypes in the west, but other cultures are collective and enforce adherance to sets of norms and behaviours. As the Latin saying goes—caveat emptor—we ignore and import these norms and behaviours at our peril.