The Biggest Obstacle to Growth in Asia

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"Can I practice my English with you?"

That's a frequent question for Americans in the touristy parts of Beijing. It's usually asked by a young Chinese girl, and if you agree, you'll eventually discover that these girls are art students and that they have exhibitions where you can buy their work "for a bargain."

I'm sure they do well. They're exclusively targeting a group (1) with money to spend and (2) looking to buy souvenirs.

But I'll also say this: They're in the wrong business.

The art student is not a smart student
Like India, China is facing a massive skilled-labor crunch. Scores of companies are lining up to go public, and most -- if not all -- do so with the goal of 15% or more annual growth.

Yet it remains to be seen just who is going to manage this growth. Again and again, we hear from Chinese companies that they are having a heck of a time hiring middle managers. For a long time, there was little to no business education in China. And while MBA and other management programs are gaining in popularity (as evidenced in part by the success of New Oriental Education's (NYSE: EDU) preparatory courses), there will be a multiyear lag before Chinese students in China will be able to step up and fill the void.

In other words, these art students need to put down the paintbrushes and concentrate on developing their fairly adept marketing skills.

A two-way street
The blame, however, doesn't lie solely with the educational system. We have yet to visit a Chinese company with strong management training initiatives and a long-term view toward personnel development. Rather, these companies want qualified employees to come straight from the schools and they want them to step in as soon as possible.

It doesn't work that way.

Unlike in fields such as the applied sciences, there's only so much that can be learned about business in school. For evidence, look no further than Microsoft's (Nasdaq: MSFT) Bill Gates and Oracle's (Nasdaq: ORCL) Larry Ellison -- two unbelievably great business minds that didn't complete undergraduate degrees.

Get long-term returns
Of course, many of the companies we're visiting in China are relatively small. It can be difficult for small companies to incorporate such squishy initiatives into their road maps, particularly when they're on the hook for rapid growth.

Yet it can be done. Extra training -- specifically leadership training -- has been key to the long-term success of General Electric (NYSE: GE), Whole Foods (Nasdaq: WFMI), and Google (Nasdaq: GOOG). Indeed, Whole Foods and Google are still two of Fortune's top five companies for getting employees more training.

Hyderabad, India-based Satyam Computer Services (NYSE: SAY) is one company we visited that is trying to incorporate Western-style employee training initiatives into its corporate culture. Under the dual crunch of declining margins (a result of rising salaries) and increasing rates of employee turnover, Satyam has set out to make every "associate" his or her own CEO. While the results don't yet allow Satyam to call the program a slam dunk, it's a novel approach in a society that has historically drawn lines between classes -- and it's an approach that more Chinese companies should be looking at.

Tim Hanson is currently traveling with Motley Fool Global Gains advisor Bill Mann and analyst Paul Elliott to meet with companies in India, China, and Taiwan. To get their free updates and analysis in your inbox live from the field, send an email ASAP to Bill at BillTrip@Fool.com.

Tim owns shares of Whole Foods. New Oriental Education is a Motley Fool Global Gains recommendation. Whole Foods is a Stock Advisor pick. Microsoft is an Inside Value recommendation. The Fool's disclosure policy offers seminars in personal hygiene improvement.