Developing a Strategic Approach to Human Resources in China - Case Study Example

Introduction China is one of the rapidly growing economies in the world compared to other countries. The current global economic crisis has not affected China much and as per economists, China’s economy will surpass that of the US’s within 20 years of time. Though, Globalization and liberalization policies adopted by many other countries, China seem to be the number one country which exploited the possibilities of Globalization and liberalization well to their domestic economic improvements. China believes quantity rather than quality of products and hence their product prices are always cheaper, compared the competing ones which enabled them monopolise the consumer market in the world. Economic growth of a nation is controlled by many parameters like, political stability, lack of agitations in the society or industrial sectors and also the country’s ability to mobilize the internal resources along with attracting foreign direct investments (FDI) in the country. The people’s living standards, unemployment problems, educational levels, infrastructure developments, overall domestic peace levels and also the relationships with the neighboring countries, all will reflect the economic growth of a nation. China has all the above qualities and hence corporate can think about investing in China. ‘China’s economy is huge and expanding rapidly towards attaining a stable proposition. Last 30 years, the world has witnessed miraculous Chinese economic growth, averaging 8% growth in Gross Domestic Product (GDP) per annum. The economy has grown in all the segments more than 10 times during that period. The Chinese GDP has already crossed 3.42 trillion US dollars and it is still growing towards much larger extent. China already has the biggest economy after the United States in purchasing power. Most economic analysts expect China to become the largest economy in near future itself (Economy watch) On the other hand, China is the number one country in the world as far as population is concerned and other countries can utilize the huge Chinese market very well if some customization of strategies has been formulated before entering into the Chinese market. These customization strategies must focus on the cultural adaptation of the business suitable to the Chinese political, economical, social and environmental spectrum. Aussie Best, the large supermarket chain that successfully operates 250 stores across Australia and New Zealand can think about exploiting the Chinese market for their own advantages considering the stiff competition in their domestic country and the huge market size of China. It is better for Aussie Best to start with a small chain of two or three supermarkets to analyse the business situation in real practice and then think about further expansion. This paper briefly explains the human resource management challenges and the feasibility of transferring the company’s highly successful ‘partnership’ approach in Chinese business environment. Human Resource Management (HRM) challenges Cultural adaptation of business from an Australian cultural spectrum to Chinese cultural scenario seems to be the main issue, Aussie Best need to consider as far as the human resource management is concerned. Australia and China are entirely different countries, socially, linguistically, politically, economically, culturally and communally. China is ruled by communist regime whereas Australia is under democratic administration, class system in Chinese and Australian society are different, Chinese economy seems to be in better shape than that of Australia and most of the Australians are Christians whereas religion is controlled in China though, Buddhism seems to have upper hand in China. Corruption all over the society and bureaucracy seems to be the major threat for Aussie Best in their Chinese operations. Strong laws and rules are the features of the socialist’s rule, but even the socialists who argues for equality in all the segments of life, could not prevent the corruption from spreading in their society. Even the Chinese government is afraid of people’s agitation against corruption. Chinese political leadership is not keen in controlling the corruption because for preventing corruption political reforms are required, which the government does not like. Money intended for utilizing in the infrastructure development, real estate development and financial services areas are looted by government officials and hence such developments are not taking rapid pace in China. Even a low level government official can make huge amount of money as bribes because of the political and bureaucratic systems in China. Aussie Best must consider such negative aspects also before formulating their strategies for China. HRM challenges for Aussie Best in China can be best analysed through the LESCANT variables of cultural adaptation formulated by former professor of Eastern Michigan University, David A. Victor; Language, Environment, Social organization, Contexting, Authority, Nonverbal behaviour, and Temporal conception. (Victor, 2009) LESCANT model of cultural variables The importance of Language in a communication process need not be stressed. Australians need English only for their domestic business activities whereas in China they need the awareness of Chinese language also in order to communicate with the Chinese people as most of the Chinese people may not have good command over English. “Whenever two parties negotiate, the entire process occurs under two umbrella contexts, environmental and immediate” (Phatak & Habib, 1996) Australia and China have different environments and hence the Australians on deputation to China for Aussie Best supermarket chain establishment must know these differences well to conduct their business and marketing activities well in China. The working culture, environment population size, technology and natural resources etc will be different in China and Australia. Social organizations in China are different from that in Australia. Chinese people have only limited freedom for believing or spreading of religion and expressing their opinions or suggestions. All the activities in Chinese society will be strictly scrutinized by the governmental agencies to find out anything wrong in it against the Chinese communist regime. Aussie Best, while formulating their marketing or advertising campaigns in China should keep these censorship issues in China, in their mind. It is difficult to have two parties of different cultures with same contexting level and hence one party will act as the higher contexted and the other, the lower contexted, in a communication process. Contexting depends on the level of information possessed by the two parties. Australians and Chinese have different levels of contexting and the knowledge of these differences is essential for the Aussie Best professionals on deputation. “The view of authority in a given society affects communication in the business environment significantly as it shapes the view of how a message will be received based on the relative status or rank of the message's sender to its receiver”. (Victor, 2009) Authority and power are interrelated concepts. Power cannot exist without authority and vice versa. Leadership definitely needs power to execute their business functions. The concept of Authority and leadership styles may be different for Chinese and Australian people. The knowledge about these styles and differences in functioning is essential for the overseas workers. “Much of nonverbal communication may be broken down into six areas: dress; kinesics, or body language; oculesics, or eye contact; haptics, or touching behaviour; proxemics, or the use of body space; and paralanguage. Any one of these areas communicates significant information nonverbally in any given culture” (Victor, 2009) Non-verbal communication is different in different cultures. In some business negotiations, the amount of nonverbal communication may exceed the verbal communication. Gestures, facial expressions and body language can communicate so many things to the people to whom we are dealing with. Understanding of time (temporal conception) is also different in China and Australia. The perceptions about time will be different in China and Australia. Some people may not give much importance to time in business process. Some others may even deliberately delay things. Americans are so particular about the timely delivery of services. Composition of managerial and non-managerial positions Locals must have preference in both managerial and non-managerial positions in China. Only the local people will be aware of the country well and same thing cannot be expected from the Australians as far as China is concerned. In order to establish the supermarket chain in China, the co-operation of the Chinese people will be important which can be obtained by the localization of the business alone. The head of each and every wings of the Aussie Best supermarket chain must be locals. The Aussie Best experts should only guide the business process with the help of their Chinese counterparts. In my opinion, at present, minimum 75% of the managerial and non-managerial employees must be the locals and only 25% Australians should be deputized to China. The main job of the Australians who are deputized to China should only guide the Chinese professionals only with respect to the critical matters about their products and policies. Rest of the management functions must be given to the Chinese professionals as they know more about the Chinese markets and the Chinese consumers. In future, the number of Australian employees in China can be reduced to around 10% as the Chinese professionals accustomed more and more with the product and policies of Aussie Best. Because of the improved communication technologies like internet, email, video and audio conferencing, Aussie Best top management can communicate effectively with their Chinese colleagues whenever they needed. Feasibility of partnership approach Partnership approach is a new business strategy adopted by business groups in order to exploit the changing trends in business activities. Relationship building is accepted as the core of every business functions at present and these relationship building is possible only through the increased involvement of the stakeholders in the business activities. Autonomous work teams are a new concept in order to boost the productivity of the employees. Employees who are allowed to function independently seems to be performing well than those who supervised by the superiors. Autonomy increases the responsibility and attachment of the employee more towards the organization and can be tested in the Chinese environment. Most of the Chinese people are unaware of the word autonomy because of the tight discipline imposed in every aspect o the Chinese social life imposed by the Chinese administration. In my opinion, a new work culture like, autonomous work teams should have tremendous positive impacts upon the Chinese workers in the Aussie Best supermarket chain. Collaboration with the trade unions, which is another aspect of the partnership approach, is also a better tactics in the Chinese environment. Chinese trade unions mare not much powerful compared to some other trade unions in other countries. For example, in India like countries, because of the democratic administration, trade unions are more powerful and they can standstill the business functions of not only one organization, but even the entire country business activities. 24 hour long trade union strikes are common in India whereas in China such protests may not be even in the trade union’s distant dreams. So, seeking better involvement of the trade unions in the business functions will motivate them and the Chinese operations of Aussie best can be considerably improved. “The abilities and skills that determine the quality of our decisions and problem solutions are stored not only in more than 200 million human heads, but also in tools and machines, and especially today in those machines we call computers. This fund of brains and its attendant machines form the basis of our American ingenuity, an ingenuity that has permitted U.S. society to reach remarkable levels of economic productivity” (Simon and Associates, 1986) Decision making systems can be implemented in the Chinese business environment also. It is almost impossible for the current entrepreneurs to think about a decision making system without the help of equipments like computers. Mathematical calculations, statistical analysis, business presentations like decision making tools can be utilized only with the help of computers and the role of such equipments in the decision making process in Chinese environment cannot be avoided by Aussie Best. Conclusions Aussie Best can confidently establish their supermarket chains in China because of the immense stability and population size in China. Because of the tight administration, Chinese people are more disciplined and hence agitations are less in Chinese social, political and business world. Aussie Best must start with two or three supermarkets in order to analyse the market first. Locals must give priority while hiring the employees and only the essential management and non-management staff should be sent to China for starting the business operations. After stabilising the business, Aussie Best can reduce the number of Australians working in their Chinese operations. Human Resource Managers of Aussie Best must give proper training to the Aussie professional on deputation to China with respect to differences in the cultural variables between Australia and China like; Language, Environment, Social organization, Contexting, Authority, Nonverbal behaviour, and Temporal conception. References 1. Censorship in China Business Standards in China, (2008) Retrieved on March 23 2009 from http://www.amnestyusa.org/business-and-human-rights/internet-censorship/business-standards-in-china/page.do?id=1101629 2. Collins Dan, (2002) China's Internet Censorship Retrieved on March 23 2009 from http://www.cbsnews.com/stories/2002/12/03/tech/main531567.shtml 3. Phatak Arvind V. , Habib Mohammed M. (1996), The Dynamics of Iinternational Business Negotiations, Retrieved on July 10, 2009 from http://findarticles.com/p/articles/mi_m1038/is_n3_v39/ai_18348264 4. Simon Herbert A. and Associates: Associates: George B. Dantzig, Robin Hogarth, Charles R. Piott, Howard Raiffa, Thomas C. Schelling, Kennth A. Shepsle, Richard Thaier, Amos Tversky, and Sidney Winter, (1986), Decision Making and Problem Solving, Retrieved on July 10, 2009 from http://dieoff.org/page163.htm 5. Victor David A. (2009) Cross-Cultural/International Communication Retrieved on July 10, 2009 from http://www.enotes.com/biz-encyclopedia/cross-cultural-international-communication 6. Wiseman Paul, USA TODAY, (2008), Cracking the 'Great Firewall' of China's Web censorship, Retrieved on March 23 2009 from http://www.usatoday.com/tech/news/techpolicy/2008-04-22-InternetBandits_N.htm Read More