The Differences between Chinese and Australian Management Practices - Case Study Example

The differences between Chinese and Australian Management Practices Name Professor Institution Course Date The differences between Chinese and Australian management practices In the present settings, the world of business is experiencing the influence of free trade agitation. Caligiuri, Lepak and Bonache (2010) contended that as the 21st century unfolds, globalization is increasing at an overwhelming pace with companies crossing borders to invest into foreign markets. Local markets are getting saturated with little, a situation which has countries realize the importance of creating free trade agreements with other countries. For instance, Chinese economic growth in the last decade has led to massive products and services which have surpassed the local demand, hence the need to export or invest in other countries (Jayaraman 2009, p.1). Chinese venturing into Australia is proving to be significant factor in creating a strong economic relationship between these two countries. The foundation of the economic relation between China and Australia has over the years the trade of products which has continued to thrive. Currently, China has surpassed the Japan and U.S. to be number one trade partner with Australia with bilateral products or services. Statistics demonstrates that between 2006 and 2007, exports from Australia to China reached to $A24.8 billion whereas Australia imported worth $A29.2 billion from China (Child & Rodrigues 2005, p. 381) As the trade increase, many countries from China has sort to invest in Australia so as to increase their profits. One of search companies is Chinese Real Estate Company, Shanghai Greenland group. However, the company is likely to face different management challenges. Therefore, using Shanghai Greenland Group as the company in focus, this paper will analyze the differences between Chinese and Australian management practices. Some of the differences to be discussed include tax, technology, labor, brand differentiation, culture and organizational behavior. Chinese companies are used to investing in countries with law tax or tax havens to capitalize on such opportunity and invest the profit back at their home countries (Peng 2011, p.5). Some Chinese Multinationals look to avoid discrimination by the local companies by investing into Caribbean (Yamakawa, Peng & Deeds, 2008, p.67). The situation reduces the cost of operation and enabling the manager to maximize shareholders return. The condition is so different in Australia with high taxes on foreign firms. Even though China is developed, its technology is not update as Australia. In fact, Peng (2011, p.5) stated that the technology of China is considered to be behind by two generations. This weakness makes disadvantages its competition in the real estate industry. In the recent years, technology has become vital in the management of real estate in terms of marketing and sales. Customer currently needs pictures of houses and land the company is dealing with. Technology provides opportunity for the Shanghai Greenland Group to satisfy this require. This means the company must increase its budget to cover cost of implementing technology (Peng 2005, p.5). Other managerial issues which could affect Shanghai Greenland Group operation in Australia are the labour, brand differentiation and culture. China has a cheap labor due to high population of both skilled and unskilled. This means labour can cheaply be acquired by companies hence reduction in the cost of operation. Many Chinese companies back at home including Shanghai Greenland Group are “already enjoying cost advantages owing to low wages and production enhancements realized over the recent years” (Child & Rodrigues 2005, p.389). According to Zhang (2005) cost advantage is a comparatively significant competitive aspect for the simple products. Differentiation is an important brand management practice which cannot be ignored in a foreign market. However, China has not been known with differentiation but rather copying from the competitors. According to Jayaraman (2009, p.3) the culture of copycat known as “Shanzhai” has been rooted in Chinese society; over the year. The culture is mostly regarded as Confucian and promotes sharing between people in a belief that it creates a great harmony between members. The culture is transferred to businesses where companies and individuals copy nearly every products or service from competitors and use them as theirs to compete in the market. Jayaraman (2009, p.3) went ahead to state that the culture ranks China as the leading manufacturer or developer of the counterfeit products or service in the world. Australian has an innovative culture where companies even in real estate industry develop new products and service to increase their competitive advantage in the market. The local consumers expect new products and services with a great touch from multinationals which is different from which local firms offer. Child & Rodrigues (2005, p.389) argued that differentiated products or services stand out compared to those of competitors and are likely to be customers approved by customers. If Shanghai Greenland Group insists of differentiation in Australia, “it is likely to have brand advantage and customers will be willing to pay high price for their products and services better than competing products” (Child & Rodrigues 2005, p.390). Shanghai Greenland Group of Chinese origin is moving to invest in a new country, Australia, with unique culture; hence managers must be able to adopt different cultures to work effectively. The cultural differences between China and Australia can analyzed through various frameworks such as Hofstede and Trompenaars models. National cultures influence management and decision making in an organization. Ahlstrom, Chen and Yeh (2010, p.343) posited that Since China is a country from Eastern, its management practices is generally influenced by the wider Eastern culture. On the other hand (Gamble 2006, p.331) business transactions and management in Australia is influenced by Western culture because the country was colonized by western country, Britain. These cross-cultural differences have been portrayed by Hofstede in its cross culture research. In his studies, Meng (2011) asserted that Hofstede categorized six dimensions of cultures which can affect performance, negotiations and communication between business from different and customers from diverse cultural background. Hosftede six dimension of culture include power distance, Individualism versus collectivism, uncertainty avoidance, Masculinity versus femininity, short-term versus long-term orientation and restraint versus indulgence (Geert & Hofstede & Minkov 2010). In trying to capture the Australian real estate market, Shanghai Greenland Group must employee Australia to work with their Chinese counterparts. The company does so because the managers that Australian employees understand the customer needs better. However, the difference in culture as explained by Hofstede could bring challenges to the management. Hosftede (2015) demonstrated that China has a high power distance of 80 while Australia has a lower power distance of 36 hence different expectations from the management. Normally, there are hierarchies in the organization which distinguishes managers from employees. However, the policy does not isolate managers completely from employees. Nevertheless, Chinese high power distance culture hold that people are unequal in the organization thus manager and subordinate relationship is more not strong (Hosftede 2015). In a nutshell, managers and employees should keep distance and not have strong relationship. Contrarily, Loi, Lai and Lam (2012, p.469) opined that Australian employees are influenced by low power distance hence want to form a strong relationship with the managers. In this process, it makes the managers more accessible and can liaise with them on various issues pertaining work (Hosftede 2015). The Management conflict at Shanghai Greenland Group will be that one a Chinese managers wants employees to keep distance and allow him enjoy power while the same employees will want to be close to power. Australia has a culture of individualism both at home at work place. In fact a research conducted by Hofstede reveals that Australia has a score of 90 on individualism while China sores low of 20. This implies that China culture is rich in collectivism. Luthans and Doh (2012, p.124) stated that in countries with high individualism employees prefer to work alone as opposed to group. Australian employees reason that being self-reliant is more effective than teamwork because one make faster decisions and work fast. Also, they would want to gain individual merit out of performance. In the current world of business, teamwork is regarded as one of the best management practices embraced by successful companies across the globe (Gelfand, Erez & Aycan 2007, p.483). As a country which comes from a collectivist society, Shanghai Greenland Group will obviously adopt management will embraces their culture. Hofstede (2007, p.413) stated that China which is the parent home of the company is high in collectivism and employees work in the interest of group and not individual. Such culture believes that team work increases the speed of completing tasks. In addition, Chinese collectivist culture holds that more ideas can be raised within the group which can be used to create new products (Warner 2001). Individualism impacts how people communicate and negotiate with one another. For example, if individualism at Shanghai Greenland Group left to thrive, Chinese employees working in Australia might regard Australian’s reception as cold. The situation could reduce the morale within the organization. Thus, Hashim (2012) argued that global managers have to form employee teams which can create positive relationship between employees. Another challenge for Shanghai Greenland Group managers is the uncertainty avoidance. According to Hosftede, uncertainty avoidance is the degree to which a society feels vulnerable by unclear or unfamiliar circumstances and has developed institutions and beliefs that attempt to evade them. Comparing the two countries, China scores only 30 whilst Australia scores an average of 51 (Hosftede 2015). The Chinese employees are often comfortable with culture ambiguity and are not prepared for change in part of their culture. However, Australia has a slightly low certainty avoidance meaning its people are likely to accept culture whenever they meet new people. Another Hosftede cultural dimension which is likely to impact change negatively is indulgence versus restrain. According to Geert, Hofstede and Minkov (2010) indulgence is described as to which individuals attempt to manage their impulses or desires in terms of the manner in which they grew up. Fairly weak control of such aspects in referred to as “indulgence” while a strong control is termed as “restraint”. With a rating of 24, China is considered to be a restrained society with the tendency of pessimism, not focus on leisure and controls theirs desires (Hosftede 2015). On the other spectrum, Hosftede (2015) showed that Australia scores highly with 71 rating on this dimension and considered an indulgent nation. The employees from this county have been influenced with willingness to achieve their desires and impulses with reference to having fun or enjoying life (Tan &Meyer 2010, p.156). They are oriented with the culture of optimism, high level of leisure time and spending money of leisure well. Even though, leisure of flexi-time is highly recommended for contemporary employees, Australia employees pursuing such time might be regarded by Shanghai Greenland Group managers as time waster of lazy. Trompenaars’ model has also been used to analyze how management differs in countries. This model of culture has seven dimensions comprising of universalism versus particularism, achievement versus ascription, individualism versus communitarianism, specific versus diffuse, sequential versus synchronic, neutral versus emotional, and internal versus external control. Universalism versus particularism is a dimension founded on either a rule or a situation. According to Trompenaars (1997), high universalism countries Australia have a high emphasis of rules, obligation, law and value and their application on day-to-day activities. Maleki (2013) stated that in China where culture encompasses particularism, people are oriented that every state of affairs has its rules used to resolve it. Li, Lam & Qian (2001, p.117) contended that it implies that the employees and managers react to a situation changes depending on how it happens. In every performing organization, rules, obligation and value must be applied to build efficiency of operation and reduce factors affecting it such as absenteeism, organization conflict, bad decisions and poor performance. Gelfand, Erez and Aycan (2007, p.482) argued that with such differences in management practices, Australian holding managerial positions at Shanghai Greenland Group may find difficult to implement particular ideas since instruction, procedure and procedure will not be followed. Similar to Hosfted, Trompenaar also carried out a research on how individualistic culture affects management practices. His research differentiated the elements of individualism and communitarianism. As stated earlier, Australia is highly an individualistic nation with many people preferring to work as independently rather than as group. This culture holds that work as individual makes it easy for one to make individual decision which is much faster than group decision (Tuntimas 2007). Communitarianism is similarly to collectivism where people work together for the common good of the society. In this perspective they favour working as a group rather than individual because they hold the view that with group work, an organization is likely to handle several projects rapidly. Trompenaar used achievement versus ascription to analyze differences in cultures and how they can influence the decision and management at the place of work. Braun & Warner (2002, p.559) argued that in achievement which is particularly found in Australia, people believe that that highest status can only be rewarded through best performance. In a nutshell, achievement is realized through hard work and positive performance. Chinese have a culture where people believe that who they are in the society should earn them some status at the workplace. In this culture, people are judged and rewarded by the title they hold in the society such as elder or parent (Trompenaars & Hampden-Turner 1997). Due to the fact that it is a Chinese company establishing an outlet in Australia, it will be very difficult to achieve efficiency at Shanghai Greenland Group because the manager is likely to have conflict with employees who do not believe in achievement but ascription. In the contemporary business world, majority of successful companies compete on achievement. Similarly, Schuler (2000, p.246) affirmed that most of employees know that their best achievement lies on the performance gauged against other employees. Since the world of business is being oriented towards achievement culture, companies often reward employees based on this dimension through promotion, certificate of achievement, salary increment of just encouragement. Management practices also entail managing behavior, relationship and motivation in the workplace. Some experts argue that an effective and successful organization is where employees have formed a strong business relationship observe one family (Barnard 2010, p.169). From this perspective, some employees think that their social life in the work place and at home should not be kept secret because it affects their performance in the organization (Nee & Opper 2012). However, some believe that remaining professional is to keep your social life a secret to the organization one works for. It is this dimension which Trompenaars and Hampden-Turner (1997) referred to as specific versus diffuse. Chinese employed lives with a highly specific culture which restrict them from disclosing personal information at the workplace (Xu 2001,). This case imply that if Shanghai Greenland Group HR manager or officer with Australian origin interviews an employee with Chinese origin about their personal issues such as marriage and home life, they are likely to decline to answer, hence being labeled as rude (Liu, Zhang & Leung 2006, p.329). Australia employees are not normally afraid of disclosing their personal information such as marriage, social life and leisure as they believe good rapport is formed when individuals talk openly concerning personal lives and business in the organization. Nee & Opper (2012) contended that they regard socializing highly since it assist them create a good relationship with the managers. Some employees think that those who keep their personal issues away from organization like the Chinese are antisocial and dull (Nee & Opper 2012). In conclusion, this paper has explained various issues that Shanghai Greenland Group should consider in its internationalization into Australia. The paper as discovered several management difference between China and Australian. Cultural difference between China and Australia is one of challenges facing managers run a new company into any of these countries. Chinese culture has been identified to promote counterfeiting as opposed to being innovative. Similarly, Trompenaar discovered that Chinese in most time ignore the rule of law recommend that a problem is solved based on the situation. Chinese firms are used to cheap labour back in their countries, and other foreign labour juts increase the cost of operation. Such foreignness liabilities could make it difficult for a Chinese real estate company, Shanghai Greenland Group to operate successfully in Australia. To resolve such cases, this paper recommends for more training and polycentric staffing. Training will foster cultural intelligence and enable Chinese citizens to drop their cultural difference and adopt dominant culture within the market. Reference Ahlstrom, D, Chen, S & Yeh, K.S. 2010, ‘Managing in ethnic Chinese communities: cultures, institutions, and context’, Asia Pacific Journal of Management Vol.27, pp.341-354. Barnard, H 2010, ‘Overcoming the liability of foreignness without strong firm capabilities: the value of market-based resources’, Journal of International Management Vol.16, pp.165-176. Braun, W & Warner, M 2002, ‘Strategic human resource management in western multinationals in China: The differentiation of practices across different ownership forms’, Personnel Review, Vol.31, No.5, pp. 553-579. 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